Global Value Chain
International Sales and Marketing
Global Value Chain Management and Planning
Signed, Sealed and Delivered
Plexet is a mid-sized manufacturing firm located in Auckland, New Zealand. The company
produces a range of plastic containers that includes its flagship product range, Goodseal. The
Goodseal brand includes a range of plastic food storage containers, designed to be sold to
retailers and grocery stores for home use. The containers are sold in three- and six-packs, in
three different sizes: 0.25L, 0.5L and 1L. They are typically marketed to consumers for food
storage in the refrigerator or freezer. Currently, Plexet has achieved a 9 percent annual sales
growth over the past five years. Within the manufacturing plant, the company is running three
shifts at full capacity, although the plastic moulding equipment is running at only 58 percent of its
optimal production capacity. Production levels fluctuate frequently, and Plexet adjusts its labour
schedule around its forecasted sales demands. The sales manager is concerned about sluggish
sales over the past six months, and is aware that manufacturing targets are based on the recent
sales forecasts. Having excess product is of concern to Plexet management. Therefore,
increasing production is not a strategy it will adopt to help boost quarterly sales targets. Instead,
Plexet is considering offering a discount to its suppliers, as well as adopting a new marketing
strategy that will offer consumers coupons to buy one Goodseal product and receive a three-pack
of 1L containers free of charge.
Plexet does not receive as many orders for the 1L Goodseal container from its suppliers as it
does for other container sizes, leading to a decision to discontinue the 1L product and focus
manufacturing efforts on the more popular sizes. This will enable the manufacturing plant to
replace the 1L moulds with 0.25L and 0.5L components. This may help alleviate the low 58
percent rate of production, because there will be more equipment to handle the production of the
two remaining product lines. Managers believe this will increase production levels. The coupon
strategy is designed to help move some of the obsolete 1L product from its inventory, in addition
to retaining consumer loyalty with the smaller sized products. The manufacturer will implement
the sales and production strategies over the next fiscal year.
What is promising for Plexet is a recent order from Chinex, an exporting agent that sells to China.
The agreement stipulates that Plexet will ship 25,000 cases of the entire Goodseal line to Chinex.
This could not have come at a better time, because the order will be placed in time to meet
Plexet’s quarterly sales target. To expedite the sale, Chinex has been offered a significant
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Global Value Chain
International Sales and Marketing
discount. Chinex has agreed to send payment within seven business days, and pay by letter of
credit from a reputable Australian bank.
Meanwhile, Back at the Retail Store
Plexet has a reliable supplier relationship with a large retail chain, KiwiMart (KM). The head of
purchasing at KM acquired 4000 cases of containers this quarter at a 4 percent discount from
Plexet, but has sold only 1800 over the last two quarters. She decided that KMs in regions outside
Auckland would also benefit from the discounted price, and has sold 1800 to them. In addition,
she sold 400 cases to a wholesaler at cost, with a negotiated deal to buy them back at a 3 percent
premium within 90 days if KM needed the supply. This has helped the other KMs throughout the
country, as well as solved any inventory issues with the Auckland KM. The plan is for the Auckland
KM to discount 1000 cases for a special in-store promotion.
Soon after the deal with Plexet had been negotiated, Chinex contacted the head of KM’s
purchasing department. It offered a significant 7 percent discount on 5000 cases of assorted
Goodseal products. The deal was far too good to be ignored, and KM accepted. The sales
department contacted Plexet and cancelled its next three orders. KM received the Chinex
products over a month late.
Unfortunately, the purchasing manager was unaware of the situation on the ground in the local
KM. The shelves holding the Goodseal line had an ample supply of the 1L six-packs, but no other
size was on the shelf. Worse yet, Plexet’s competitors were stocked next to the Goodseal line,
and had a full line of product sizes and quantities per pack.
What’s the Problem?
Plexet is under the assumption that it has a sales crisis. Forecasted demands are higher than its
current rate of sales. It has decided to help resolve this by adjusting its product line and adapting
its production line to manufacture more products that sell faster. Offering coupons would help
boost sales and consumer loyalty. The purchasing department at KM believes it has addressed
a potential inventory crisis, is secure in the amount of supply it has acquired, and has perhaps
even boosted its bottom line through the recent acquisition of the cheaper Goodseal product from
Chinex.
Learning Outcomes
This case study relates to the following learning outcomes from the module Inventory
Management in the course Global Value Chain and the module Selling to International Markets
in the course International Sales and Marketing:
• Build inventory systems through a strategic approach to control inventory levels and
financial risks when exporting and/or importing on a global basis.
• Manage relationships with sales channel partners to ensure that the organization’s needs
are being met, as well as those of sales channel partners and customers.
• Ensure efficient delivery of products and services and provide after-sales support to meet
commitments and enhance customer relationships.
• Measure, collect and analyze data about customer behaviour and organizational sales
activities to maximize future sales.
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Global Value Chain
International Sales and Marketing
Case Study Questions
1. Explain how conducting an organized and systematic sourcing process would benefit the
purchasing department at KiwiMart (KM).
2. What form of partnership would help improve both KM and Plexet’s supply chains? Explain
your choice.
3. How would Plexet benefit from adopting a JIT approach to production?
4. Explain the advantages KM and Plexet would receive from implementing an inventory
management system.
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Global Value Chain
International Sales and Marketing
Photo Attributions
Photo #1 (Water bottles)
Attribution: No attribution required Licence: Public Domain
pixabay.com/en/bottles-plastic-bottle-bottle-60477
Photo #2 (Pallet)
Attribution: No attribution required Licence: Public Domain
pixabay.com/en/pallet-goods-freighter-transport-1665471
Photo #3 (Flow chart)
Attribution: No attribution required Licence: Public Domain
pixabay.com/en/mark-marker-hand-leave-516277
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