Stage 1 Strengths| Weaknesses| Strong market positionManufacturing themselves| Less-efficient about their system| Opportunities(Potential benefit)| Threats| Cost reduction| Fierce competition| Strengths Strong market position Osram is the second largest lighting equipment manufacturers in the world (22% of sales), and Europe as well (34% market share). Manufacturing themselves Since they manufactured approx 90% of their products themselves, they are less-affected by the power of the buyer. Weaknesses Less-efficient about their systemOsram has no strong advantages about their goods, inefficient warehouse system, and ordinary customer service compared to major competitors’.
Opportunities Cost reduction As Osram GmbH try to re-arranging the number of warehouses, certainly it allows for improvement of service level and lead time, decreasing the total inventory level and centralization of purchasing. According to this, it is expected to significant cost savings for them. Threats Fierce competition In 1989 GE began to advance in the European market, with a couple of huge M&As. And the many minor companies in this industry have reduced significantly by acquisition.It could make competitors’ stronger, and since then the full-scale price war has begun. Stage 2 Strengths| Weaknesses| FlexibilityEconomics of scale| Variables from the replacing warehouse| Opportunities(Potential benefit)| Threats| Cost savingsGrowing demand for safety and save energy| Intense competition| Strengths Flexibility After Osram GmbH took over all European stock entirely and authority of controlling logistics, purchasing from the BG’s, the Euro-logistics team of Osram GmbH could advance in the decision-making process because they don’t have to wait for the order from the BG’s.
And it gives the company a clear view of inventory planning, central purchasing which reduces transaction cost, and actual demands and so forth. Economics of scale Since the euro-logistics team of Osram GmbH has accumulated experiences of logistic system and now they are independent from the HQ, they act well in replaced DSC and warehouses circumstance. Weaknesses Variables from the replacing warehouses Since the German ownership of stock in the national warehouse, and they want to full-control from the top, there might be conflicts from the BG Managing Directors who have actual stocks.It could lead the loss of reaction speed in exceptional situation. Furthermore there are frictions of multi-cultural diplomacy since they close and fire the local employee, thus it could arising a complex problem of HR and SCM. Opportunities Cost savings Certainly, it is expected to enormous cost reduction from the replacing warehouses.
Simply look at the appendix 4, 781,000 DM savings come from the adoption of new system. Also the levels of the stock held decrease from 3-4 months to 2 weeks, there will be much more cost saving follow. Growing demand for safety and save energyThere is a growing demand that better lighting can improve safety and save energy. Such a new way of demands could bring to Osram a continuous growth in the Europe market which regarded as mature market; even though there are fierce competition still exists.
Threats Intense competition Even though Osram GmbH succeeds to innovate their distribution systems, their rivals try to advance one-step further in their services. GE, the largest company in their industry, they still do M&A so that they get a maximum market size. And Philips, they have a closer look at their Supply Chain Management and try to develop their distribution system.
