Reference no: EM132952576 , Length: 3600 Words

Assessment - Network Design Report

In this assessment you are presented with a fictitious scenario. Based upon the details of the scenario, the assumptions you make and personal research, you will design a supply chain network for a New Zealand company that will optimise transportation costs and customer service levels, and minimise waste and carbon emissions. Role playing as a supply chain consultant, you will write a report in which you will explain and recommend your supply chain design to the CEO of the company.

Scenario
Proctor-Thorsen International Limited (PTIL, known as Pee-Til) is a very successful New Zealand manufacturer of high quality possum fur booties for adults and babies. Designed for indoor use, the booties sell well in New Zealand (NZ) to both locals and tourists, and the company has stable markets overseas, specifically Australia, North America (USA and Canada), and Europe. Representative images of the PTIL product line can be found at the end of this document.

PTIL's manufacturing facility is based in Masterton. Currently PTIL receives all its possum fur skins from Warm Wearer (WW), which is a tannery specialising in possum fur skins. WW is based in Woodville and is managed by Iva B. Eard. WW has the capacity and supply resource to produce up to 200,000 skins per year, where one skin is required for each adult bootie or a pair of baby booties. WW's dispatch policy is to courier orders within 10 days of ordering, unless otherwise discussed with the customer.

WW receives all its skins from hunters and trappers and, because possums are considered to be a pest in New Zealand, there is no legal limit. Skins suitable for booties are harvested during the period Jun - Aug, since the possum pelt is thickest during the NZ winter. National demand information for PTIL booties is as follows:

 

National Region	Average Annual Demand (pairs)	High sales season
Adult Booties	Baby Booties
Auckland/Northland	5,000	2,000	May - Aug
Waikato/Bay of Plenty	3,100	1,000
Gisborne/Hawke's Bay	1,000	400
Taranaki/Manawatu-Wanganui	2,000	500
Wellington	2,800	800
Tasman/Nelson/Marlborough	2,400	600
West Coast	900	300
Canterbury	3,600	1,200
Otago/Southland	2,100	550

International demand information is as follows:

 

International Region	Average Annual Demand (pairs)	High Sales Season
Adult Booties	Baby Booties
Australia	7,500	3,200	May - Aug
USA	6,000	3,200	Oct - Jan
Canada	4,500	2,000	Oct - Jan
Europe	5,500	3,000	Oct - Jan

The average retail price for a pair of booties is as follows: adult $NZ170, and baby $NZ60, with similar prices being fetched overseas, after exchange rate conversion. All sales are through independent retail stores whose customers tend to be affluent locals and tourists.

PTIL produces all its product at its Masterton facility and it values its loyal staff, many of whom have been with the company since the start. Currently excess product is stored at the manufacturing facility, including 15% buffer stock (15% of average annual demand), but if PTIL wishes to expand its production, then that will have to be at the expense of storage space. Therefore, it is important to find ways to safely reduce buffer stock.

PTIL is flexible with regard to packaging. The company is able to pack product in a range of package sizes and will consider any package size that will help to optimise costs. While PTIL is successful and has an established supply chain, the new owner and managing director, Saraya Proctor-Thorsen, believes that it is old-fashioned because, other than recently introducing a basic spreadsheet-level accounting and product/customer management system, things have not changed much since her father started the business 20 years ago. She is keen to introduce supply chain best practice to PTIL, in particular to optimise transportation costs and customer service levels. She is also enthusiastic about sustainable practice so she wants to explore ways to minimise waste and carbon emissions throughout her supply chain.

You are a supply chain consultant and PTIL has employed you to, in effect, design a supply chain network that will achieve Saraya's objectives. She does not want you to be guided by PTIL's existing process, but whatever you recommend must take account of the fact that PTIL is a medium-sized company with a limited budget.

Scenario Assumption

1. There is no intention by PTIL to invest in transportation equipment, so there is no need to consider the cost of investing in trucks, aircraft, rail cars, or ships. PTIL uses third party carriers only;

2. Manufacturing will remain at Masterton in the foreseeable future;

3. PTIL has existing contracts with retailers and so at this stage, has no intention of entering the on-line retail business; and

4. PTIL is responsible for getting its product to the international port of entry overseas, and that the international purchaser will take care of the freight once the product has cleared customs.

Your Assignment

Taking the scenario above, you are to design a supply chain network for Proctor-Thorsen International that optimises transportation costs and
customer service levels, and minimises waste and carbon emissions.

You are to present your analysis and design recommendation in the form of a report.

The design recommendation is to be based upon research and analysis of all applicable and appropriate modes of transport taking account of the locations provided above. This means that you are to analyse and present options in detail, and recommend the preferred option. As far as possible, you are to evaluate the typical trade-offs associated with cost of transport & inventory, customer responsiveness, and consider innovative methods of reducing costs, plus the environmental impact in terms of waste and carbon emissions.

The total submission should comprise 3600 words (+/-10%, not including calculations, appendices, citations and references).

Research. You are to actively research current costs, but you are also to justify and explain assumptions and support these by referring to up-todate theory (this is achieved by exploring and using research literature).

Links to research literature are provided in the course/programme resource section and also by searching using the Google Scholar search engine. No matter the source, you are to document your research, including contacts, emails, etc.

Finally, APA referencing guidelines are to be followed and evidence of wide reading is expected for an assignment at this level, i.e. a minimum
of six authoritative sources to be acceptable, including the textbook.

LO2. Critically analyse trade-offs between transportation costs and customer service levels and evaluate innovative options to mitigate trade-off decisions (30% total course weighting and 10% covered in this assessment)

LO3. Design a supply chain network for a New Zealand company operating globally to optimise transportation costs and customer service levels, and minimise waste and carbon emissions.