Sustainable Supplier Key Performance Indicators – A Discussion

Problem

Discuss about the Sustainable Supplier Key Performance Indicators.

Fires have become a very rampant problem in the society today. In numerous instances, fires have caused severe damages to people, animals, plants and property. Lack of effective measures to counteract the fires has made it hard to put out fires. The solution presented here is the manufacture and promote the use of fire extinguisher balls to put out fires. Currently, the extinguishing systems used include a fire extinguishing cylinder filled with gas. The cylinders have failed to serve as the most effective extinguishing method, hence the need for development and marketing of a better extinguishing system.

The damage caused by fires cuts across the society, affecting families, property owners, causing loss of lives and emotional problems. This is an ongoing problem since fires are still an integral part of the world. Lack of an effective fire extinguishing system has caused harm and loss of property and lives.

Very fierce fires have been experienced within the last few years. Some of the most devastating fires include:

• The 1283 fires witnessed between January 1, 2018 through May 20, 2018 that burned 7946 acres of land (Fire Statistics, 2018).
• 1049 fires between January 1, 2017 and May 20, 2017 that destroyed 22492 acres of land (Fire Statistics, 2018).
• 1336 fires experienced in California within the past 5 years destroying a total of 10984 fires (Fire Statistics, 2018).

The problem of fires needs to addressed with urgency in order to reduce the effects of the fires on        people and property. Some of the reasons why the fire extinguisher ball needs to be developed is     because of:

• Lack of information on how to use the fire extinguisher cylinders
• Government regulation limiting use of fire extinguisher cylinders
• High cost of fire extinguisher cylinders

Manufacture and marketing of fire extinguishing balls may help to also promote use of gas and other forms of energy such as electricity without fear of fires. Thus, this technology will promote utilization of clean energy as it may be sold at gas stations alongside gas cylinders or installed together with electricity in homes.

Fire extinguisher ball is a fire safety equipment that has been employed for extinguishing the fire in an emergency condition. The fire extinguisher balls can be used for extinguishing purposes in many buildings, school, and colleges all over the nation. If a building does not have any fire extinguishing thing in their complexes then if fire catches then it may ruin the whole building property so using fire extinguisher ball apart from fire extinguisher is a new idea of reducing such problems. The government has the strict instruction of using the fire extinguisher in various industrial, commercial and also in public areas. Due to the high cost of the fire extinguisher, it hampers the growth of this fire extinguisher in the market. But nowadays the market has produced low cost and lightweight fire extinguisher ball and thus the growth of the industry in the market are increasing on a huge amount

Background

Introduction of this new product will help to meet the break-even point of the business as the new product will increase sales. Marketing for this new product line will also enhance general performance of the firm as all other product of the firm will benefit from this marketing activities (Bai & Sarkis, 2014).

To measure the delivery of the fire extinguisher balls, the break-even point of the business will be observed. The company is expected to hit the break-even point in six months after rolling out the new product. In addition, the sales volume and the comparison between the sales revenues and the projected revenue will be employees in measuring the delivery of the new product. The Net Promoter Score and the number of customers will also be used in the measurement of benefit delivery (Velasquez & Hester, 2014).

The performance of the benefit delivery will run hand-in-hand with other aspects such as the extent and costs of marketing. The more the marketing and its comprehensiveness, the more likely the ability of the company to excel in its new product (Matzler et al., 2013).

In coming up with the fire extinguisher ball, the factors used to inform the decision were a consideration of the mass losses that have been caused by fires, and the poor management of fires that has been recorded with the use of fire extinguishing cylinders. The inability to carry around the extinguishers, their high cost and lack of training on the use of the cylinders advised the need to develop a simper and more effective fire extinguishing system.

Manufacture and marketing of the fire extinguishing ball will help to increase the ability to manage fires and reduce the losses that are caused by fire through early extinguishing of fires with a lot of ease.

Strategic Interventions

Intervention 1 Manufacture of fire extinguishing ball as a stand-alone or tagged to other products

Intervention 2 Marketing and sale of the  fire extinguishing balls on media

Table 1 Summary of potential strategic interventions

	Strategic options
	Option 1	Option 2	Option 3
Strategic Interventions	Manufacture and marketing	Manufacture and marketing	Manufacture and marketing	Manufacture and marketing
Intervention 1 Manufacture of fire extinguishing ball as a stand-alone or tagged to other products	Sell as a stand-alone at half the cost of cylinders	Sell as part of electricity installation package at half the cost of cylinders	Sell as part of gas cylinders at two-thirds the cost of cylinders	Sell as stand-alone at similar to the cost of cylinders
Intervention 2 Marketing and sale of the  fire extinguishing balls on media	Website, television, Newspaper & Magazines	Website, television, Newspaper & Magazine	Website, television, Newspaper & Magazine	Website, television, Newspaper & Magazine

Table 2: Strategic options

	Strategic options
	Option 1	Option 2	Option 3	Option 4	Option 5	Option 6
	Sell at quarter the cost of cylinders	Sell at half the cost of cylinders	Sell at two-thirds the cost of cylinders	Sell at similar to the cost of cylinders
Benefits
Percentage of full benefit to be delivered	90%	80%	80%	75%	0%	0%
Benefit 1	Affordability	95%
Benefit 2	Effectiveness & efficiency	85%
Benefit 3	High sales forecast	75%
Cost
Estimated capital investment cost (Range)	$50 mil – $75 mil	$40 mil – $50 mil	$35 mil – $40 mil	$20 mil – $30 mil	$n mil – $n mil	$n mil – $n mil
Estimated operational costs (Range)	$35 mil – $40 mil pa	$25 mil – $30 mil pa	$20 mil – $25 mil pa	$10 mil – $15 mil pa	$n mil – $n mil pa	$n mil – $n mil pa
Time
(Range)	Jan-May	Jan-May	Jan-May	Jan-May	mm-mm	mm-mm
Risks
Risk 1	Huge loss	Lack of raw materials	competition	Huge losses
Risk 2	Lack of raw materials	competition	Huge loss	competition
Dis-benefits
Dis-benefit 1	High sales	High sales	High sales	High sales
Dis-benefit 2	New market entry	New market entry	New market entry	New market entry
Ranking
1-3	1	2	2	3

Table 3: Evaluation of strategic options

The best strategic option to implement would be to sell the new product as a stand-alone item at a cost equal to half the cost of the fire extinguishing cylinders, while advertising on the company website, television, newspapers and magazines. This choice has been informed by the benefits that each of the strategic options present. The selected options has more income and much ;less spending. Sold as a stand-alone, the product would be able to establish itself much more easily that when it is tagged along other products.

Definition of the problem

The number one intervention is the manufacture of fire extinguishing ball as a stand-alone or tagged to other products while the number two strategic intervention is the marketing and sale of the fire extinguishing balls on media. Manufacture and sale of the balls as stand-alone or tagged to other products will ensure that either the product is manufactured and sold on its own or is attached to other products such as gas cylinders in gas stations or electricity installation packages. This solution would include installation of electricity to residents or sale alongside gas cylinder which would provide revenue for third parties who are involved in electricity installation or gas cylinder vending. This would provide window of opportunity to grow the product and enhance utilization as it would come alongside a pertinent commodity. Selling it as a stand-alone provides opportunity for the product to establish its own market and grow steadily. Some of the options in this case include selling the product at varying prices such as half or equal prices as the fire extinguishing cylinders.

Advertising in different media would include use of website adverts, television, newspaper and magazine adverts. This would create revenue for owners of those sites and their managers, but would also create a window of opportunity by spreading information about the products far and large. Both interventions conform to government regulations since they do not contravene government regulations about marketing or sale and manufactures of products.

To the users, this product will enhance effectiveness and affordability. The shareholders will benefit through increased share value. Managers will benefit from improved performance of the organization.

Better housing and confidence to own property due to the ability to manage fires that would discourage people from owning property due to fear of loss. This will lead to general improvement in standards of living (Fitzsimons et al.,2012; Driscoll et al., 2010 ).

Reduced environmental pollution through proliferation of uncontrollable fires. Fires cause release of greenhouse gases which can be reduced by effective fire extinguishers (Driscoll et al., 2010).

Protection of property from destruction will reduce losses incurred from destruction pf property. In addition, better fire management will enhance zeal and confidence to own property leading to increased business activities and economic status. In addition, the manufacture marketing and selling of the product will employ many people, earning them a livelihood (Chuvieco et al., 2012).

Generally, better fire management will help to boost the business confidence. More economic activities will mean more employment opportunities and hence more money in the economy. The more money there is, the better the living standards of people. The government will even be able to employ the money set aside for disaster management for other economic purposes.

Evidence of the problem

The cost incurred in production and marketing is nothing compared to the benefit accrued. The millions of money lost in fires over the past few years can be recovered by ensuring that such fires do not happen again. In addition, being able to save live through cheaper fire extinguishing balls validates the manufacture and sale of the balls.

The initial production and marketing is estimated to cost around 50 to 75 million dollars. Te production time will be four months, while one month will be used for marketing. It is estimated that the sales will earn a revenue of 35 to 40 million dollar within the year. As the demand increases, more balls will be produced.

Potential hazards will be identified through a risk assessment plan that will involve identification of hazards in a workshop. The hazards will be classified based on the people likely to be harmed and in what manner. Next will be the evaluation of the risks in terms of their severity and probability. Finally, possible actions will be listed and a follow-up on the actions and the review conducted. Key risks include high competition, low reception in the market and acceptability, high expenses and change of consumer preferences (Williams, 2014; Vinnem, 2013).

The strategic option selected where the balls will be sold as a stand-alone product at half the price of the fire extinguishing cylinders and marketed on company website, television, newspaper and magazines will serve public interest as it will increase affordability, accessibility and effectiveness of the fire management equipment. The equipment is simple to use and is light hence it is very convenient for use. The ball is also very small and hence can be used conveniently and by young and old people alike.

In order to come up with the stand-along product, suppliers of the different factors needed for the manufacture will be asked to bid, and the best supplier picked based on merit. This will help to control the quality of the operations by ensuring the suppliers are vetted and are up to task.

Increased competition will be problematic since this may lead to reduced profits. To counter this, the company will enhance promoting activities such as lowering prices in order to attract customers (Schwing & Albers, 2013).

Risk	Management strategy
Competition	Price variation and enhanced marketing

Table X: Key risks to the success of this investment

Element	Estimate	Table reference
Base cost estimate	$75m
Base risk allocation	$10m
Project cost estimate	$35m
Contingency	$5m
Project budget	$60m

Table 1: Headline project cost element summary

BASE COST ESTIMATE Effective date of BCE: dd/mm/yy Estimated date of commencement of construction: dd/mm/yy
1	Direct Costs
	1.1	Materials
	1.2	Labour
	1.3	Plant Hire
	Sub total			$ 30m
2	Indirect Costs
	2.1	Recurrent overheads
		2.1.1	Site facilities
		2.1.2	Plant & Equipment – site maintenance
		2.1.3	Project management costs
		2.1.4	Commercial
		2.1.5	QA and Safety
	2.2	Non-recurrent overheads
		2.2.1	Establishment and mobilisation
		2.2.2	Disestablishment and demobilisation
		2.2.3	Project insurances
		2.2.4	Professional fees  – design, legal, financial, etc
	Subtotal			$ 25m
3	Owner’s Cost
	3.1	Contracted professional staff
	3.2	Investigations
	3.3	Land costs & resumptions
	3.4	Authority fees
	3.5	Owner supplied plant and equipment
	Subtotal			$ 10m
4	Contractor’s Fee
	4.1	Profit margin
	4.2	Corporate Overheads
	Subtotal			$5m
5	Provisional Sums
	5.1
	Subtotal			$5m
TOTAL OF BASE COST ESTIMATE	$75m

Table 2: Base cost estimate

BASE RISK ALLOCATION AND CONTINGENCY
6	Base Risk Allocation
	6.1	Escalation	(period between BCE and construction)
	6.2	Project Risk A
	6.3	Project Risk B etc
	Sub total			$10m
7	Contingency
	7.1
	Subtotal			$5m
TOTAL OF PROJECT RISKS	$15m

Timing considerations

Table 3: Project risks

Funding can be sourced through loans from financial institutions. In addition, grants fro the government for innovation can also be a very good funding for the business idea.

The project will be headed by a CEO helped by a manager and two supervisors. This will help to make management clear and keep the chain of command as short and effective as possible. Employees will answer to their respective supervisors who will answer to managers that will answer to the CEO.

Important stakeholders include employees, shareholders, the public and the government. Communication to employees will be carried out face-to-face and through corporate meetings and emails (Hill, 2008). Communication to shareholders will be carried out electronically and through annual general meetings while to the government it will be made through official letters. Communication to the public will be made using social media and official advertisements (Lundgren & McMakin, 2013).

[To deliver in time, suppliers will be vetted based on ability to provide raw materials in time, strict time frames of operations will be followed and the fastest means of transport or finished products will be used.

Output name: Performance Measures	Unit of measure	Change in target if proposal is endorsed 2012-13      2013-14      2014-15      2015-16      2016-17
Quantity	1,000	1000            1200            1500            2000              2200
Quality	Extinguishing time	Extinguishing time
Timeliness	3 days of delivery	3 days of delivery

Should the project fail, the exit strategy would be to produce smaller fire extinguishing cylinders that resemble balls and that would be lighter to carry and safe and easy to use.

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