Project

赵昱曦�

Assessment #3: Supply Chain Management Project

Contents

1 Executive Summary ....................................................................................... 2

2 Introduction ................................................................................................. 3

3 The problems of the company from SCM perspective ............................................. .4

4 Re sponse to the problems ................................................................................... 5

5 Justification for the new SCM solution ................................................................... I 0

6 Conclusion ................................................................................................... I 0

7 Reference ................................................................................................... 11

Assessment #3: Supply Chain Management Project

Executive Summary

This proposal is about a possible solution to a particular supply chain management problem of Jory

Henley Furniture.

There are five main parts of this proposal. Firstly, it is the background introduction of Jory Henley

Furniture. Moreover, it is identification and analysis of the problem in SCM, which is the increase

in cost resulting from the unnecessary product transfer between different branches. Furthermore, a

solution to the problem will be suggested, which includes two steps, such as establishing a central

warehouse and apply in weighted moving average to forecast the demand. In addition, it will

critically evaluate the feasibility of the response. Finally, it is the conclusion.

Assessment #3: Supply Chain Management Project

Introduction

Jory Henley is a ew Zealand furniture retail brand with its head office in Australia. It offers an

exten sive selection of furniture from lounge units, bedroom, living to the dining room. Products

can be divided into three categories , made in ew Zealand, Australia and China. Its

competitivenes s comes from differentiated furniture imported from Australia and China.

Since it s ettled in Auckland in 2015, it had expanded wildly and opened 5 stores in a row until end

of 2018, covering an area of 1000-4000 square meters per mall. However, in 2019, a serious

difficulty is the increase in profit cannot cover the boosted cost of s upply chain management (SCM),

which lead the owners had to determine to close two stores. Figure 1 illustrates the location of the

current branches of Jory Henley, such as Manukau branch (2000 m2 ), Mt Willington branch ( 4000

m2 ) and orth shore branch ( 1000 m2 ), a big showroom and a small warehouse belong to each

branch. In thi s report, it will identify and analyze the SCM problem, suggest a solution and

Justification.

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Figure 1: The Location of the branches of Jory Henley

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Assessment #3: Supply Chain Management Project

The problems of the company from SCM perspective

One of the biggest problems about SCM of Jory Henley is a sale plan normally big differences with

the actual demand of each branch, resulting in a high cost to transfer the stuff between branches.

The cost of those unjustified product transfer mainly comes from the expense of fuel of trucks and

labour of driver s. Due to the limitation of warehouse size and the requirement for rapid inventory

turnover, the company adopts the purchase method of a small lot size and multi-batch. After the

containers arriving at the port regularly every month are unloaded, the stuff imported has to be

allocated and store in the three branches based on the plan & goals for that month, because there is

no uniform distri bution centre or big warehouse. Each branch is equipped with a truck and two

driver s. Besides delivering goods to customers, another important role of trucks is to transfer

product between different branches. For instance, a customer bought a product in the Manukau

branch after viewing the floor-model in the showroom (Floor model typically can not be allowed

to sold). The stock of the product in the SCM system displayed O in this branch but 2 stock in orth

shore branch. Thus, the truck of the Manukau branch will go to transfer the product back from the

or th shore branch, then deliver to the customer. Things like this happen almos t every day for

different kind of furniture, which means that plan of the original distribution and storage of goods

may be unreasonable. According to the data from the SCM system, the average cost per transfer

trip is $89, it may result in a huge loss for long-run.

The sale plan was typically made based on the quantity in actual sales of last month and the left

space of the small warehouse back of the branch. Take one of the imported products called Franklin

electric recliner sofa as an example (Table 1 ). When the quantity of original plan lower than actual

demand (The orange numbers in Table 1 ), the transfer must happen or waiting s tock coming.

Assessment #3: Supply Chain Management Project

anukau Branch Mt Willin ton

orth hor Branch Branch

onth

Aug, 2019

Sept, 2019

Oct, 2019

o ,2019

Dec, 2019

Jan,2020

Feb,2020

Mar 2020

ctual Demand

25

27

30

33

4

36

40

,8

Original ctual Plan Demand

24 6

27 JO

28 10

30 14

2 12

33 13

36 14

40 15

The data i from the s st m of Jory Henle

Original ctual Plan Demand

7 18

8 21

8 22

10 22

14 2

12 20

12 27

14 17

Table 1: The actual demand and ori ginal plan (sale plan)

of Franklin electric recliner ofa

Original Plan

16

18

20

20

21

20

22

29

Response to the problems

According to the SCM problem and the actual situation of Jory Henley, a new possible solution

could be two steps. As can be seen in Figure 2, the first step is repositioning function of the three

branches. Figure 3 illustrates the new function position of the business branches. The Mt Willington

branch is located between the other two stores, and its size is the largest, with 4000 square meters,

so that it could be a big warehouse and office. Meanwhile, only one quarter in front of it can be

still allocated and retained a small exhibition hall. On the other hand, the other branches keep

running with no change in function. When the new goods arrive at the port, they are unified into

the large warehouse at Mt Willington branch, and the warehouse is distributing and delivering

products according to the forecast and plan of each branch. After this setting, it will no longer

happen that goods transfer between the orth shore store and Manukau store. Thereby, it can save

time and cost.

Assessment #3: Supply Chain Management Project

e, po ible solution to the problem

tep I: Repo itioning function of the thr branch.

2 tor + I Big arehou

(in luding a mall howroom)

tep 2: Reasonable calculation and formulation of tock di tribution and

plan.

Foreca ting ofth d mand b m erag and

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Figur 2: The n , po ibl olution to th probl m

Service

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Service

radius

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ur : Th n fun tion la o t of th branch of Jory Ilenl

6

Assessment #3: Supply Chain Management Project

In the second step, it should reasonably calculate and formulate of stock distribution and storage

plan. Weighted moving average will be applied to forecast the product demand of each branch. It

assigns more weight to recent data for 3-month weighted moving average, in this case, 1 for three

months ago, 2 for two months ago, 3 for last month. According to the formula:

1:[(Weighted for period 3)(Demand in period 3)] Weighted moving average =

3

Therefore, the result can be seen in Table 2, and Figure 4 shows the difference between actual

demand, original plan and the forecasting demand by weighted moving average methods. It can be

seen, the results predicted by weighted moving average are always closer to the actual demand.

Assessment #3: Supply Chain Management Project

Month

Aug, 2019

Sept, 2019

Oct., 2019

Nov, 2019

Dec, 2019

Jan,2020

Feb,2020

Mar, 2020

Actual Demand

25

27

30

33

34

36

40

38

Manukau Branch

3-Month Original Weighted

Plan Moving Average (WMA-M)

24

27

28

30 28.17

32 31

33 33

36 34.83

40 37.67

Mt Willington Branch North shore Branch

3-Month 3-Month Actual Original Weighted Actual Original Weighted

Demand Plan Moving Average Demand Plan Moving Average (WMA-M) (WMA-M)

6 7 18 16

10 8 21 18

10 8 22 20

14 10 9.33 22 20 21

12 14 12 23 21 21.83

13 12 12.33 20 20 22.5

14 12 12.83 27 22 21.33

15 14 13.33 17 29 24

Table 2: The forecasting of demand by using 3-Month weighted moving average

Assessment #3: Supply Chain Management Project

Manukao Branch

Actual demand vs. Weighted

moving average and Original

plan

45 I

40 � I 1 6

35 �/ I 14

30

�

12

25 10

20 8

15 I 6

10 4

5 2

0 0 Aug, Sept, Oct, Nov, Dec, Jan, Feb, Mar,

2019 2019 2019 2019 2019 2020 2020 2020

-Manukau Branch Actual Demand

-Manukau Branch Original Plan

-Manukau Branch WMA-M

Mt Willington Branch

Acutual demand vs.

Weighted

moving average and Original

plan

- - - - - - -

,�-

,--J/· �

r

Aug, Sept, Oct, Nov, Dec, Jan, Feb, Mar,

2019 2019 2019 2019 2019 2020 2020 2020

-Mt Willington Branch Actual Demand

-Mt Willington Branch Original Plan

-Mt Willington Branch WMA-W

North shore Branch

Actual demand vs. Weighted

moving average and Original

plan

35

30

II 2 5

20

15

10

5

0 Aug, Sept, Oct, Nov, Dec, Jan, Feb, Mar,

2019 2019 2019 2019 2019 2020 2020 2020

-Northst,o,, B<a,ch A«o• :J -North shore Branch Original Plan

-North shore Branch WMA-N

Figure 4: Actual demand vs. Weighted moving average and Original plan of the three branches

Assessment #3: Supply Chain Management Project

Justification for the new SCM solution

Moving-average is a significant method to forecast when people assume that market demands will

stay fairly steady over time. Meanwhile, when a detectable trend or pattern is present, weights can

be used to place more emphasis on recent values (Heizer, Render & Munson, 2014). In this case,

before the lockdown of COVID-19 in ew Zealand, the furniture market was relatively stable.

From the data, it can see that the actual demand for different branches was basically increasi ng

steadily. Thus, the weighted moving average method can be used in SCM of Jory Henley and it

closer to the actual demand. As a consequence, it can reduce the frequency of product transfer

between difference branches, the distribution of goods is close to the actual sales situation at the

beginning. Furthermore, since the new large warehouse is located between the two stores, even if

there are some necessary transfers, it is still convenient and cost-saving.

However, as the market was locked down in April, if the demand for July is to be predicted, i t may

be possible to take advantage of actual sales data in March, May and June.

Conclusion

One SCM problem of Jory Henley is the high-cost caused by unnecessary product transfer due to

the unreasonable plan. This proposal gives a possible solution including two steps, which are re­

function the Mt Willington branch to a center warehouse between the other two branches and using

the approach of weighted moving average to forecast the demand. This suggestion can effectively

reduce the unnecessary transfer of goods to reduce losses.

( I 093 words)

10

Assessment #3: Supply Chain Management Project

References

Heizer, J., Render, B., & Munson, C. (2020). Operations Management-Sustainability and supply chain management (I 3 th). London, United Kingdom: Pearson.

II

FINAL GRADE

/100

Project GRADEMARK REPORT

GENERAL COMMENTS

Instructor

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