Instructor’s Manual Abstracts
Vol. 2, Issue 2 IM Abstract: Pipework Warehouse Inc.: Managing Disruptions in Supply and Demand
Fatih Yegul; Jane Gravill; and Juliet Conlon
Case Overview
This case explains the challenges faced by Pipework Warehouse Inc. (PWI) when the global supply chains had to endure several major disruptions. Established in the 1960s and located in Ontario, Canada, PWI was a steadily growing company in the expanding market of HVAC (heating, ventilation & air conditioning) and plumbing parts before the disruptions.
Disruptions and uncertainties caused by the Covid-19 pandemic and other global events created various kinds of difficulties for PWI during 2020 and 2021. The sudden shifts in the supply and demand patterns forced PWI to make drastic changes to its business operations. Early in the pandemic, with unprecedented quick drops in demand, PWI had to shrink in size to remain financially stable. However, as the demand volume unexpectedly jumped back to its pre-pandemic levels within months, PWI found it hard to grow at the same pace due to shortages in the labour market.
During the summer of 2021, PWI was dealing with new challenges. The bullwhip effect triggered by the sudden shifts in consumer preferences at the onset of the pandemic started to impact the supply and demand balance causing price inflation and material shortages. PWI, in pre-pandemic times, received once-a-year price updates from suppliers; but now the updates were applied quarterly, amounting to 50% annual hikes for some items. Material shortages meant much longer lead times from vendors. Troy Gilbert, a category manager at PWI, was asked to meet with the management team to help them make some critical discussions. Gilbert needed to recommend a strategy to management regarding how the company would deal with the frequent price hikes and manage their sales channels and inventory at a time of limited supplies while trying to avoid considerable damage to the customer service levels.
Learning Objectives
By working through this case, students should be able to
- Distinguish between alternative capacity management strategies during significant demand fluctuations.
- Evaluate ways to overcome capacity problems when faced with shortages in the labour market.
- Assess effective inventory/sales policies under inflationary pressure.
- Evaluate the strategies used to handle supply shortages and rationing policies.
- Assess the need for customer rationalization when supply falls short.
- Analyze and interpret the causes and implications of the bullwhip effect in supply chains.
Course Suitability
This case study is ideal for undergraduate-level supply chain management courses but can also be used in MBA programs, positioned towards the end of the course once students have gained an understanding of the concepts. It can stimulate more advanced discussions in MBA-level programs regarding the causes of the global bullwhip effect at times of crisis and inventory/sales policies under inflationary pressure. Additional discussion questions tailored for MBA students are also provided.
Recommended Reading
sarenegue. (2015). The Bullwhip effect …in less than 3 mins! [Video]. YouTube.
Tardi, C. (2021, April 25). LIFO vs. FIFO: Inventory valuation explained. Investopedia.
Wisner, J., Keah-Choon, T., Keong Leong, G. (2022). Principles of supply chain management, (6th ed.). Cengage
Zighan, S. (2022). Managing the great bullwhip effects caused by COVID-19. Journal of Global Operations and Strategic Sourcing, 15(1), 28-47.
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