OMGT 1082: Introduction to Logistics and Supply Chain Management

Assignment 3 (Individual): 40% weight

CASE Analysis Report

Task outline

This assessment task will be based on the Supplied Case Study, which is available on here.
Each individual student will work on a supplied case and will answer specific questions and
submit the report.

The case analysis report is an opportunity for students to demonstrate what they have
learned during the semester on ‘Introduction to Logistics and Supply Chain Management’
course. Analysis of the case will usually require you to consider not just the obvious
problems, but what were the likely causes of these problems. You should discuss each
question logically by using references from academic journals and text book(s). To support
your answer, you can take help from lecture note (put reference as ILSCM 2021 Lecture
Note- week no.), peer reviewed journal articles and authentic websites.

This assignment must be delivered in a report format containing:

Reference style
Reference of all articles and sources of information referenced in the report is mandatory.
Please use (AGPS) Harvard referencing style

Word limit: 2000

1|Page
 The Woodland case study report will be evaluated based on the following:
Total Marks: 40

A. Executive summary (brief): Brief overview of the purpose of the report, findings and
recommendations (2.5 marks)
B. Introduction (brief): Clearly demonstrate case brief, the purpose of the report, key
terms/issues you are going to discuss and the report structure. (2.5 marks)
C. Case discussion questions (25 marks)
1. Supply chain overview : Develop a flow diagram of Woodland product supply chain
(manufacturing, distribution centers, customers), label the network (product flow,
information flow, actors) and critically reflect on product or commodity supply chain you
have studied in assessment-2 (in your group project ) and compare it with Woodland
supply chain. Discuss the pitfalls of Woodland’s current supply chain operations (inventory
management and replenishment process). (5 marks)
2. Supply chain relationship: Discuss existing supply chain relationships and their
implications on supply chain performance: (2.5 marks)
a) relationship between Woodland and HomeDecor, and
b) relationship between Woodland and ‘Home and Living’.
3. Bullwhip effect: What causes bullwhip effects in supply chain? Briefly discuss two
strategies that HomeDecor can use (or is using) to resolve or to minimise the bullwhip
effects in supply chain (Use academic literature to answer these questions). (2.5 marks)
4. The proposal:
a) Discuss how ‘Time-Based logistics’ (like JeanJean’s system) can be processed for
order fulfilments from the Woodland’s distribution centers to HomeDecor stores.
(2.5 marks)
b) What are the benefits and barriers (short and long-term) to “the proposal” for both
Woodland and HomeDecor? What other factors need to be considered to improve
the current proposal for long-run viability? (5 marks)
5. Digital supply chain: Technology has changed the traditional way of doing window
fashion business supply chain. Discuss how the use of technology can help Woodland
and it’s customer (HomeDecor) to improve capability for better customer service, to
reduce operating cost, and to drive supply chain excellence? Critically analyse expected
implementation challenges of digital transformation of Woodland’s supply chain.
(5 marks)
6. Sustainability: What makes a supply chain sustainable and how important is
sustainability in supply chain? (Use academic literature to answer this question). How can
‘Time-based logistics’ (like QuickJeans system) help the Woodland company to
incorporate sustainability into their logistics activities? (2.5 marks)
D. Recommendation/Conclusion (5 marks)
 Conclusion- The conclusion 'wraps up' your report. Briefly summarise the key
points/issues/lessons from the case study.
 Recommendation - List recommendations for approval or endorsement. You can make
recommendations to Woodland and HomeDecor about the current proposal. Do not
confuse with the “Conclusion”.
E. Others: Overall presentation (all topics are clearly explained, easy to follow/clarity of
language, coverage and completeness, page numbers, table of contents), use of
references and citation, conciseness. (5 marks)
 Woodland Products -Case study
Introduction to Logistics and Supply Chain, Sem 1, 2021, RMIT

John Smith had just returned from what may prove to be one of his most important sales
calls. John, a sales representative for a top window fashion (furnishing) manufacturer
Woodland, had been meeting with a representative from HomeDecor, a major home
decorating retailer. It seems the buyer, Nan Peterson, and the product team she heads had
just returned from the annual Council of Logistics Management Conference. At the
conference, Nan’s team had attended several sessions on time-based logistics strategies.
Even though Nan and her team had just been exposed to the new strategies, they felt it had
the potential for significant competitive advantage in their industry.
At the meeting with John, Nan explained that HomeDecor is an entrepreneurial
company that encourages product teams to try new products and channel relations. The few
rules a team has to follow are simple: (1) deal only with manufacturers (no independent
distributors are contacted) and (2) keep costs low and service high. The second rule
highlights HomeDecor’s basic business philosophy. HomeDecor is a design and home
decorating retail chain that follows the warehouse club retail format. As such, a premium is
placed on maintaining low overhead to support an everyday low price (EDLP) strategy.
Service is also a premium since HomeDecor targets two distinct customer segments: do-it-
yourself consumers, who need special in-store guidance; and interior decorators, who need
speedy checkouts and convenient delivery or pickup.
Nan explained that the team has been considering applying time-based logistics
strategies to window fashion products. Such an arrangement had the potential to improve
product availability for in-store customers while reducing overall inventory. HomeDecor’s
close relationship with professional decorators required continued attention to improve its
profitability and to ensure long-term growth. Interior decorators need convenient and
exacting service, and HomeDecor feels that time-based logistics applied to window fashions
could be an important step to improving profitability to ensure long term growth and improve
competitiveness.
HomeDecor’s main concern is that the window fashion industry as a whole appears
to be trailing other industries in terms of sophisticated logistics operations and use of
technology in supply chain. For example. the window fashions industry has invested little in
information technology and maintains high inventories throughout the channel, including at
the retail level. The results other firms reported for their innovative logistics applications gave
HomeDecor a new insight into how an alliance with a window fashion manufacturer might
create a best practice distribution system with lower costs and less inventory.
Nan told John that Woodland had the potential to achieve an exclusive distribution
arrangement with HomeDecor if the two companies could create time-based logistical
capability. Woodland was chosen since the business press had recently featured articles on
its new organisation plan that focused on channels of distribution and leading-edge logistics
strategies. In addition, Woodland was beginning to invest in information technology. Nan felt
both companies should be able to reduce overall channel costs and offer customers superior
product availability. Her specific request was for John to formulate a tentative proposal within
three weeks to strike while the iron was hot. Nan knew the timing and unexpected
opportunity created a great challenge for Woodland, but she explained that HomeDecor
strives to remain leading edge. Furthermore, HomeDecor wants to increase annual growth to
20 percent and feels that Window fashions offers the best opportunities. As such, top
management attention is on this potential business arrangement.
John’s discussion with his sales manager
As John walked to his regional sales manager’s office, it was hard to conceal his excitement.
The potential agreement HomeDecor offered was enormous. However, the effort required to
get all groups at Woodland involved would be great. The first step was to convince top
management of the unique opportunity so that a team could be formed to create the proposal
HomeDecor was expecting.
 John’s boss, Frank Harrison, was on the phone as John walked in. John carefully
planned his words while Frank finished his conversation. As Frank hung up the phone, John
blurted out, “We have got the potential for an exclusive with HomeDecor, but they want a
customized delivery system. The proposal’s due in three weeks. I think we need the top
brass in on this one. It’s big.”
Frank’s reply was typical. “It’s not April 1 (one) again already, is it John? What’s the
problem with our current system? Three weeks! It will never happen.” After John explained
the meeting with Nan, Frank got on the phone to arrange a senior management review.
Surprisingly, a business planning meeting was scheduled for the coming Friday. Frank and
John could get on the agenda under new business. What a break! It was Wednesday and
John began to reorganize his calendar to concentrate on the Friday meeting.
The first item John focused on was researching HomeDecor. He discovered that
HomeDecor operated over 60 warehouse-style stores in Australia with the average store
being over 80,000 square feet and offering 25,000 different products. Typical sales
breakdown is 50 percent wallpaper and draperies, 25 percent accessory pieces, 20 percent
lighting and electrical fixtures and 5 percent Window fashion products. The window fashions
sold include
(1) cellular shades in various designed, plated fabrics; (2) wood blinds in a variety of colours
and finishes; (3) fashion verticals made in fabrics or PVC; and (4) standard aluminium mini
blinds. Woodland is one of the three manufacturers that currently supplies the first three
types of window fashions sold at HomeDecor.
HomeDecor was the industry leader with 10 percent of the $120 billion home
decorating retail market. Forecasts indicate that the market will reach $150 billion in five
years. Industry observers predict that HomeDecor is positioned to enjoy up to 20 percent of
total industry sales. HomeDecor is also the first major player in its market to offer online
ordering, their competitors online/internet pages offer product and store information only.
Online sales are estimated to increase to $500 billion by year end. HomeDecor is anxious to
see how its online services can be expanded to manufacturing partners to reshape the
business and ordering processes.
HomeDecor is dedicated to service. In-store classes illustrate design techniques,
repair and installation procedures on wallpaper, drapes, and lighting and electrical fixtures.
The classes are taught by HomeDecor’s employees, most of whom are retired or part-time
professional decorators and contractors. HomeDecor provides installation service in a
majority of its stores as well as professional decorating services. Both services are offered
on a fee basis.
Forty percent of HomeDecor’s sales involve professional decorators. The remaining
60 percent come from do-it-yourself consumers. The professional segment is quite large,
and HomeDecor works closely with this group to meet service requirements. The
Propartners also tend to be technically sophisticated and this are using Internet to price
competing products as well as compare lead times. Nan would want to involve a group of
clients in the Propartner Program in an evaluation of any new strategy.
Second, each HomeDecor store’s inventory is restricted to display items plus a
limited stock of fast-moving products. Typically, only 20 percent of all customer orders can
be filled from store inventory. This is for two reasons: (i) only standard sizes are held in
inventory , and
(ii) typically only high trend colours and fabrics are held in inventory. As such, if a store does
not have a specific piece of furniture, an order for the item is forwarded to a regional
warehouse where the item is taken from inventory and sent to the store the following day. If
the order is highly customised, then a custom order must be placed with the manufacturer.
Window fashions from the regional warehouse are available for delivery or customers can
pick up 2 days after the original order, assuming the warehouse has stock. If the regional
warehouse is out of stock, the piece is typically not available for shipment or pickup for 5 to 7
days because an interfacility transfer or manufacturer shipment is required.
Currently 25 percent of all orders for window fashions are custom orders. The
remainder are standard products held in inventory at the store or the regional warehouse.
However, custom orders are expected to increase as customers select non-standard size
windows. Propartners also indicated to Home Décor that the trend is toward more cellular
shares and wood blinds rather than standard mini blinds and draperies.
Since many Propartners are working on remodeling/redecorating projects,
unexpected problems and delays can easily cause schedule changes. On a day-in and day-
out basis, the exact time of furniture delivery and installation is difficult to accurately gauge.
Propartners would like to be able to place an order 48 hours (or less) before the expected
completion to reduce cost of rescheduling. Working on shorter timetables would improve
their efficiency and cash flow and is perceived by Propartners as a major benefit. Currently,
Propartners buy mostly from independent distributors who have more flexible delivery
programs.
Friday’s meeting was long. Frank and John weren’t scheduled to present until near
the end and they hoped it wouldn’t run overtime, forcing them to be rescheduled. Finally, it
was their turn. Frank started the presentation and discussed how long and hard a struggle it
had been to develop a relationship with HomeDecor. Then John spoke of the benefits. He
built on the need to develop new business relationships because Woodland was involved in
an alliance with a retailer in financial trouble. This retailer, Home & Living, had historically
accounted for 25 percent of Woodland’s sales, but this figure was dropping dramatically.
Home & Living’s erratic purchases were creating under-capacity in Woodland’s
manufacturing facilities.
Furthermore, HomeDecor had a relationship with decorators, a customer group that
Woodland had been targeting under its reorganization plan. Woodland’s image was as a
value leader good quality Window fashions at a low price. Attracting professional decorators
to its products would definitely enhance Woodland’s image. Furthermore, Woodland hoped
to have some direct contact with professional decorators to get firsthand information on
upcoming fashion trends.
Finally, an exclusive arrangement with HomeDecor appeared critical for the future.
Window fashions manufacturing is heavily consolidated among a few key players, meaning
stiff competition. While the home decorating industry remains heavily fragmented,
HomeDecor is a leader and appears positioned to grow faster than competitors. Even though
HomeDecor currently only has 10 percent of the market share, they have unlimited growth
potential and are often referred to as the Walmart of the home decorating industry.
Reaction from senior management was mixed. While many were excited about the
potential, they were also cautious. The long-term relationship with Home & Living that had
prospered for 50 years was clearly becoming a potential problem for Woodland. Relying on
Home & Living had created a false sense of security, and when Home & Living suffered
financially during the recessions, Woodland also suffered. Furthermore, Home & Living’s
reputation as a quality retailer was beginning to decline. In fact, it was getting the reputation
for providing low-quality, outdated products. Top management was afraid to launch another
close relationship that tied Woodland’s success to another company. Frank responded that
HomeDecor had achieved at least 10 percent growth each year for the last 15 years, even
though the recessions. The main reason for this growth was its advertising strategy, which
convinced consumers who couldn’t afford a new home that they could afford to
remodel/redesign their current one.
Another concern was the shift in traditional operations necessary to support a
customized delivery system. While no concrete evidence was available on the exact
requirements of customized delivery, it was still apparent that the service being requested
was unique and non-traditional and might require major reorganization and financial
investment. Also, several board members wondered how traditional customers, not
interested in time- based logistics, would benefit. Their specific concern was that the
commitment to HomeDecor would increase the overall cost of doing business with all
customers. In short, some customers would be over serviced at a cost penalty. There was
also concern that Woodland’s current system could not provide the service HomeDecor
required.
John agreed these were serious concerns, but reminded the group of the potential
benefits that could result from a successful shift to time-based logistics. Not only was the
exclusive agreement with HomeDecor important, but this “test case” with a major retailer
could forge a leading-edge path for Woodland, resulting in difficult-to-duplicate
competitive
advantage. Furthermore, John was convinced that HomeDecor would make a move to time-
based logistics in the furniture segment with or without Woodland. After extended discussion,
the group decided to assign a task team, with John as the leader, to take the steps
necessary to determine if an arrangement with HomeDecor was in Woodland’s best interest
and, if so, to develop the requested business proposal. The proposal would need approval
before the presentation to HomeDecor. A special review meeting was scheduled in 2 weeks.
First, John felt the team had to detail Woodland’s current operations. Then, an
appropriate time-based system would need to be defined and compared to current
operations to isolate changes necessary to offer excellent service support. A modified
system would also need to be outlined and the cost and benefits determined. The issue of
coexistence of current and time-based response capabilities was also a concern.
Current SC Operations of Woodland
Woodland currently has two manufacturing facilities and six regional distribution centers.
One manufacturing facility is located in Tasmania, while the other is in China. The
Tasmanian facility produces fabric-covered items, such as cellular shades. The plant in
China produces wooden blinds. The six distribution centers are located throughout the
Australia with one adjacent to the manufacturing facilities. Orders are received from
customers electronically as well as by phone through sales representatives. Only 40 percent
of Woodland’s customers are electronically linked to the ordering system.
Woodland’s manufacturing facilities forecast sales to create the production schedule.
Forecasts are locked in 6 weeks prior to assembly. Three of the distribution centers carry a
full line of product inventory and seek to maintain a minimum on-hand quantity for each
product. When inventory hits the predetermined minimum (re-order point), a restock order is
sent to the appropriate manufacturing facility. The other distribution centers stock only the
fast- moving products. When a customer order is received it is assigned to the distribution
center closest to the customer. If the product ordered is not available, the required item is
transferred from the closest distribution center that has the required stock. If multiple
products are ordered, the original order is held until the out-of-stock item is available to ship
so customers receive all requirements in one delivery. No shipments are sent directly from
the manufacturing plant to the customer; all orders are processed through a distribution
center.
Woodland’s customers are dealers at the retail level who maintain their own inventory
of Woodland’s products. When customers’ inventory is low, they place replenishment orders.
These orders are transmitted to Woodland’s designated distribution center. Distribution
centers review their orders nightly in an effort to consolidate truckloads and schedule
efficient delivery routes. When a full load is available, orders are assembled and loaded to
facilitate sequenced delivery. Typical order cycle time is 3 to 6 days when inventory is
available at the initially assigned distribution center. Interfacility inventory transfers typically
add 2 to 3 days to the order cycle. When an item is backordered to a manufacturing plant, 8
to 12 more days are added to the order cycle. When factory backorders are required, a
partial order may be sent to the dealer or retailer; however, no firm policy exists concerning
when to ship and when to hold partial orders. Currently Woodland uses a national for-hire
carrier to handle all its outbound deliveries to customers and interfacility movements
between distribution centers. This carrier is already working with food and clothing customers
that operate on a time-based logistics system.
Time-Based Logistics
John felt it was important for the task team to talk with a representative from another
company concerning its experience with time-based logistics. John contacted an old college
roommate working at JeanJean, a clothing manufacturer, to see if he could help. John’s old
roommate, Phil Williams, arranged for John’s team to visit JeanJean to discuss QuickJeans,
its proprietary time-based system.
In JeanJean’s system, retailers play a major role. When a product sells in a retail
store, the bar code on that product is scanned, and the POS information is transmitted
electronically to JeanJean. POS data detail the size, colour, and style of product sold and
are transmitted
directly to JeanJean’s manufacturing facilities where they are used to derive production
schedules in response to consumer sales. Rapid movement of information replaces the need
to forecast. To the Woodland team, it looked as though information was being traded for
inventory. Product replenishment was exact and done within days of the sale depending on
each retail store’s volume. For example, high-volume stores receive daily replenishment
shipments whereas lower volume retail outlets are served less frequently. The time-based
system was flexible and able to accommodate a variety of different replenishment styles
based upon individual retail customer requirements.
This type of system reduces response order cycle time and inventory. Since delivery
is tied to actual sales, consumer trends are responded to quickly, reducing obsolescence.
Furthermore, daily or weekly replenishment cycles allow the retail outlet to carry significantly
less inventory while improving stockout performance. JeanJean was also able to reduce
inventory by 20 percent by timing production to POS data. This reduction was even more
impressive when JeanJean explained that its sales increased by 25 percent. Even though
transportation cost doubled, it was more than justified by the savings in inventory and the
benefits of knowing for sure that product was needed to service customers.
The QuickJeans solution was technology driven. EDI used to transmit POS data and
bar codes were essential to making the system work. EDI was also utilized for invoicing and
payments, advanced shipment notification, and delivery verification. This reduction in
paperwork and clerical tasks benefited both JeanJean and its customers.
To implement QuickJeans, JeanJean had to change its fundamental business
processes not just with its customers but also within its manufacturing plants. Flexible
manufacturing required quick product changeovers to be fully responsive to the POS data.
Furthermore, the ability to produce small runs of necessary product was a key requirement.
The management at JeanJean pointed out that one of the most difficult parts of
implementing time-based logistics was the sales decline that resulted from “deloading the
channel.” This “sales hit” was created by the false sense of expected sales and anticipatory
inventory that resulted from manufacturing according to forecast, not to actual need.
JeanJean had to wait until inventory at the retail stores, retail warehouses, JeanJean
warehouses, and manufacturing facilities moved through the channel system before
QuickJeans began to work and show the expected benefits. This created tension among
JeanJean’s top management because it was a cost not originally expected when they bought
into the QuickJeans program.
The main cost to implement QuickJeans was the investment in technology. For
example, JeanJean invested over $1 million in scanners, lasers needed to make distribution
operations fast and efficient, and ticket printers to label products with retailers’ unique bar
codes. Key retailers spent close to the same amount to purchase new equipment to scan the
bar codes. This investment was not a one-time deal, either. The need to reinvest to upgrade
technology has remained constant from the start. Some retailers, especially locally owned
stores, didn’t want to participate in QuickJeans because of the initial investment. However,
the retailers that participated were so pleased that most have placed JeanJean on their
preferred supplier list.
JeanJean provided John’s team with a flowchart of its QuickJeans operation as
shown in Figure 1. The chart shows that daily transmission of POS data, as well as any
promotional specials, is provided by the retailer. This information is used to calculate an
initial production schedule. Inventory already on-hand in JeanJean’s warehouse as well as in
its retail customers’ storage areas is subtracted from the schedule, creating production
requirements for all JeanJean’s products. These requirements are reviewed by an order
specialist, who creates a final production schedule that is transmitted to the appropriate
manufacturing plant. This order specialist also manages orders from retailers that are not
involved in QuickJeans. All products are bar coded after manufacturing as required. Delivery
is initiated by an electronic Advanced Shipping Notification (ASN) to tell the retailer what
products are on the way. Delivery is direct to the retail store unless an alternative delivery
site is specified. When the order is received at the designated location, the bar code is
scanned and compared to the ASN and invoice. If the information matches, the retailer pays
the invoice electronically.
 Pull Pull
JeanJeans Retailers
Consumers

Daily POS
Independent consumption patterns
Forecast Promotional information

Store/Warehouse Inventory
Status

Requirements

Order
overview ASN
Order process and delivery Invoice
Payment
Production Confirmation

Figure 1: QuickJeans: A Time-Based Logistics System

The Proposal
John’s team was finally ready to present its time-based delivery system to top management
and they hoped the proposal would be accepted. The presentation to HomeDecor was
scheduled in 3 days. The Woodland task team had worked hard and was confident their
proposal had strong selling features for both Woodland and HomeDecor. The special
meeting with top management was called to order.
The task team called the project “Customized Distribution: Creating Time-Based
Customer Response” and began discussing how the proposal was developed, including the
meeting with JeanJean. The team felt that Woodland could benefit greatly from accepting the
HomeDecor challenge.
Each HomeDecor store will transmit POS data on furniture sales at the close of each
day. HomeDecor will not carry any Woodland inventory in its regional warehouses and will
carry only a limited amount of furniture and display items in each store. The POS
transmission will include furniture items actually sold from inventory at the store and the
furniture ordered, but not in stock. The POS transmission will be sent to a central information
service. The information service will sort the POS data and compare them to inventory on
hand at each Woodland distribution center. Furniture in stock will be consolidated, while
those items that are not in stock will be added to the production schedule and manufactured
the next day. After manufacturing, the products will be delivered to the distribution center
where initial consolidation of in-stock items will occur, and the entire order will be shipped out
to the customer. After shipment, the on-hand quantities at the distribution centers will be
examined to determine if a replenishment needs to occur. If the on-hand quantity is too low,
a replenishment order will be sent to the appropriate manufacturing. plant.