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Supply Chain Management at World Co. LTD Case Solution

Solution Id Length Case Author Case Publisher
1115 1234 Words (3 Pages) Ananth Raman, Anna McClelland, Marshall L. Fisher Harvard Business School : 601072
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World Co. has been able to streamline its supply chain highly effectively. Lead times for restocking at stores are two weeks whereas designing, producing and shipping new products to retail outlets takes six weeks. These short lead times reflect a very strong and efficient supply chain system at the company. The fashion industry is highly dynamic and requires stealth in terms of adapting to changing trends. Management had the focus of ensuring the right product was available at the right place at the right time. For this, the supply chain of the company played a pivotal role. The supply chain management system used at the World is called the SPARCS system. The system has been able to integrate various functions and departments at World such as dyeing, suppliers, manufacturers, etc.

An important feature of the supply chain is the demand forecasts. At World, demand forecasting was done in two steps. Firstly, the estimates or initial demand forecasts were outlined. Secondly, these initial forecasts were updated based on actual sales data. Moreover, a PDCA (“Plan Do Check Act”) cycle was implemented. The accuracy of past orders was traced, causes of forecasting errors were understood and lessons learned from past mistakes were incorporated in future forecasts. Aggregate demand forecasts were made based on cumulative SKU demand forecasts. Two sets of calculations were undertaken. Firstly, the distribution side forecast which comprised the aggregate demand for each store through the Market Management System (MMS). MMS took into account various historical trends, growth rates, accounted for seasonality, competitor behavior, and changing macro-economic variables. The category side forecasts were chain-wide sales plans for certain product categories. The chain-wide sales plans were based on historical figures, advertising budgets, and growth targets.

Following questions are answered in this case study solution

  1. How do the features of the World’s supply chain explain the company’s remarkably short lead times (relative to the US apparel supply chains)?

  2. Can World’s supply chain processes be replicated at other apparel companies? What about non-apparel supply chains? Identify potential barriers.

Case Analysis for Supply Chain Management at World Co. LTD

Another important feature of the supply chain was the ranking of individual SKUs. SKU level forecasts were arrived at through the Obermeyer method. Voting was conducted for various SKU’s and rankings were given based on the votes. Store managers and assistants were invited to look at the new collection and vote. Based on the voting process a mean and standard deviation score was obtained for each SKU. Sorting was done based on the mean scores and then standard deviation scores. The ABCD analysis enabled them to predict demand and supply SKU’s in accordance with that. Moreover, the demand forecasts were updated through the life cycle of the products. Sales forecasts were revised as soon as sales data started pouring in. This streamlined the forecasts, and the updated forecasts were far more accurate.

Inventory and production planning also played an equally important role in the supply chain at World Co. This department was based on the Accurate Response approach that took into account the costs of overstocking and understocking. This Accurate Response Approach entailed three steps i.e. materials preparation, first order quantity, and replenishment quantity. These were carried out through the help of spreadsheets and merchandisers updated the forecasts at regular intervals. Based on the SKU demand forecasts, merchandisers approximated the amount of material that needed to be ordered. Moreover, standard length zippers and buttons were also stocked in ensure no time is lost due to lack of material availability. A portion of the SKU demand was ordered initially as part of the first order quantity. Lastly, once the product was launched the merchandisers kept an eye on sales. Merchandisers then re-ordered based on actual sales figures and availability of material. The supply chain at World depended heavily upon details and accuracy and was well integrated which enabled it to reduce lead times drastically.

Can World’s supply chain processes be replicated at other apparel companies? What about non-apparel supply chains? Identify potential barriers.

The world’s supply chain processes can be replicated at other apparel companies. The president of the company HidezoTerai has focused on monitoring the sales trends and consumer demand prevalent in the company and in the Japanese market and ensuring that the right products are available at the right stores and at the right time. This is in line with the dynamic fashion industry that requires short lead times and swift performance. World Co. has been able to shorten its lead times due to its supply chain management system called SPARCS (Super, Production, Apparel, Retail, Customer Satisfaction). The system has been able to coordinate product planning, production, and development, etc. Information Technology has been utilized efficiently and effectively to provide real-time information to all relevant stakeholders in the company. The simplicity of the process makes it easier for other apparel companies to replicate it with ease and implement it with ease as well. The benefits also add as an encouragement for other companies to adopt the process. The system provides improved forecasting and planning of the supply chain starting from demand forecasting to material planning, etc. Moreover, the visibility aspect is also important since it enables employees to view sales data and inventories. Moreover, given the information, it helps the company gain market share and strategizes accordingly along with being able to respond quickly to changes in the market conditions.

It is also easier to replicate the supply chain at other apparel companies due to the similar environment in which they operate. The industry is fragmented, and the structures are also similar for most firms. Similar supply chain challenges and problems are faced by other apparel companies as well. The costs associated with overstocking or understocking are serious sources of concern for all such companies. These companies are constantly working towards adopting and implementing processes that eliminate or curtail these costs.

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