Grainger: Re-engineering an International Supply Chain

by: Amitabh Sinha

Publication Date: December 10, 2010
Length: 17 pages
Product ID#: 1-429-084

Core Disciplines: International Business, Operations Management/Supply Chain, Strategy & Management

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Teaching Note

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Grainger is a distributor of MRO (maintenance, repair, and operations) equipment, based in the US. Most revenues were from the US in 2008, but Grainger was positioning itself to expand its limited global presence. Grainger was increasing the volume of private-label products, which offer higher margins and meet price points. These private label products were sourced primarily from China, by a separate business unit (Grainger Global Sourcing, or GGS) within Grainger. The GGS network, as of 2008, had significant cost inefficiencies. Furthermore, the network was not well-suited for increasing global sales of the private label products. The task in the case is to re-engineer the supply chain to improve efficiencies and better position Grainger for global growth.

Teaching Objectives

After reading and discussing the material, students should:

  • Illustrate how a company’s supply chain is engineered for optimal distribution of its products, given the characteristics of the products and end consumers.
  • Understand the operation of an international supply chain, following the flow of products from manufacturers in China to end consumers in the US and elsewhere.
  • Quantitatively assess the financial impact of operating consolidation centers in China, as opposed to the current practice of having suppliers ship directly to the US.
  • Quantitatively assess the financial impact of re-engineering the supply chain in the US by operating an additional primary import distribution center.
  • Assess the impact of this supply chain re-engineering related to positioning a company for global growth.