South West Trading is a small business that had created demand for its line of yarns made from bamboo, corn, and soy fibers, but it couldn’t supply it fast enough. The factory cranked out 500 to 800 metric tons of yarn each month. Its skeins were stuck somewhere between its manufacturing plants in China and its warehouse in Phoenix, and it had no easy way to track its orders. The company kept $1 million worth of excess inventory in Phoenix to ensure that it could meet orders. South West Trading had no way to combine products from different Chinese factories into one oceangoing container, so it paid a freight forwarder $1,000 to $2,000 to send each small shipment separately, at an annual cost of more than $100,000. A trucking company picked up the goods in the Port of Los Angeles and

Question

transported them to Phoenix at a cost of $20,000 a year. Each trucking shipment could take as long as 18 days to get to Phoenix. The company solved its problem by hiring UPS, which in recent years has been aggressively marketing the work of its Supply Chain Solutions division to small-business clients. Which management function did South West Trading need to use to achieve its organizational goal of improving distribution?

A. benchmarking.
B. goal-setting
C. control
D. implementation
E. suboptimization

Answer 1