SUPPLY CHAIN MANAGEMENT: THAKRAL CORPORATION LTD 

Supply chain management can be delineated as the management of the distribution of products and services which involves activities such as movement, storage, inventory and finished goods management (Jacoby, 2010). Precisely, supply chain management is basically determined by the interconnections between the business and the channels used to offer products and services as required by the customers in the target market. Therefore, the planning, designing, control, implementation and supervision of the supply chain activities are the basis of supply chain management (Chopra & Meindl, 2013). The major objective of supply chain management is to create net value, leverage logistics, and synchronize market demand and supply in order to create a competitive infrastructure for the products and services of the organization (Jacoby, 2010). Thus, this paper will assess the supply chain of Thakral Corporation Ltd citing from the effectiveness of the company’s four key flows of the process.

Thakral Corporation is an investment holding organization that deals with electronic manufacturing, supply chain management, brand building and marketing, property holding, and manufacture of media and technology brands (Thakral Holdings Limited, 2012). The registered and primary headquarters of Thakral Corporation is situated in Singapore though the company has subsidiaries in other countries such as Thailand, China, and Japan. The foundation date of Thakral Corporation can be cited back in 1972 when it started operating in Singapore. Basically, the supply chain of Thakral Corporation involves distribution of electronic brands from international companies such as Apple, Canon, Panasonic, Fuji, Orion, Casio, Pentax and Olympus among others. Products that are distributed by the company include television sets, cameras, audio players, mobile phones and memory cards just naming a few. However, the manufacturing segment offers electronic products achieved through manufacturing contracts with Chinese organizations. On the other hand, Thakral Corporation offers property holding services where the company is engaged in equity and property investments especially in China projects.  

The Key Flows in Supply Chain  

The company’s supply chain is based on its subsidiaries both in Singapore and other countries such as China and Japan which focus on distribution, marketing, and development of the brands offered (Thakral Corporation Ltd Annual Report, 2005). Citing back from year 2009, the distribution department recorded a revenue increase by 15%, equivalent to S$435.3 million from fiscal year 2008 (Thakral Corporation Ltd Annual Report, 2009). The distribution segment revenues accounted for approximately 99.2% of the overall revenues of the company that year. The distribution segment is the keystone of the company especially during the recovery of the losses in other segments. Back in 2009, Thakral Corporation recorded a net profit of approximately S$7 million which was accounted against the loss of $8 million in the same year (Thakral Corporation Ltd Annual Report, 2009). These profits incorporated one-off gains on the lawsuit pressed against the company. However, due to high returns in the distribution segment that was promoted by the increasing demand in the electronic products market, the company recovered and recorded a net profit of $7 million (Thakral Corporation Ltd Annual Report, 2009). The supply chain department encompassed subsidiaries in developing markets such as India where the sale of mobile phones, digital cameras and laptops recorded a significant sales increase. In this year, the company sold more than 200,000 units of mobile phones in India with the sales forecast exhibiting rising demand in the market (Thakral Corporation Ltd Annual Report, 2009).

In 2010, Thakral Corporation endured a turnover rate on their sales from the distribution segment that accrued up to 6.5% (Thakral Corporation Ltd Annual Report, 2010). The company recorded annual revenue of S$406.9 million in 2010 which slugged from S$435.3 million in 2009. However, the company was able to increase the products margin which increased the distribution segment revenues by 23% equivalent to S$8.5 million (Thakral Corporation Ltd Annual Report, 2010). However, in the same year, Thakral Corporation endured another one-off gain on legal damages in two consecutive years. In this year, the company recorded legal damages loss of S$1.7 million though they recorded a 64% profit increase which helped in the recovery (Thakral Corporation Ltd Annual Report, 2010).

In the fiscal year ended December 31, 2012, Thakral Corporation endured a sales decrease from the distribution segment that was resulted by market demand changes and economic crisis in the market served (Thakral Corporation Ltd Annual Report, 2012). Consumers in the Chinese market developed negative sentiments regarding Japanese products that were distributed by Thakral Corporation. This resulted to a considerable decrease of the consolidated sales and revenues by 15% reaching up to S$309.3 million. However, the organization enjoyed an increase in the profit before tax by 42% equivalent to S$17.2 million in 2012 (Thakral Corporation Ltd Annual Report, 2012). This helped the company to recover from S$15 million one-off gain after selling one of its investments in Australian market. Additionally, the company realized a net unrealized valuation gain of approximately S$5.4 million on Hong Kong investment properties that increased from S$0.5 million in 2011 (Thakral Corporation Ltd Annual Report, 2012).

In the supply chain of Thakral Corporation, apart from its subsidiaries, the company works with dealers and suppliers in their extended chain of supply in the served markets (Thakral Corporation Ltd Annual Report, 2012). As a result, citing from the loss that the company incurred in 2012, the following are the recommendations of approaches that Thakral Corporation can implement.

• The company should adopt a demand-oriented planning which is based on the market changes. Alluding to the fact that the decrease in the distribution segment revenues in 2012 was resulted by unpredicted market changes, Thakral Corporation ought to implement different planning and prediction tools in order to be able to respond to market changes risks.
• Thakral Corporation should develop an adaptive supply chain that can withstand integrated implementation and rapid planning. This will help the company in dealing with unpredicted market changes.
• Product design optimization for the supply to the target markets. This is based on the fact that 2012 decrease in sales was affected by factors such as negative sentiments by the customers on the products which means that the company can tackle this risk in future by optimizing the design of the product in order to comply with the demands of the target market.

 

The Make Process

The supply chain of the company is based on two major segments of the organization which include manufacture and distribution segments. For the manufacturing segment, Thakral Corporation deals with the production of electronic gadgets such as digital cameras, audio players, memory cards, DVD players, and electronic accessories among other products that are recognized with the company’s logo “YES” (Thakral Holdings Group Thg Annual Report, 2007). On the other hand, the company extends its brand portfolio by dealing with global brands from international companies such as apple, Kodak, Casio, Asus, Canon, Fuji, Nokia, Lenovo, Samsung and Nikon among others.  This means that the company is able to balance the distribution of products from its manufacturing department and from the companies partnered with (Thakral Holdings Group Thg Annual Report, 2007). Thakral Corporation has been facing decrease in sales of the products recently due to the unpredictable market changes. For instance, production of digital cameras which is one of the major products of Thakral faced a considerable sale decrease back in 2012 (Goh, 2014).

The decrease was resulted by the rise of smart phones that had high definition cameras as part of their basic features. Under the Inderbethal Singh Thakral, the managing director of distribution in the company, Thakral Corporation uncovered a repositioning strategy for the segment (Goh, 2014). Therefore, the department repositioned its product line to focus on lifestyle accessories, beauty and health products, and home appliances as the major distribution products (Thakral Holdings Group Thg Annual Report, 2012). For the manufacturing department, the materials required to produce different products come from selected suppliers and dealers. As a result, the company has partnered with suppliers who manufacture basic materials required to produce electronics, and other accessories manufactured by Thakral Corporation. Thus, it is exhibited that the company relies on the alternative profitable strategies in order to cope up with different risks and changes in the market.

The effectiveness of their implementation process is based on the huge brand portfolio together with the strong alliances with the global brands companies. Additionally, strong management both in supply chain and overall organizational management is the other factor that effectuates production planning of the company. The other alternative strategy that Thakral Corporation has implemented in order to deal with the demand changes in the market on the manufactured products is expanding network of outlets. Recently, the company decided to open more than 400 stores in the developing markets and extend their supply chain to suppliers and dealers. It is factual that the developing markets have not embraced substitution purchasing habits such as buying a smart phone with a HD camera instead of a digital camera itself. Therefore, expanding the network of outlets will help in increasing the sale of the products that have experienced decrease in demand in some markets. Lastly, the strategic alliances with global brand companies has helped Thakral Corporation significantly because that it has been able to implement alternative production strategies rapidly and effectively.

 

 

 

               

 

 

 

 

 

 

 

Recommendations      

• In extending their supply chain, Thakral Corporation should not heavily rely on suppliers and dealers to distribute their products. This will make sure that alternative strategies implemented by the company are not affected by suppliers and dealers consideration.
• Thakral launch their own manufacturing segment that produces entire materials required for producing electronic accessories and other products involved instead of relying on suppliers and dealers to offer the materials.
• Thakral should make strategic acquisition and joint-ventures with the selected dealers and suppliers in order to make them part of the organization which will enhance implementation process by reducing intervention factors.

 

 

The Supply Chain Forecasting

It is factual that demand forecast is the cornerstone of supply chain management (Gardner & McKenzie, 1985). Precisely, supply chain management uses both push and pull approaches during the forecasting. Push approach focuses on the customer demand anticipation whereas pull approach is implemented to respond to the customer demand (Shao, Sun & Noche, 2015). For the push approaches, the manager is obliged to plan for the level of production activities (Zhang, 2004). On the other hand, for pull approaches, the manager ought to plan for the inventory activities though not the actual amount to be implemented. In order to execute effective demand forecast, the company should understand the following factors;

• Lead period of a product
• Past demand
• Market and economy status
• Price discounts to be offered on the products
• Competitors’ strategies

By understanding these factors, the company is able to select an appropriate forecasting model for their supply chain (Zhang, 2004). For instance, if the product of the company endured low demand in a certain month, offering discounts can help shift the demand in the next month. As a result, the organization should make forecasts which considering the price discount factor. The following are the applicable types of forecasting models in supply chain management.

1. Casual forecasting model

This model assumes that demand forecast should be correlated with market factors such as economy status, interest rates among others. For example, organizations use casual model to evaluate the effect of price promotions on the product demand.

1. Qualitative model

This model of forecasting relies heavily on subjective human judgment where the historical data of the product demand is used to forecast future demand of the product (Tayur, Ganeshan & Magazine, 1999).

1. Simulation model

This model assumes that the choices of the customer determine the demand of the product (Law & Kelton, 2000). Therefore, the company uses approaches that correlate with the customer choices.

1. Time series

This model is similar to qualitative model since it uses historical data on the demand of the product (Gardner & McKenzie, 1985). However, in this case the company uses the pattern exhibited by the demand of the product and assuming that it will follow the same path, the company forecasts the future demand of the product.

Therefore, the most effective forecast model for Thakral Corporation is simulation model. This is based on the fact that the decrease in revenues that the company incurred back in 2012 was resulted by the change in the purchasing habit of the customers. The customers substituted digital cameras with smart phones thereby shifting their demand on the major product distributed by the company. As a result considering customers’ choice as the factor for supply chain forecasting, the company will be able to evaluate market demand and offer the products to satisfy the demand. The other reason that makes the model the most effective for the company is that it combines both time series and casual model approaches in making the demand forecast. For example, the company assesses both the effect of product promotion and competitors’ strategies on the product demand.

Conclusion

Generally, supply chain management involves management of distribution activities including inventory, storage, movement and finished goods supervision. The major goal of supply chain management is to synchronize market demand and supply, create net value, and leverage logistics. As a result, Thakral Corporation is a supply chain management organization that deals with production and distribution of television sets, cameras, audio players, mobile phones and home appliances. However, the company also deals with property investments in different markets such as Australia and China. The company deals relies on subsidiaries, suppliers and dealers in developed and developing markets such as Japan and India. The supply chain management of Thakral Corporation has been effective over the past years especially in the distribution department which the company uses to recover from losses in other departments. For example, the company incurred losses of approximately S$8 million which was covered by the profits in the distribution department realizing a net profit of S$435.3 million. However, citing from the fact that the company incurred considerable reduction in sales back in 2012, it is factual that the company ought to utilize the most effective forecast model in order to synchronize demand and supply in the market. As the result, simulation model will help the company assess the customer choices (which is the major factor affecting the demand of the products of the company) and manage their supply chain. 

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