Assignment-final 2 - Assignment PDF

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TABLE OF CONTENT 1-Executive Summary 2-Introduction 3-Background 3.1.Background of Under Armour 3.2.About the Product 3.3.Rebel Sport 3.3.1.Introduce Rebel Sport and their market 3.3.2.Network design 3.3.3.Online presence 3.3.4.Retail stores in Australia 3.4.The Category and Customer Segment 4-Estimating Demand 4.1.Definition of Forecast and How One Is Developed 4.2.Explain and Justify One Most Appropriate Method 4.3.Discuss Seasonal Patterns, Business Cycles and the Affections 4.3.1.Seasonal patterns 4.3.2.Business cycles 5-Sourcing Suppliers 5.1.Basic Bill of Materials 5.2.Supply Chain Diagram 6-Information 6.1.Information for Place-Time-Quantity Utility 6.2.Mechanism to Ensure Performance 7-Distribution 7.1.Map for Distribution Route(s)-Locations and Transport Models 7.2.Estimated Time for Delivery 7.3.Use Own Transport or 3PLs 7.4.Private or Contract Warehouse 8-Conclusion 9-Reference

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1-EXECUTIVE SUMMARY The report provides a deep analysis of the forecast and distribution plan for the Under Armour Sportstyle Windbreaker Jacket. The report will also include a brief summary of the background of the company and furthermore informations about distribution such as a map for transporting routes along with the appropriate place, time and quantity utility.

It is recommended:

• Using Seasonal Pattern as the most appropriate method for forecasting demand. • Increase production and promotion during cold times. • Combine both contract 3PLs and our own transportation fleet. • Using private warehouse to store goods.

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2-INTRODUCTION The report will include a brief summary of the Under Armour’s background and the product chosen along with the category and customer segment suitable. There will also be an introduction of Rebel Sport and their markets and shops in Australia. The report continues with forecasting and estimating demand and figure out the most appropriate method.

Sourcing the suppliers includes the basic prices for the material and a supply chain diagram that fits the situation. Lastly, the distribution process consists of the information needed to ensure the performance and furthermore developing distribution routes, locations and transport models as well as time for delivery.

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3-BACKGROUND 3.1.Background of Under Armour: Under Armour is an American company operating in the footwear and sports clothing industry, and it should be noticed that the company has the international businesses and markets. To be more specific, the company designs, manufactures, distributes and sells the footwear, the sports clothes, the casual appeals and other related products. In fact, the headquarters of the company are located in Baltimore, Maryland with other offices around the world (Hansen 2015). As a matter of fact, the company also sets the offices in other major cities of the world. including Amsterdam, Austin, Guangzhou, Hong Kong and so on. The company has a good reputation and fame all over the world, and it has been widely regarded as one of the best footwear and casual wear brands. As a matter of fact, it can be seen that the Under Armour has not only attracted the normal citizens, but also the celebrities and the sports stars (Henao 2014). The brand was established in 1996, and it has a relatively long history of operation. Since the founding of the company, the

Under Armour has aimed to research and develop with the good design of footwear and clothes that can help the people to do sports in a more effective way, using the sustainable and functional materials. In fact, through the official website of the company, it can be found that the mission of the firm is to inspire the performance solutions that the people might not imagine about. The Under Armour has devoted in the sports fashion industry, and it has a good performance in recent years (Fossen 2011). Currently, the Under Armour does not only operate in the market of the United States, but it has gradually entered into the international markets. It has won the loyalty of many customers all over the world, and it is believed to be one of the most successful brands in this industry.

3.2.About the Product: The product is the Under Armour Mens Sportystyle Windbreaker Jacket, there are numerous advantages, first, this product is 100 % made from Polyester which could effectively prevent from the heavy rain and wind. Also, it is equipped with a double draw cord hood and an adjustable bungee hem showed in picture 1. Besides, in order to meet different preferences and demands of various targeted market segments, it is more appropriated for personalized design. This product was manufactured by an American manufacture company, that is, the Under Armour, it is one of leading company which mainly focusing on footwear, innovative sports clothing, athletic shoes & !5

accessories and casual apparel. Under Armour has a long history since it was founded in 1996. Based on the 2018 annual report of the Under Armour, it dedicated to be one of the world's greatest, athletics performance brands. The economic revenues of Under Armour is positive in these years, according to the latest data, the income from operations in 2018 increased by 14 percent compared with that in 2017 (Figure 1).

Figure 1 Source: Under Armour 2018 Annual Report

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Picture 1 Source:

3.3.Rebel Sport: 3.3.1.Introduce Rebel Sport and their markets: Rebel Sport is an Australian/New Zealand retail company specialized in sportswear and equipments. The retailer was established in 1985 at Sydney before they were taken over by Super Retail Group Limited in 2011 (Rebel (company) 2019). Rebel Sport participates in both Australian and New Zealand markets-which are markets that are flourishing over the 5-year-period with a 2 billion revenue and annual growth at 5.8% (Fitness and Athletic Clothing Stores - Australia Market Research Report 2018).

3.3.2.Network design: As a consequence of globalization, Rebel Sport must find a cheaper place for suppliers and manufacturers and China is the most appropriate place as the labour and also material cost is cheaper. After the products being manufactured they will be shipped to the Super Retail Group distribution centre at 441-443 Grieve Parade at Altona North, VIC before being transferred to the Rebel Sport warehouses near Docklands. Lastly, products would be sent to wholesalers and retailers by truckloads before being sold to the customers.

3.3.3.Online presence: Rebel Sport owns 2 websites that are customized for Australia and New Zealand regions. Customers can search for required items as well as brick-and-mortar stores in these 2 countries and furthermore get them ordered and shipped via websites. Rebel Sport also interact with potential consumers through social media channels. Facebook and Instagram are the 2 main portals that are frequently updated and got the most likes and follows by the buyers.

3.3.4.Retail stores in Australia: There are 160 stores in Australia in total (About Us 2018?).

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3.4.The Category and Customer Segment: Rebel sport is the most popular clothing retail store have around in Australia. In the modern supply chain environment customer segmentation is becoming more and more valuable than past. It involves treating product, customer group, different brand name, channel segments and differentiate according to their different characteristics or need. Segmentation is identifying the product characteristics vibrate with target market and traits for each market segment. In our case study, selected product is the Under Armour Men’s Sport style Windbreaker and my point of view most suitable segment method is segment by customer and product. Customer segment is Men and Product segmentation (Sport style) is highlighted under product features as followers

• Storm fabric maintains breathability while it repels water • Windproof construction helps to protect you from the elements • Fitted design with shaped hem Segmentation can be major advantage for a company supply chain. Its helps to minimize waste and unnecessary expenditures and on the other hand it helps to boot profitability by redeveloping resources more wisely.

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4-ESTIMATING DEMAND 4.1.Definition of Forecast and How One Is Developed: Forecasting is defined as the analysis of the past and future economic condition with many accurate interpretations of possible future threats and opportunities about the company. Proper calculation and reasonable probabilities are based on the analysis of information and tested by using statistical econometric technique. Forecasting process has two method quantitative and qualitative but different company take up different method used to forecast. This is the summery of the forecasting process. In supply chain demand forecasting is a major component. Demand forecasting defined as the process by which the historical sales data are used to develop an estimate of the expected forecast of customer demand. It provides an information of the goods and service that customer will purchase in foreseeable future. Also include budgeting, planning, sales and marketing plans, production plans. Forecasting is a very important for effective supply chain as a result of that every company develop forecasting technique as a strategy. Today business environment more competitive than past as a result of that companies are practice forecasting strategy Performing their supply chain smoothly. There are different ways to forecasting but in our company similar clothing retail stores best solution is demand forecasting method. Demand forecasting can be described methodical process that include expecting the demand for the product of the company in future under set of uncontrollable and competitive forces. It tests the quantity of product our customers are likely to want during a specific amount of time period. That kind of information helps to have right volume in stock enough to fill customer orders. Companies are developing forecasting method it contributes to the success of their business and ultimately profitability such as:

• Increase customer satisfaction (mostly affect in our selected product and Business) • Reducing stock out situation. • Lower safety stock requirement > Developing production requests to manufacturing operations > Development for new product launches > Preparation for promotional activity > Forecasting for seasonal variations in demand !9

• Preparing the budget. • Expanding the Business. Those are the key benefit of developing the forecasting method in through the entire supply chain in company.

4.2.Explain and Justify One Most Appropriate Method: The seasonal patterns would be one most appropriate method. Seasonal variation is a very common phenomenon. The basic idea of seasonal pattern prediction method is to separate the influencing factors of seasonal variation through time series decomposition. Then, the influence of seasonal variation on the predicted objects is found, that is, the seasonal influencing factors are separated. Finally, the trend line and seasonal factors are combined to obtain a prediction model that can describe the overall development law of time series and is used for prediction (Hawkins 1957, p. 428).

Thus, the seasonal patterns method is commonly used in the MTO and MTS models of supply chain management, the prediction of the market often plays a decisive role. It not only takes into account the trend change of the seasonal index, but also makes full use of the known data information with high credibility, which is a good prediction method of the constant seasonal change model. Since, the Under Armour Mens Sportystyle Windbreaker Jacket is a product with highly seasonal characters, in other words, demands of the Windbreaker Jacket would increase significantly in the cold winter or rainy and windy weather. On the contrast, demands of the Windbreaker Jacket would reduce in warmer weather like summer. Thus, the seasonal patterns would be one most appropriate method for Under Armour Mens Sportystyle Windbreaker Jacket to estimate demands.

4.3.Discuss Seasonal Patterns, Business Cycles and the Affections: 4.3.1.Seasonal patterns: The Under Armour Mens Sportstyle Windbreaker is frequently used for blocking the wind, which is really useful during the cold days. Therefore the demand would be higher during the Fall, Winter and the start of Spring seasons when the weather starts to become colder. Rebel Sport should increase the production and also promotion for the item during the period mentioned as the Under

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Armour Mens Sportstyle Windbreaker proves to be favored among consumers by getting 5-starreviews on Rebel’s website (Picture 2).

Picture 2 Source:

4.3.2.Business cycle: The business cycle is at the declining stage as the Australian economy is experiencing a downfall at the end of 2018 and beginning of 2019. House price fell by 4.8% and this would decline the main form of wealth among customers, leads to less confidence to spend from the customers (Graham 2019). Furthermore, GDP growth is also slowing down dramatically as it was reported to stay at 0.2% and also a 1.2% fall in manufacturing, recorded at the 6th of March 2019 (Australian GDP Growth Rate 2019). These would create a negative impact on Rebel Sport as buyers are not willing to spend money and the manufacturing process is having issues due to the slow down from GDP growth. !11

5-SOURCING SUPPLIER 5.1.Basic Bill of Material: The basic bill of materials of the Under Armour Mens Sportystyle Windbreaker Jacket are showed in the table below. BOM level

Part Number

Part Name

0

20-0001

Zipper

1

20-0002

Recycled Polyester

2

20-0003

Organic Cotton

3

40-0011

Hemp

4

50-0012

Durable water repellent fabric

The durable water repellent fabric would be beneficial to prevent the rain and snow and reduce dry times. Also, the durable water repellent fabric is environmental friendly material. Hemp contributes to bring about soft and breathable feelings for consumers (Under Armour's Suppliers Performance 2018?). Also, hemp is a renewable material. The recycled polyester is different from traditional polyester material, the most advantage is that it is more sustainable by taking petroleum as the main source of raw material. As for organic cotton, it is more pure and natural, in order to dedicate to developing organic farming, the production of cotton also take negative effects on the local farming (Patagonia 2019). 5.2.Supply Chain Diagram:

6-INFORMATION 6.1.Information for Place-Time-Quantity Utility: For the Under Armour, the important business activities include the production and distribution of the goods, and thus the supply chain management is one key task. In order to manage the global supply chain in a more effective way, the information is needed and the information system should be established. To be more specific, the information related to the place, time and quality is necessary, so that the supply chain managers and employees have the supports in decision-making. For instance, the company requires the information related to the place of the assets, inventories, raw materials and goods, so that they can make decisions that save the cost and increase the delivery speed (Khaliq, Qayyum and Pannek 2017). In the meantime, it is also critical for the managers to get the information related to the time for the packages and the delivery paths, so that they can better arrange the tasks and processes.

It should be noticed that the quality and reliability of the information have played an essential role in the management of supply chain, because the decisions in the supply chain requires the information as the support. With the development of the technology, it is possible for the company to use the machines and chips to finish the information collection work, and a comprehensive system can be established to summarize the information from different places, stores and distribution centers (Meudt, Metternich and Abele 2017). The necessity of information for the global logistics has been argued by many researches and previous literatures, and it can be found that the information is the fundamental thing to facilitate the decision-making in the global logistics. In fact, the information related to place, time, quality and other aspects of the business activities can help the company to find the better strategy with more effective approach.

6.2.Mechanism to Ensure the Performance: Measurement is important as it affects behaviors that impact supply chain and the business process of the company long term as well as take decision in day to day process. All company have mechanism to ensure the performance. Most of the company doing financial measurement to evaluate performance but currently have various measurement to ensure performance also it covers all the area of the process. It is more advantage than past method because we can ensure performance of all stage in supply chain. Supply chain process start with customer and it and with the customer. For example, starting step is customer needs or requirement and last step is fulfilling !13

the customer requirement through selecting proper distribution channel and finally satisfied customer. It means we need ensure performance through the supply chain. Companies are using measure the performance main 2 category qualitative as well as quantitative. Following method can use to measure the performance in Rebel clothing retail store:

• Qualitative measure: (example: product quality and customer satisfaction) • Quantitate measure: assessment used to recognize the performance and compare with forecasting data also we can further divide quantitative measure of supply chin performance in to two type.

• Non-financial measures > Cycle time (Supply chain lead time, Order-to-delivery lead time) > Customer service level (order fill rate, stockout rate) > Inventory level (row material, work in process goods, finish good inventory) > Resource utilization (manufacturing, storage, logistic, human and financial resources)

• Financial measures: it directly affects the operational cost related to supply chain are consider the financial measures final key objectives are maximize the revenue by maintain the minimize cost in supply chain namely: > Cost of raw materials > Revenue from goods sold. > Activity-based costs like the material handling, manufacturing, assembling rates etc. > Inventory holding costs. > Transportation costs. > Penalties for incorrectly filled or late orders delivered to customers. > Credits for incorrectly filled or late deliveries from suppliers. > Cost of goods returned by customers. > Credits for goods returned to suppliers.

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7-DISTRIBUTION 7.1.Map for Distribution Route(s)-Locations and Transport Models:

Under Armour products are assumed to be manufactured in Guangdong, China before got transferred to the Super Retail Group distribution center (VIC branch) in Grieve Parade through seaways.

The transport model to be used here is the cargo ships which might take 9 to 11 working days to deliver. Using cargo ship is the most appropriate as this mean of transportation is cheaper than plane (Vineyard 2011).

Then products will be shipped to Rebel Sport warehouses all over the country and in this case the warehouse is assumed to be in Port Melbourne. The suitable transportation would be truckload as the distance is short and trucks can carry more than cars and vans.

Lastly the products will be transported to the retailers through truckloads due to short distance and trucks can carry more weight.

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7.2.Estimated Time for Delivery: Estimated time for deli...