| KG Tools | Operations Management Evaluation | | Candice Brooks | |

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A.
Supply Chain Strategy
Supply chain Strategies: Vertical integration | * Developing the ability to produce goods or services previously purchased * Buying a supplier or distributor | Few suppliers | Long term relationship with few dedicated suppliers | Many Suppliers | A supplier responds to the demands and specifications of “request for quotation”, with order going to the lowest bidder | Joint Ventures | Formal collaboration | Keiretsu Network | A Japanese term that describes suppliers who become part of a company coalition |

It is recommended that KG tools select the Keiretsu network as the company’s supply chain strategy. The strategy is recommended because of its versatility. The tool company need to be able to respond quickly to the need of their customers. Keiretsu is a hybrid of purchasing from a few suppliers approach and vertical integration. The Japanese Word Keiretsu describes suppliers that become part of the company’s coalition.
There are two different types of Keiretsu. Horizontal keiretsu are usually organized around a bank and consist of a variety of companies that perform different functions. Vertical keiretsu, are composed of a major industrial corporation and its suppliers in a particular industry. These vertical keiretsu are "held together by fairly predictable transaction patterns and based on implicit long-term contracts, financing and equity ownership. In a vertical keiretsu, the corporation is at the center of operations dominating its family of parts manufacturers and suppliers. One of the most often cited advantages of the keiretsu system is that it allows member companies to plan on a long-term basis, rather than having to focus on short-term profits. Keiretsu will give the tool company’s supplier a guaranteed customer,