APPLIED MANAGEMENT (BUSM3163) ASSIGNMENT 01

Stitched Up
Business Case

RMIT University Brandix College of Clothing Technology Bachelor of Applied Science (Textile Technology)

Contents
Topics Page Number Customer Observation ........................................................................... Idea Generation ..................................................................................... Business case ......................................................................................... Executive Summary................................................................................ The Need ........................................................................... Solution ............................................................................. Dimensions of Check Fast .............................. Why it is Innovative .......................................................... Customer Research ........................................................... Customers Who Said Yes ............................... Customers Who Said No ................................ Overall Customer Feedback ........................... Design and Development .................................................. Investment Requirements................................................. Expected Benefits.............................................................. The Ask ..............................................................................

Customer Observation
We went to Stich Up outlet on 2nd of March to examine out the unmet need of customers. Members are separated in to three groups and done the observation roughly about five hours and list down the below point as unmet need of customers while shopping at Stitched Up. There were nearly 800 people on that time at outlet and most are a hurry to select out garments. Our main concern goes to several main criterias such as what people are buying and why, management point of view, how customers browsing for clothes (colors, sizes and etc.), how customers trying on them, what about how customers pay, how do they get their purchases to home, do they need to make any changes in garment (adjusting hem and etc.)And what customer interest and so on. The observations are listed down below under three leading points.

Concerns of the layout

Theres no proper layout and didnt visibly a categorized the flow. So customers have spent more time to find out their requirements.
Due to unavailability of dressing rooms customers are constrained to fit on on top of the clothes that they are already wearing.

Because of that the garments cant fit properly, consumers have to come again to the shop if they need to change the brought stuffs. In Kelly Felder, they dont have any security at fit on rooms; just any one can open it from outside though one consumer is in inside of the room. At Kelly Felder, the space is not enough for a large crowd during seasonal time durations. Displayed clothes are tightly packed and difficult to select without dropping down the garments. Some garments are displayed in bins and customers couldnt reach to the bottom level of the bin to select garments.so what are in bottom of the bin will never goes to customers.
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Theres no proper ventilation to the shop. Theres only one lift to link all flows and it is not quite enough since consumers have to wait in lifts for long time go to the specific floor that they required. Heat of the atmosphere inside the shop is high and customers feel uncomfortable when shopping due to sweating. No proper vehicle parking facilities for customers. No play area for children, so consumers are struggling with children while shopping.

Inventory matters Most designs dont have a size range which customer required The counts of mirrors are less and consumers need to search out for mirrors once necessity.

Some styles dont have stocks. No attracted fashions at dummies. No new innovations for Sri-Lankan market and most clothes are quality rejections of export marketers.

Difficulties due to poor customer service Customers felt uncomfortable by hearing sorry these items are non -exchangeable by sells persons, after they arrive to exchange the goods. Sells persons doesnt have better familiarity in clothing brands. Some garments dont have the price tags. Most of the sells persons dont have an exact idea of fabric composition of the garment. (from which fabric the garment is finished off) Because of not removing security tags at cashier by vendors, Customers get troubling at the exit points. Customers have to wait at the queue of the cashier point, for long time to settle bills. So the billing process needs to be rapidity.
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Though selected garments some people get off from the shops without buying them since the queue is too long. Sometimes dont have sales a person when customers are having inquires.

After analyzing the data of the behavioral patterns of the customers, the most common customer unmet needs are displayed through a pie chart below. It shows the areas that have to be improved in order to satisfy the customers.

Customer Behaviour

Were not happy because of the queue Were not happy babout the service Were not satisfied with the sizes available Were not happy happy with the stock

The main areas can be listed as, 1. The saturation at the point of sale especially during peak hours. 2. Poor service given by the outlet. 3. Scarcity of the size variations of the outlet. Selected unmet customer need: Saturation of customers at the point of sale Since majority of the customers had to undergo this problem it seemed like a burning problem at Stitched Up. There is a higher risk of losing customers unless they find a solution which is implementable. Since the customer base was very strong for Stitched Up they always had this queue problem and day by day they were strengthening their base. In this competitive field Stitched Up cannot afford to lose customers because of a queue problem. It is high time to find a solution.

Idea Generation
I think fit on room was a must to any garment shop in the past, because everybody likes to wear it and get the feel of the garment to the body before purchasing it. So with the idea of satisfying it, the owners of the most garment shops have provided fit on rooms to their outlets. Although there are more garment shops with fit on rooms, we could identified that there are prevailing problems, such as we heard that some fit on rooms are consisting of mini-cameras. Owing to that some customers have a lukewarm attitude towards fit-on rooms. On the other hand some there are no more space in some outlets for fit on rooms. In our business case management has decided to run the outlets without fit rooms ,but we had to find a better solution for the issue and tried to come out with a new idea as a solution for the fit on room problem, At last we won all these challenges by dawning a new era to fit on room history. We were able to innovated a new methodology and management decided to use this for our all garment outlets, because before introducing this innovation we used to do a research to ask the comments of the customers, through that we were able to prove that this is the most appropriate method. By using this methodology anybody can purchase the best suited garment for him/her body Measurements.

A brainstorming session was conducted aiming to find solutions for the unmet need. All the ideas that were given by the members are listed below. 1. Have to increase the point of sale units. 2. Plant units for each section to do the payments separately. 3. Introduce a credit system where the customer does not have to pay on the same day itself. 4. Implement a system unit where the point of sale process happens automatically. 5. Use robots to make work quicker instead of manual labor. 6. Separate the payment units according to number of items the customers are buying. 7. Make standing in the queue interesting using televisions, entertainment activities. 8. Arrange a waiting area for the customers so that they can rest until being called for billing. 9. Do not add security tags to the garments to reduce the time taken to remove them. 10. Train the cashiers weekly and maintain a performance chart so that they get motivated and work with speed. The idea of installing an automated system by removing the manual labor was taken for granted by the team members.
Customer has to insert the selected items to a cubical scanner where the RFID system is being used, sequentially the summation of the items is performed while the security microchip gets deactivated, and also the inventory system gets updated.

This can be unique as all the other suggestions have issues and some are not practical and productive. Even though the initial cost is high to implement this system the payback time is low since the revenue can advance due to this system and the remaining customer base can be doubled. For the customers to do the payment we can introduce a system where they do not have to use cash. But for the conventional customers we have a manual operating system as well.

Business Case
Executive summary
According to our knowledge, just by replacing the traditional Fit-on rooms with the E- Fit on will not help us to recover the cost of the new system. As far as I am concerned the project can be made viable by customizing this existing system and therefore evaluation of actual financial cost from the implementation to execution of the project will provide a clear picture for us to prepare a strategic plan to recover the initial investment within a specific time frame. An analysis of e-fit on system in the financial perspective Total cost of acquisition Purchasing costs Research Accounting Commissions Legal fees xxx xxx xxx xxx xxxx

xxxx xxxx xxxx xxxx

Transportation Preparation and Installation costs Cost of acquisition Add Preventive Maintenance cost Operational cost Total Cost

xxxx xxxx xxxx

Note: We have to incorporate certain cost such as preventive maintenance and the operational cost in order to discover the actual implementation cost of new system.

Investment Appraisal: The ROI calculation is an attempt to determine how much each dollar invested will return. If a business has limited resources only the highest ROI projects would be financed. The obvious shortcoming of the model is needed to make some assumptions as to how much we will save. So we should consider how long it will take to recover the initial investment in other words have to determine the payback period of the project in order to make precautionary measures to sustain the business. Evaluate the traditional business operation Benchmark traditional business process with modern business process Evaluation Methodology E.g. how much it will cost for 1 fit-on, Square feet required per fit on and etc and should be multiplied by number of fit on rooms so as to compute the cost of traditional business process. How to recover the investment Warehousing Cost of Maintenance, and the distance between stores and business premises Direct cost and indirect cost Direct costs are directly attributable to the cost object such as (DM, DL and D O/H) Indirect costs are not directly attributable to a cost object. Indirect costs are typically allocated to a cost object on some basis. Have stores inside mall Cost of store minimizes

E-fit on system will assist to minimize Defective products (cloths) Labor cost will be minimizing

Time is all what you have. Master your time and you master your life. Time management is one of those wonderful, timeless topics with so many lessons and so many great mentors. Time saving is a huge investment for any of the parties in this competitive world. Saving single second can worth more than a couple of dollars to anyone. Standing in a queue is utterly a waste; it does not add value to the any process. Minimization of the time customers spend on standing in queues at the point of sale can be decreased by 70% by implementing the innovation we are proposing to the Stitched Up retail fashion store. This is an automated system where the point of sale process happens automatically without any involvement of manual labor. Customer has to insert the selected items to a cubical scanner (Check Fast) where the RFID system is being used and sequentially the summation of the items is performed while the security microchip gets deactivated, simultaneously the inventory system gets updated. When Check Fast grasps all the information (Price, size, Color, Style number) from the microchip, it displays the total on its monitor. Once the payment is done, all the items are carried on the conveyer belt to the other end of the scanner. It does not take even a minute to clear a customer through this system. As calculated, it is a 50% reduction of the initial time taken using manual labor. To install this process a capital of 1.2 million USD needed per unit. The payback period is two years. Well experienced software expertise and a group of technicians are needed to develop and setup the system. Requirement is about 5 units and a manual cashiering unit for conventional customers who does not use credit cards. 95% of the customers are positive about this idea and they want to start up this system as soon as possible. Since every person values time a lot they will use their maximum to reduce the time wasting. Therefore many will visit the stitched up retail store in order to get things done easily. Customer base will be strong and the revenues will increase within a very short period of time due to the vast number of projected customers.

The Need
*people do not have the facility of fit on rooms.

*People get troubled regarding the case.(without fit on a garment they cannot whether the garment suit or not)

*Although some outlets have fit on rooms, customers do not like to use it due to several concerns.(eg: mini-cams)

*We tried to come out with a new generation.

*Our methodology should be practical and applicable in the same way should receive better comments.

Solution
The solution we came up with is Check Fast, which is a scanning machine. It is composed of a RFID scanner. The customer has to enter all the items at point A. As soon as the item(s) are fed to Check Fast it will emit a beam of electromagnetic waves which would identify all the electronically stored information in the RFID chip(s) which are embedded inside the items. Simultaneously the security alarm triggering code in the RFID chip(s) will be over written. As soon as this process is completed the monitor will display information like quantity of items and the net price. The customer will be asked to insert the credit card also. The interface is very user friendly. All the navigation can be done with the aid of a mouse. A customer need not possess very advanced IT skills for this. When the transaction is completed the customer can collect the credit card, and the item(s) will come out from point B. The inventory system will also get updated. Eventually the customer can fill up a poly-bag with the item(s) there itself and walk out of stitched up without triggering the security alarm.

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Mouse

Monitor

Conveyer Belt

Poly-bag Holder

Card Reader

Scanner

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Dimensions of Check Fast

0.2m

1m 0.6m 0.55m

1.25m 2m

Width 0.6m

Roughly volume of Check Fast = 0.6*1.25*1 = 0.75 When the rough volume of Check Fast is considered it is not much apparently. Therefore, five Check Fast units can easily fit in the floor.

Why its innovative

During the customer observation we observed more customers, about 70% settling the bill via credit cards. Even though there were five point of sale systems with five cashiers long queues were seen. We were able to observe customers during the off-peak and peak hours and even during the off-peak hours there were fairly long queues.

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The reason for me to mention all this is to set a platform to pile up the reasons to justify why Check Fast is so innovative. We got the chance to time the transaction speeds of some cashiers and the mean transaction speed was surprisingly 2.45 minutes. If Check Fast handled a transaction it would not even take one minute, so Check Fast is about 275% efficient than a conventional point of sale system. There is another key factor which makes Check Fast innovative. If Stitched Up installed four units of Check Fast and left one conventional point of sale system for non credit card holders, stitched up would only need to pay wages for the cashier at the non conventional point of sale system since four of the cashiers are substituted by four Check Fast units. This is actually a cost cutting method. When the customers were interviewed, they themselves said that this is innovative and that they are eagerly waiting to use it. So we are sure that the customer base would increase with the usage of Check Fast. The payback period for Check Fast units would be less than two years because Stitched Up can increase their profits with a denser customer base while capital could be saved due to the elimination of cashiers. When all these factors are taken into consideration we believe it is very unique since this innovation covers a lot of aspects. RFID system may be broadly used in the world today but after doing a research on this we found out that this unique system is not to be found in Fashion Retail outlets.

Customer Research
The solution we have brought out is very clear now. But it is better to know how the customer or the consumer thinks about this newly invented system. Our customer is the one who faces difficulty due to having no fit on rooms in the shopping floor. So we decided to go back to the shopping floor and get the feedback of those customers about the system which is going to be implemented on the shopping floor of the stitched up outlet. To get the feedback of the customers, we did a questionnaire survey at the stitched up outlets. We randomly selected twenty customers and got their feedback. Below mentioned is the questionnaire we used. 1. Do you like this new system? Yes No 2. Are you satisfied with it? Yes No
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3. Do you think that this system is convenient? Yes No 4. Do you think that still the fit on rooms are needed? Yes No 5. Is this system advantages? Yes No 6. Do you think that there should be other improvements in this system?
Yes No

7. 8. 9. 10.

Comments: Customer 1: We face so much of difficulties due to the absence of fit on rooms here. So we think that this alternative will be really useful for the customers. Customer 2: some people dont like to fit on the garments without washing as if they have already fit on by someone else. So the system is more convenient because we can select a garment without any difficulty. Customer 3: better if you can have a trial session Customer 4: normally people are reluctant to change. They might still look for the fit on rooms. Customer 5: not mentioned Customer 6: if you have the measurements of all the members of your family one can go to the shop and shop for all the members. Customer 7: customers will really like this change. Customer 8: use full application of the developing technology. Customer 9: not mentioned
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Customer 10: not mentioned Customer 11: we can save our time as exchanges will be less. Customer 12: the garments will be clean than before as the customers dont wear them. Customer 13: will be really good. Customer 14: waiting to experience the new system. Customer 15: should be good. Customer 16: will be a new experience. Customer 17: very useful Customer18: like it. Customer 19: really good. Customer 20: a new experience. Procedure Selected a customer. Each of the group members went to the customer and made an introduction about our newly invented system. Gave them the questionnaire. Got their feedback. Analyzed the answers that they have given. ( positive and negative) Analysis Collected all the given sheets to the customers and count the no: of yes. Took it as a percentage of the entire yes and no count. Accordingly 85% of the customers had a positive feedback about the new system. We analyzed the comments of the customers. Then the count of the positive comments was taken as a percentage. Accordingly 75% of the customers had a positive feedback

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Design & Development

Being the managers of innovation and business growth of stitched Up Company we designed a self billing system called Check Fast where the customers can do the billing without a cashier & it takes only about 1/3rd the manual billing time. This is a purely a conceptual development. Why we say like that is because so far no other company has developed such a system. Stitched Up will have to remove most of their manual cashiers since this is a fully automated system, there will be one manual cashiers for people those who do not use credit cards .This is because our system is fully automated and it requires a credit card to purchase goods .Though the initial cost is high profits can be gained in the long run. Stitched Up will have to train some off their staff members apart from the technical team. And we need a separate IT department trained for this system. Once we implement this system to our company we need to have a team to instruct our customers on how to use it because it is a totally new thing for our customers. A maintenance team is required to take care of the machines.

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Investment Requirements

INVESTMENT REQUIREMENTS
Item Cost per unit ($) Quantity Total

Hardware Barcode readers Computers LED Screens Cards for customers (with the barcode printed) Server machine Networking Software applications Inventory control+ billing system Accounting system (optional) Customized software for the business solution (to be used by the customers) Human Resources Operators System Administrator Consultant New system Implementations expences Layout design leaflets location name boards Promotions (Team) Advertising (TV) Launching expences DJ music & Announcing Decorations and Banners Small Gifts Total 300 750 1000 0.2 3 350 20000 150 180 2000 6 2 1 10000 100 1 1 1 1 1 1800 1500 1000 2000 300 350 20000 150 180 2000
72025 $72,025.00

250 675 195 10 1600 1000

15 10 11 1000 1

3750 6750 2145 10000 1600 1000

1500 1000

1 1

1500 1000

15000

15000

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Expected Benefits
Detain interpretation of financial and social benefits of customized E-Fit on system

FINANCIAL BENEFITS: By having direct contact with suppliers we dont need a purchasing department. Let me explain this concept with examples. When Reorder level of angry bird t-shirt is 50, according to the sales department policy their keeping 30 of the angry bird t-shirts in display, if 20 product is being bought by costumers from the display, we have to fill up the display by adding 20 angry bird t-shirt from the warehouse. And the remaining on the warehouse will be 30 and if the purchase department place the order on time normally it will take 2 weeks time receive the product, and the company is maintaining ten as the buffer stock and if the management has not make the order on time due to number of circumstances (holidays), and when the customer purchases the rest 30 angry bird t-shirt on that time, the store will run out of stocks and will cause the customers to reach other stores. If we look into the traditional business process there are number of employees engaged in order to ensure smooth flow of this particular operation. This traditional business operation is handled by the human being so the possibility of the humans error is comparativ ely more. So our team has come up with a new solution so as to minimize the cost plus the humans errors by customizing the existing system. our new customize system will have a direct contact with the suppliers, all the availability of stock will be displayed to the supplier through this computerize system and when the customers buys out the product and when it reaches the limit of 50 product available, the suppliers will ensure to transport the products on time without any interruptions and therefore the availability of products will remain stable. The system will recognize the demand for the specific brands by the number times the data is being entered within the specific time duration and automatically adjust certain amount of percentage more or less depending on the demands of the brand and the system will be sending an automated purchasing order when the product reaches the ROL.

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By introducing this system, purchasing department does not require consequently those who are working for purchasing department can be trained to operate the new systems hence new employees no needed to be hired. The customer satisfaction will be increased since they can buy any brand in any quantity at any time. As a result there should be a core relationship between financial and social benefits. The customer satisfaction will lead to retain the existing customers as well as increase new customers. The other new system that I have come up with is the barcode system. The use of this system would give an advantage to the store, where it helpful to the customers to select the product relating to its brand. Example: when a customer want to chooses an angry bird tshirt and is not satisfied with the color and requires another size, with the barcode system the customer can scan it using the E-Fit-On system to check the availability of the stock in store and choose his/her favorite color and required size as displayed. As a result customer consumes less time in selection of product and system will ensure the accuracy in terms of availability of the stock. SOCIAL BENEFITS: Most of the customers are reluctant to wear the same dress that other wears and when a dress is wearied over and over again will cause the dress to be damaged and to prevent this, the E-Fit-On system will ensure for the product to be hygienic and undamaged due to the use of dummies and its size stabilizing system. Enables the customer to have an outer look of the dress bought and helps them to match up with the top and bottom bought at the same time. Although the direct contact with supplier through the computerize system, will reduce the workload of the employees and this will create a positive impact in stress management. The recording of stock available and required newly is automatically calculated by the system itself, so the staff has no requirement to do several checkups before ordering and after ordering. The store room will be fully updated and there wont be many of the stocks in the store room, which might lead the store room to run as a loss leader when demands of the stock

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decrease. With stabilize product in hand the company has no worry about extra space consumption. The supplier has no need to do paper works dealing with exporting stock to the store rooms. In addition to that suppliers also can be vigilant about the demand of certain brands and their own products in order to take precautionary measures. We believe that spirit of the business is customer satisfaction. Our expectation is to intensify the profit by reducing the cost and through diversification.

The Ask
To implement this system, we need about 1.2 million US dollars, a software development team & maintenance team. According to our calculations, the play back period will be around one and half years.

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