Company Background Information
Throx sells higher-end custom-design socks in three-sock sets (rather than two).The company operates from a small packaging and distribution facility in Richmond, CA from which it ships product to customers.Given the company's location and focus, 97% of sales are in California, primarily in the major urban areas of the San Francisco bay area, Los Angeles, Sacramento (and last but not least) San Diego.The company sells exclusively via online sales, at an average price of $15/three-sock set, plus shipping costs charged to the customer.
The company currently orders its product from the Chinese sock manufacturer Zhejiang Datang Hosiery Group Co., Ltd in so-called "Sock City."Socks are shipped via truck to the port of Shanghai, from where they are shipped to the port at Los Angeles-Long Beach via ocean freight. Once offloaded in Los Angeles-Long Beach, the socks are shipped via truck to the Richmond facility.On average, shipment from the manufacturer to the Richmond facility takes 4 weeks.In addition to the transit time required for shipment, the lead time from when an order is placed with the manufacturer to when it is shipped from Zhejiang is 3 weeks. So, the total lead time is considered to be 7 weeks from when Throx places an order til it reaches the Richmond facility.Historically, the standard deviation of lead time has been 1 week.
Overview of the Case Analysis We have discussed many concepts in SCM 301 related to planning, sourcing, making and delivering products and services. The purpose of this case analysis is to integrate the different elements of the course and to apply tools you have learned evaluate the supply chain performance. Consider yourself a consultant assigned to develop a supply chain management strategy for the company lm. You are tasked with evaluating the company's recent performance and recommending changes (decisions) to improve supply chain management performance. The questions that you are required to answer are found in the Project Deliverables le in Canvas. Company Background Information lam; sells higher-end custom-design socks in three-sock sets (rather than two). The company operates from a small packaging and distribution facility in Richmond, CA from which it ships product to customers. Given the company's location and focus, 97% of sales are in California, primarily in the major urban areas of the San Francisco bay area, Los Angeles, Sacramento (and last but not least) San Diego. The company sells exclusively via online sales, at an average price of $1 S/three-sock set, plus shipping costs charged to the customer. The company currently orders its product from the Chinese sock manufacturer Zhejiang Qatari; Hosiery Group Co., Ltd in so-called \"Sock City.\" Socks are shipped via truck to the port of Shanghai, from where they are shipped to the port at Los Angeles-Long Beach via ocean -eight. Once oloaded in Los Angeles-Long Beach, the socks are shipped via truck to the Richmond facility. On average, shipment from the manufacturer to the Richmond facility takes 4 weeks. In addition to the transit time required for shipment, the lead time from when an order is placed with the manufacturer to when it is shipped from Zhejiang is 3 weeks. So, the total lead time is considered to be 7 weeks from when m places an order til it reaches the Richmond facility. Historically, the standard deviation of lead time has been 1 week. Potential Alternatives to Current Supply Chain Management The company has asked you to evaluate a number of alternatives to their current SCM practices, including at a minimum their choice of supplier, transportation modes, warehouse capacity, order quantities and safety stock. Alternative Suppliers The company has contacted potential alternative suppliers in China, who have offered the following information relative to the current supplier: Supplier Characteristic Current Supplier A Supplier B Unit Price, $/3-sock set S 4.00 $ 2.50 $ 1.25 Order cost, $/order 500.00 200.00 $ 600.00 Defect Rate 1.0% 3.0% 0.5% Financial condition of the firm Good Poor Fair Throx wants to use a single-sourcing strategy, so they want a recommendation about which supplier would be best. Throx has decided to use the following weights in analyzing the suppliers: Supplier Characteristic Weight Unit Price, $/3-sock set 0.4 Order cost, $/order 0.3 Defect Rate 0.2 Financial condition of the firm 0.1 Alternative Transportation An alternative to their current transportation approach available to Throx is shipment by UPS Express Air from Shanghai to Richmond, which averages 3.5 days. The comparison of costs is given as: Maersk Ocean Freight UPS AirExpress Transporation Supplier Characteristics (current) (Alternative) Units cost, $/sock set $ 1.50 $ 3.00 Damage Rate 2.0% 1.0% Average Transit time, weeks* 4 1Similar to their decision about sourcing, WWants to use a single-sourcing strategy for transportation, so they want a recommendation about which mode would be best. Alternative Warehouse Location The company would also like to assess whether its current warehouse location is appropriate based on where customers are located. It provides you the following information about its key my indicates that its orders in each market are roughly proportional to the total population. m Population - LA-Long Beach 500,000 \" 390,000 1,500,000 \" 510,000 \
