MGT 320 – Operations Management (Fall 2020) Due Date: Dec 1st, 2020
MGT 320 (A) – Assignment 2 Page 1
Supply Chain Assignment
Please review the Lakewood Motor Corporation case-study and answer the assignment questions:
Lakewood Motor Corporation (LMC) is headquartered in the City of Edmonton for over 2 decades. Tim
Delaney, CEO of Lakewood Motor Corporation, just returned after visiting his latest dealership acquisition. It
was the 5th Lakewood Motors dealership in their network that serves the Edmonton metropolis of one million
people. In addition, northwest of the City of Edmonton is the city of St. Albert located on the Sturgeon River
with a population of 70,000 people. In the south is the city of Leduc with a population of 50,000 people. Further
in the eastern boundary is Sherwood Park, a large hamlet in Strathcona County with a population of 75,000
people. Each of the dealership in the LMC network marketed a different brand of vehicle and have traditionally
Tim is excited about this new dealership since it is the first “Auto Super-market” in the LMC network. The
Auto super-markets are different from traditional dealership because they are setup to sell/service multiple
brands of vehicles at the same location. This new dealership boats of 30,000 square foot facility selling the full
line of Toyota, Honda and Nissan in the same facility.
Lakewood Motor Corporation was birthed two decades ago with the purchase of a bankrupt Ford dealership,
and has grown steadily in size and reputation. Tim attributes the success of his business to 3 critical strategies.
The first strategy is “Customer First” strategy in everything they do. The second strategy was “hassle free
buying experience”. Each vehicle on the floor is identified with the “lowest price tag” attached to the vehicle,
which allowed customers to freely browse without the pressure of a pushy salesperson. If customer’s had a
question or wanted to drive the car they would approach the Customer Service desk located at the centre of the
sales floor. The customer service desk on the sales floor was staffed with highly skilled and knowledgeable
sales members with impeccable customer first orientation. Tim thought that the third strategy for retaining
customers for life was to deliver a memorable after sales service. Tim developed a robust service department
driven with a reputation of servicing, diagnosing and repairing vehicles properly on a timely basis.
High quality after sales service depended on a three essential components. First, was the presence of highly
qualified and well-trained service technicians. Second, was the use of the latest tools and technologies for
appropriate diagnosis and repair activities. Third, was the availability of full range of parts, materials and
supplies necessary to complete the repairs on a timely basis. Tim had invested in the modernization of their
tools and equipment for timely repairs. He subscribed to TPS lean management system for training LMC
management, staff, technicians and other personnel. Tim worried about the LMC supply chain and their ability
to manage inventory on a timely basis. He worried about the supplier relationship process and the management
of service parts and material flows in the system. Tim was constantly worried about the continued availability of
right parts and materials for the store and service department. Tim observed that their stores had low inventory
turnover ratio and there was high levels of parts or inventory in the stores. The management of the supplier
relationship process and service parts/material flows in the supply chain was not consistent. Tim had read of
business cases where organizations failed since they had not prepared for growth and growing demand of
Currently each of the 5 dealership purchase their own service parts, supplies and materials independently based
on their forecast derived from historical demand data which accounted for seasonality. Batteries and alternators
had a high failure rate in Winter while air-conditioner parts are in high demand during summer. Similarly,
coolants were needed in the spring to service air-conditioners for the summer months whereas antifreeze was
MGT 320 – Operations Management (Fall 2020) Due Date: Dec 1st, 2020
MGT 320 (A) – Assignment 2 Page 2
needed in the Fall to winterize automobiles. Demand forecast was adjusted for special vehicle sales and service
One of the growing complexities of managing service parts and supplies was exhaustive SKU list that had to be
stocked at service centers. Some of these parts would be used for repairs while others sold over the counter. The
procurements of parts varied and some of the OEM parts had to be purchased from Toyota, Honda and Nissan
suppliers while others parts and material such as oils, lubricants, filters, fan belts were procured from other
suppliers. The purchasing department had to remember that the success of a dealership depended on
(1) Supplying the right parts at the right time to support fast reliable after sales service and (2) lowering the
costs to support hassle free one price – lowest price service concept.
As Tim thought about procuring parts, materials and supplies for his business he wondered how he would
allocate space and financial resources to invest in parts and supplies. The acquisition of the 5th Lakewood
Motors dealership had added additional strain on both finances and space. The need to support 3 distinct
manufacturer lines in the same facility was a mammoth task. With the current pandemic and economic situation,
investment dollars were scarce and space was at a premium. Tim was wondering what could be done in the area
of procurement, inventory and supply chain management to address some of the concerns and alleviate some of
(1) Identify some supply chain management strategies that will improve supply chain performance
for Lakewood Motor Corporation?
(2) What recommendations would you provide to address the space and financial challenges of
Lakewood Motor Corporation?
(3) What recommendations would you make to Tim Delaney with respect to procurement of parts,
supplies and materials for dealership network of Lakewood Motor Corporation?
(4) Identify atleast 3-4 inventory management technique that will benefit Lakewood Motor
Corporation. Explain the specific benefits of each recommended technique.
Total Marks: 20
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