Assignment task:
Overview:
This activity presents a case study of a fictitious 3D printer and printer cartridge company called 3DMall. 3DMall has a patent on proprietary 3D printing technology and has decided to sell its novel, user-friendly 3D printers and cartridges to consumers. The unique benefit to using 3DMall printers is that consumers do not have to design their own products by using complex scanning and design programs that require a certain level of technological expertise. Instead, they can choose to immediately print ready-made designs they find in 3DMall's online store.
The designs in 3DMall's store are provided by third-party organizations who submit these to 3DMall for sale. 3DMall hosts the designs, and consumers can browse and purchase them via an app or 3DMall's store website. When a consumer purchases a design through the 3DMall store, they are purchasing a one-time-use design from a third party and using it to print the item immediately with their own printer. 3DMall receives a percentage of every purchase made in the store. Once a consumer has purchased a design and uses it, the design automatically deletes itself from their printer.
Read the case study below and answer the questions that follow. At the end of the activity, the instructor will review the steps of the activity and share the correct answers for each question. This case study will be revisited in later activities.
Case Study Information
3DMall is a private start-up with some large investors. They used the investors' money to fund initial research and development and design, to build and staff a headquarters and a number of regional DCs with light manufacturing capability, and to pay for outsourced manufacturing, transportation, and supply. They also leased a cloud-based enterprise resources planning (ERP) system early on and spent some time developing a less hierarchical organizational structure-a network structure-that focuses on end-to-end process efficiency. Since all of the employees are new, human resources staffed key roles with persons who had experience using this software system and were comfortable working in a more empowered, collegiate environment.
3DMall's founders felt that part of their mission was to sell sustainable products to support their environmental and fair trade priorities, so the initial R&D team used design-for-the-environment methodology by involving many internal stakeholders in the design process. They also developed an ethics and sustainability policy for manufacturers and suppliers. The manufacturer and suppliers agreed to these policies in the initial contract, but, at this time, it is unclear whether the policies are being put in practice, especially as 3DMall has started to grow rapidly and the manufacturer has added its own subcontractors to increase capacity.
Growth in sales in the first three years has been significant. The product and the marketplace are gaining users, but, according to market research, growth would be greater if there were more designs in the online marketplace. However, too many firms are still skittish about losing traditional sales to this new method, and others are upset that start-up firms have sprung up using this medium to compete with them directly.
The independent retail franchises are growing steadily, but some did close, in part due to overambitious inventory ordering relative to sales. 3DMall's revenue in the first year was US$60 million, but they had total expenses of US$80 million, for a net loss of US$20 million. Revenue grew by 20% in the next year, to US$72 million, and, due to some one-time start-up expenses, total expenses fell to US$70 million, for a first-time net profit of US$2 million. The strategic forecast predicts that revenue will continue to grow by 20% per year for each of the next five years. However, further investments will be needed to increase capacity, and most of 3DMall's expenses are variable rather than fixed, so total expenses are expected to rise each year. In addition, they expect an increase in net profits of only 10% per year (i.e., US$2.2 million expected net profit in the third year of operations). Has a modern ERP system staffed with persons who were already familiar with its functionality, so it is likely being utilized effectively. Since it is cloud-based, the a u these retailers.
Please advise in the choosing the following and the reasoning behind
Part 1: What is 3DMall's stage of supply chain maturity?
- Stage 1: Multiple dysfunction
- Stage 2: Semi functional enterprise
- Stage 3: Integrated enterprise
- Stage 4: Extended enterprise made US$2 million in net profit the second year, but this is only reducing their prior year net loss. If the organization hopes to satisfy red flag of a gap in strategy, but it is not the most significant red flag.
Part 2: Which is the most important red flag that there are misalignments or gaps in 3DMall's strategy?
- Revenue is growing at 20% but net profit is growing at only 10%.
- They had a net loss of US$20 million in the first year.
- The manufacturer has started using subcontractors to increase capacity.
- It is unclear whether their manufacturer and suppliers are following the ethics and sustainability policies. rests are already variable and increase directly with revenues. Owning more parts of the supply chain or otherwise increasing fixed costs could be another solution if funding is available. Increasing the fees charged to third-e marketplace is not yet robust enough and nothing should be done to hinder its growth.
Part 3: Which is the best suggestion for resolving this major misalignment or gap in strategy?
- Build and own a manufacturing plant in the U.S. or the EU.
- Increase the proportion of costs that are variable relative to those that are fixed.
- Get the manufacturer to develop better economies of scale or switch providers.
- Increase the percentage fee charged to third-party design providers to improve profits. to waste, a marginal analysis is called for. The marginal cost is US$25 per motor increase 3DMall's profits by spreading the production costs to more units.
Part 4: 3DMall decides to become a minority investor in the Thailand manufacturing plant, providing funds for it to expand capacity and gaining significant cost savings from the improved economies of scale as well as better prices due to the closer business relationship. This dramatically reduces 3DMall's projected total expenses over the next five years. However, the expanded plant will have excess capacity for the next two years since it was built to have sufficient capacity for the final three years of the strategic plan. During the first two years of this new relationship, it costs US$100,000 to produce a batch of 800 printer motors. A 3D printer competitor wants to outsource its motor purchases to you and offers to buy all available excess capacity for US$100 per motor. Doing so would increase plant wear and tear and increase other costs for materials and so on by US$25 per motor sold to the competitor. What should the manufacturer and 3DMall do?
- Accept the offer but only if they pay US$150 per motor or more.
- Reject the offer because you would be selling at less than cost.
- Reject the offer because it would be helping a competitor.
- Accept the offer as is.
Part 5: 3DMall conducts a SWOT analysis to determine what else it might be able to do to further increase revenue growth or profitability. Which observation from that analysis should be given the highest priority in terms of time and funding?
- Threat of existing 3D printer competitor copying the organization's business model in three to five years but with additional colors of materials that can be printed
- Opportunity to market to potential third-party print design providers that this is just another sales channel with very low costs that, if not acted on, will become a threat
- Strength in high difficulty of refilling used printer cartridges or getting third-party cartridges to work in 3DMall's printers
- Weakness in the organization's open organizational structure and corresponding open office theme in its headquarters that means some employees get less done due to the lack of cubicles