Running Case Introduction

Our third running case involves Carrie, a university student who started a custom fashion t-shirt and accessory business, Carries Custom Clothing, while working at her high school clothing store. Now in her second year at university, Carrie has studied the clothing industry and knows that it is generally considered to be made up of three key areas: (1) the textile industry, which takes raw materials and produces fabrics; (2) the apparel industry, which designs, creates, and distributes finished goods (clothes) to wholesalers; and (3) the retail industry, which is responsible for end customer distribution and sales.

Carrie knows first-hand that the Canadian clothing industry, which tends to have a high labour component, has been hit hard by globalization, improved technology, and the movement of labour to low-cost countries. Between 2007 and 2011, for example, Canadian manufactured clothing GDP shrank from $1947 million to $1363 million (equal to a Compound Annual Growth Rate of 8.5%) and employment declined from 54,500 to 35,700 (-10% CAGR). Carrie, however, remains optimistic, largely because she knows that her customers buy clothes for fashion, rather than just to keep dry and stay warm, and some Canadian clothing firms that cater to the fitness and yoga segments have done well. Carrie hopes that by continuing to focus on customer service, remaining agile and responsive, and using ideas appropriately, all of which she is learning in this course, she will be able to continue to grow her business.

In her high school, Carrie ran the schools clothing store. She learned about materials, suppliers, and printing/embroidering on all sorts of textiles. Even more important, she learned about how to sell school fashions. When she came to university, she decided to keep her focus on embroidery, printing, and fashion design for outerwear by becoming an entrepreneur and starting her own company.

Starting Carries Custom Clothing was not easy. She was busy with her school work and she had to find time not only to make sales but also to print t-shirts and hoodies and deliver them on time to her customers. Once she graduated, she decided to continue to grow her business. She has now expanded her line significantly and provides custom printing and embroidery solutions for teams, clubs, schools, and numerous events. She now takes t-shirts, hoodies, outerwear, accessories (such as scarves), pens, and mugs and adapts them to the needs of her customers.

One of Carries advantages has been her wide network of friends and acquaintances who have given her lots of repeat business. Carrie likes to say that once people deal with her, they never look anywhere else. She does personal delivery and backs her quality up with a seven-day return policy if people are not satisfied with the look of the product. Her excellent customer service has paid off as she has lost very few clients and continues to grow her list of happy clients. The problem is that her list is growing longer than she can keep in her head. The volume of orders is too much to keep track of, and Carrie feels that the business is simply outgrowing her ability to keep up with her customers. Unfortunately, as her customers grow, so does the amount of information that she needs to store. She has always kept excellent paper records, but now it takes her longer at the end of each month to do her accounting and pay off her bills. She is starting to think about some systems to help her company grow.

Another consideration of Carrie is how she produces her t-shirts and outwear for her clients. There are two basic methods. One is buying machinery so that she can do it herself. This works well for small orders and allow Carrie to respond to rush orders. However, for larger orders, Carrie needs to rely

on third-party vendors who have larger capacity. She makes less on every t-shirt when she uses third-party vendors. Moreover, often there is a longer delay in production, which makes it harder to ensure that the outwear will be delivered on time to customers. The question Carrie need to answer is when to buy new machinery and when to send an order out to third-party vendors.

It is clear that selling customized clothing and accessories is a growing industry. T-Shirts and print designs are available in any style imaginable. Many people have started their own t-shirt business. The low barriers to entry make the industry fiercely competitive. Carrie is well aware of the competition and has survived her first few years. She is looking for a way to give her company a competitive edge. The next three chapters provide information that can help Carrie with these decisions.

Running Case: Carries Custom Clothing

As her customer list grows, Carrie has been thinking about finding a way to manage her customers more effectively. She has found that customers addresses and phone numbers often change and that she uses a variety of ways to store these numbers, including her personal phone, her purse, a paper calendar she keeps in her car, and even some sticky notes. It gets a little frustrating when data are stored in so many places and I cant get access to hem when I need them the most, Carrie noted. She added, That is one of my main frustrations.

Another source of frustration is the accessibility of information about her previous sales. Carrie notes, Sometimes, I have to remember that discount I gave to one of my customers, but I just dont have access to that information at my fingertips. I have my phone with me all the time, but I dont have access to the sales information on my phone. When she is in her office, she can look up her Excel spreadsheet for information. She is very careful with the spreadsheet, as it includes her customers names and personal information, so she does not bring it with her on the road.

Once she gets started, Carrie provides a larger list of her frustrations, Im also getting frustrated with entering stuff all over the place. My customer names go in the spreadsheet, but then they have to get re-entered in the accounting system. I then place the new numbers in my phone. Thats three points of entry. Then I have to create invoices and collect payments that come in through a whole bunch of channels. It gets difficult to keep up with all of that data entry. And dont even mention how I interact with my suppliers. That is a whole different story. The prices change every day, and delivery times are key. You have to be on it to make sure you can deliver the orders on time. Ugh!

Carries issues are very similar to many issues in smaller businesses. The question you should consider as you read through this chapter is this: How can Carrie address her frustration and add value to her company by investing in technology? It is an important question and one of central importance in understanding how to achieve competitive advantage.

Running Case

Carries Custom Clothing continues to grow and the average size of the t-shirt orders has steadily increased. The customized t-shirt market is very competitive, and one of the most important decisions Carrie must now make is whether to invest in new textile printing machinery. Carrie knows she will need to make a decision about this soon. In her industry, there are two basic approaches used to

print t-shirts: (1) screen printing and (2) drop-on-demand inkjet printing. Both have advantages and disadvantages.

Screen printing is the traditional way of printing t-shirts and remains the most cost-effective method for very large orders. It can reliably produce 400 to 500 t-shirts in an hour, but it requires a bigger investment, larger machinery, and an experienced person to run the process. Only large textile printers use this method, and Carries business has not reached this level yet. When she needs to print a larger volume of t-shirts, Carrie knows that she can always contract with the screen printers to get the job done.

Drop-on-demand inkjet printing uses what looks like an inkjet printer to print the design directly on the t-shirt. This is how Carrie does most of her printing. Almost any type of textile can be used (cotton, polyester, rayon). The t-shirts can be printed within 1 to 2 minutes for less than $1 for ink, and very little training is required to become quite good at producing a quality shirt.

Carrie is thinking about adding a second drop-on-demand printer for her business, but she is not sure if her business is ready. Adding another drop-on-demand printer will enable her to print two orders at the same time as well as increase her capacity to fill larger orders without having to turn to screen-printing shops or other suppliers.

She has the choice of three different machines, but she believes that the Anajet Sprint will work best. She can either lease the printer over a five-year period for $320 per month or buy the printer for $16,500. Sometimes a used model may be available, which would be less expensive. The ink cartridges cost $250, and each t-shirt uses up less than a dollar of ink to print.

In this chapter, we will learn about decision-making and business intelligence systems. Looking at Carrie, it is obvious that her company has reached a decision point. She now needs to find answers for some important questions. Should she invest in a new screen-printing technology or work with what she currently has? Will the increase in t-shirt printing capacity create real value for the business? Should she lease or buy the printer? These are all important questions that a business owner needs to be able to answer. Decision like these would make a difference in developing competitive advantage in Carries business.

Running Case

Carries personality and professional nature have helped her create a good customer base for her business. She gets her fair share of one-of-a-kind events but has focused her efforts on customers who provide her with repeat business, such as schools, sports clubs, and annual charity events.

To grow her company further, Carrie realizes that she must find ways to expand beyond her traditional customer base. To do this, she is turning her attention toward ecommerce, social media, and the internet. She has already developed a company website, which has some basic information about her company. She is able to show off a range of her designs and has found the website to be useful tool for discussing options with clients. Although it has been useful, the website is not created much customer interest. Carrie often has to point people to the website, and some people have had a hard time finding the site.

Carrie recognizes that search engines could do more work for her if she were able to get closer to the top of the most frequent searches. She is not sure how to do that. She has thought about using targeted content directories, such as T-ShirtCountdown.com and Americantshirtnetwork.com, to attract more attention to some of her own designs. However, she is worried that moving in a direction that caters to selling to a larger consumer market might dilute her repeat customers strategy.

Carrie is often on Facebook and Twitter and enjoys using these sites. She has been frustrated trying to find out how to use these sites to the advantage of her company. She does see the power of social networking, but it seems like there is already too much traffic and that is hard to get heard above all the noise.

One place for Carrie to start would be to investigate Web 2.0. Carrie should realize that more and more of her work for the company can be done through her website. For example, she could integrate her invoicing, customer relationship, supplier relationship, and order status data on her website. This would allow her to have all the information she needs at her fingertips and enable her to focus more attention on selling (rather than on administration). In this chapter, we will look at how Web 2.0 and social media are changing the way small and large organizations are doing business.

Running Case Assignment Part 3

1. 1. Carrie has decided to understand more about her printing situation. She collected information about clients and their orders in the last two years in an Excel spreadsheet labelled Carrie Creations Order Information.xlsx. Use the data in the spreadsheet to answer the following questions: a. How many different customers did Carries Creations have over the past two years?
2. b. What was the overall average number of t-shirts printed per order?
3. c. What was the average number of t-shirts Carrie sold per month?
4. d. On average, how long did it take to complete an order (end date start date)
5. e. What was the average time between the end date of production and the delivery date (delivery date end date).
6. f. Were there any orders that were not delivered on time (delivery date > required by)? List the order numbers along with the number of days late for each late order.
8. 2. Carrie is considering buying a new drop-on-demand inkjet printer. She has one printer that has already been paid off. The new printers retail price is $16,500. But Carrie has chosen to lease over five years at $250 a month. She then has the option to buy the five year-old printer for $2,500. a. Assume that Carrie has a margin of $1.75 for each shirt that she sells (in total, she makes $1.75 more than she pays for making the shirt). If Carrie increases her monthly sales by 10 percent, will this increase in sales cover the increased cost associated with leasing the printer?
9. b. Given the assumption in (a), how many additional t-shirts does Carrie have to sell in a month to break even on the lease on the printing machine?
10. c. What is the total cost of the five-year lease excluding the purchase at the end of five years? If Carrie decides to buy the printer after five years, what will be the total cost of using and obtaining the printer?

Collaborative Questions

1. In your opinion, is the decision to acquire a new garment printer justified? List the advantages and disadvantages associated with this decision and create a recommendation for Carrie.

2. Do you think that having this printer (either through a lease or a purchase) will create a competitive advantage for Carries Creations? Justify your answer.