Woodmere Products Case Study 1
American Public University
Professor John Turner
23 July 2106
Woodmere Case Study
I. MAJOR FACTS
a. A major manufacturer of window fashions including cellular shades, wood blinds and fashion verticals look to capitalize on an opportunity to create an alliance with a major home decorating retailer and possibly adapting a new time-based logistics strategy in hopes of improving business and efficiency. The retailer operates over 400+ retail locations in 38 states all containing 5% of floor inventory dedicated to window fashions (Bowersox D., Closs E., Cooper M.B.).
b. Manufacturer is currently utilizing a majority “push” logistics strategy through their two manufacturing facilities located in Grand Rapids, Michigan and Holland, Michigan along with 6 distribution centers located across the U.S, 3 of which manages to maintain minimum on-hand quantity of a full line of products (Bowersox D., Closs E., Cooper M.B.).
c. Information Technology is being utilized, however only 40% of the manufacturer's customers are electronically linked to the ordering system (Bowersox D., Closs E., Cooper M.B.).
II. MAJOR PROBLEMS
a. Relationship with current retail company. With the manufacturer's current retail partner suffering from financial deterioration, alternative actions must be taken to avoid further damage to company.
b. Risk of getting involved with another retail company may be too risky in the eyes of upper management.
c. Will the cost of implementing time-based logistics be detrimental to the window fashion manufacturer? Where will this funding come from?
d. Current retail sale trends for window fashions is 25% custom order, while remainder is stocked in-store or regional warehouses. Overall only 40% of the manufacture's customers are electronically connected.
e. Current delivery of only full truckloads, inter-facility transfers and backorders are timely and likely has negative effect on customer satisfaction and brand reputation.
III. POSSIBLE SOLUTIONS
a. Solution 1: Take a gradual approach in terms of manufacturing. Window fashions could adopt a somewhat assemble-to-order type manufacturing strategy where cellular shades, wood blinds and fashion verticals can be manufactured in several standardized size and widths and have the capability to be further modified at the retail location for custom specifications. Partner with the retail stores to provide additional training to the “propartners” and store employees on the modification of window fashions. Reconstruct the current marketing techniques by investing a little on new in-store displays that highlight the various modifications and fit-to-home designs. Implement “Lean” which is a philosophy of manufacturing that emphasizes the minimization of the amount of all resources and minimizes waste (Bowersox D., Closs D., Cooper M.B., n.d.). This process will require an initial down-sizing of the facilities as manufacturing becomes more specific. The facilities initially effected would be the distribution centers that are closest to the manufacturing facilities as new orders can be shipped directly from the manufacturing facilities to the retail locations. There may be some lay-offs or job loss within this process. Management is encouraged to enforce quality control but remain loyal to employees. With some distribution being moved to the manufacturing facility, there will be possibility for transfers to assist in the new operations that must take place. Also with implementing new I.T. approaches, specialized trainers to train retail employees, new marketing tactics and advertisements, there will be many employment opportunities. Shifting further away from storing large amounts of inventory in distribution centers and giving customers more of a customized approach can easily justify a 72-hour delivery time for all products specially ordered or currently out of stock at retail locations. Products that are in stock or doesn't require further modification should be available almost immediately or delivered no later than 48 hours. The biggest innovation that will be instituted is the newly restructured website and introducing seamless connections to the retail POS system. This will give the manufacturing facility instant access to feedback and sales of products, it will give the distribution facilities and management an oversight on most popular items and where they are being purchased on a daily basis to keep the inventory on unpopular items low and more popular items consistently being made and delivered. The constant oversight of sales, tracking and sales trends will minimize the need for forecasting. This is a grand approach and will need a big budget to reinvest in the company. The risk is high however, the rewards could be great as well, with an expected trend that window fashions will continue to grow the company could ensure its position as the best quality for a very competitive price.
b. Solution 2: Implement a time-based delivery system without reconstructing the entire manufacturing process. Manufacturing will be conducted as it always has; however, begin to integrate products into the retail store's POS system to allow some oversight of sales and inventory status. The retail store may have to factor the cost of the POS into customer charges (Anderson,D.D., 1985). Inventory will be managed and stored at retail locations and no surplus in the retail warehouses. The POS and custom order information will be managed by the manufacturer where they will sort the data and determine which distribution center would best service the order at the end of each day. Items not available will be scheduled to be manufactured within 24 hours. After manufacturing the items will be shipped to the distribution center where the initial consolidation of in-stock items occurred and the entire order will be shipped to the customer via for-hire carrier. The biggest risk involved with this solution is likely the collaboration with the retail stores and ensuring the electronic efforts are seamless between the two. The POS system needs to be visible by the manufacturing facility and inventory must be managed perfectly to reduce further delays in shipments.
c. Solution 3: As a variant of Solution 2, instead of waiting until the end of the day to collect data from the POS systems at retail locations, collect data multiple times a day and consistently communicate between retail location, manufacturer and distribution centers. In-store displays will be maximized and emphasize the specialized electronic ordering capabilities. Instead of waiting for full shipments, ship items directly from the closest distribution center that has the product, rather than shipping portions of the order to be consolidated at retail location, then shipped as a full shipment. However, in this process, ensure to notify customers when ordering that partial shipments may arrive to speed up delivery. With implementing a Six Sigma program, manufacturing should soon achieve a very high standards rating. Also, with adopting a new Lean system (as implemented in Solution 1), the general reduction of waste throughout the manufacturing process and the supply chain should reduce the amount of monthly expenses throughout the company. The initial investment with implementing all these programs may seem grand however, positive results should be seen as the expected window fashions trend continues to grow as predicted.
IV. CHOICE AND RATIONALE
a. The primary recommendation for this study would be Solution 3. The perimeters of Solution 1 would likely be too much of an initial investment when the company is already in the process of separating from its current retail location. Since the company is already suffering from the woes of the failing retail line, it would be best to take things slow as far as total renovation. Solution 2 is still implementing some risk as they would creep into its time-based strategy, but the approach would likely be a waste if they are not capturing the attention of customers and fully moving forward with the times. This is the age of information technology and online ordering, shopping, and customization. To take a halfway approach to this opportunity would be like using a spoon to get water out of a leaking boat. Partnering with a new retail location should reap some rewards on both sides. The best way to reap rewards and establish long-term success is through the employees and especially the customers. Providing customized help, quick communication and very fast delivery will prove valuable.
a. If the retail location agrees to arrange a new partnership, the first thing to do is establish an online presence. Capitalize on the fast delivery and communication efforts. “Improved service outputs to target markets indicates a degree of success for a supply chain management strategy of maximizing customer value” (as cited in Iyer, K. N. S., Germain, R., & Frankwick, G.L., 2004). Contractors and renovators will appeal to the fact that if they can't get all the window fashions, that they can always get what's on-hand and the rest will be delivered as soon as possible from the nearest distribution center. Utilize for-hire shipping to maximize this quality. Implementing the Lean/Six Sigma initiatives will prove beneficiary by over the long run saving money, reducing waste and increasing customer satisfaction. Implement customer satisfaction surveys after every sale and invest in media of high quality rating. Improving in-store displays will benefit the retail locations business and appeal as well as overall profits.
Anderson, D. D. (1985). Point-of-sale benefit flows and pricing relationships. The Magazine of
Bank Administration, 61(9), 28. Retrieved from http://search.proquest.com/docview/204140769?accountid=8289
Bowersox, Donald, Closs, David, Cooper Bixby M. (n.d.) Supply Chain Logistics Management –
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Iyer, K. N. S., Germain, R., & Frankwick, G. L. (2004). Supply chain B2B e-commerce and
time-based delivery performance. International Journal of Physical Distribution & Logistics Management, 34(7), 645-661. Retrieved from http://search.proquest.com/docview/232594532?accountid=8289
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