Replenishment /TOC Supply Chain solution Of Scullers Brand at Indus league clothing (future group )

Harmukh meena(142/48) Maha Rishi (199/48)

Replenishment
Final product categories Distribution network Replenishment lead time (RLT) Excessive inventories TOC solution Thinking process

Brief History
Scullers is a leading brand in chinos (trousers) in apparel industry for both men and women. Launched in sept.1999 by Indus league clothing ltd. Acquired by FUTURE GROUP(pantaloons) in 2005

Main products of Scullers are 1. Backpacker products

2. This is life : smart casual 3. Irish linen shirts: premium relaxed shirts 4. Prepped : contains formal product for men and women 5. Crush free chinos 6. Working chinos 8 easy care 9 All day

Distribution network
Customer customer

Retailer

Retailer

Regional WH 1

RWH2 Central warehouse

RWH3

plant

Vendor 1

Vendor 2

Vendor 3

Replenishment Lead Time

Order time:
central warehouse manager gets order from the stores all over the India at the same time whenever a product is being sold out (0days)

Production time: 40-45 days(leading to excessive

inventory)

Transportation time: 1 day for Bangalore, 7 days for other

states.

Inventory Details
Product name shirts Trousers 20 30 25 30 20 20 20 Excessive inventory in each category for every 3 months 15% 15% 20% 0% 10% 5-10% New product 0% Backpacker :shirts & 20 trousers This is life: shirts & trousers Prepped : formal wear Crush free chinos Easy care Working chinos All day chinos Premium Irish Lenin shirts 30 25 0 0 0 0 20

Supply chain problems

PROBLEMS DUE TO THIS SUPPLY CHAIN PROCESS Stock outs (cheetah items) High inventory in some products(elephant items) Lack of responsiveness to customer needs Opportunity loss Potential Causes of the Problems Lack of good forecasting model Less Replenishment Frequency High setup time/batch size Difficulty in introducing new products Push tendency

TOC solutions
1. Aggregate stock at the highest level in the SC- the PWH/CWH 2. Determine stock buffer sizes for all chain locations based on demand and replenishment lead time 3. Increase the frequency of replenishment in fast moving products (should be around 5-6 days) 4. Manage the flow of inventories using buffers and buffer penetration 5. Use Dynamic Buffer Management (DBM) 6. Set manufacturing priorities according to urgency in the PWH /CWH stock buffers.

1. Aggregate stock at the highest level in the SC- the

PWH/CWH Increase the replenishment frequency for the fast moving products (cheetah items) in store which are located in forum mall, electronics city and garuda mall. Currently , replenishment is happening once in 9-10 days which is why stock out problems are their and lost of sales, it should be reduced to at least 5-6 days . Buffer size at first divergent point CWH in this case is quite good. But the buffer size at consumption point should be increased which is around 80-90 for trousers and 100 for shirts.

Buffer penetration
Before applying DBM , we would like to give an idea of buffer size for each SKUs and buffer penetration actions. Here, The buffer size is divided into three equal zones: Green, Yellow and Red. Buffer penetration will be calculated in this way :The number of missing units from the buffer divided by the stock buffer size expressed as a percentage & divide the buffer in 3 regions Less than 33 % buffer penetration: Green Between 33 and 67 % buffer penetration: Yellow Between 67 and 100 % buffer penetration: Red 100 % buffer penetration (being stocked out): Black

Dynamic Buffer Management (DBM)

The buffer size is too high: the relevant SKU is staying in the green region for three consecutive replenishment periods, Action: Reduce buffer size by 33%. The buffer size is too low: The SKU inventory, after replenishment, stays in the red zone. Action: Increase buffer by 33% After adjusting the buffer, the SKU needs to go through a cooling period in which no buffer changes are suggested until the system adjusts to the revised buffer size

Thinking Process
Undesirable effects (UDEs) 1. Particular size is not available 2. Color is not available 3. Design/variety problems 4. Store location 5. Stock out 6. Excessive inventory 7. Lot of returns to warehouse 8. High transportation lead time 9. Price 10. Market share is declining 11. Lack of new arrivals

CRT
Company's Market shares Declining Less profit High discount sales on elephant items Excessive inventory of slow moving items Old stock is carried forwarded in slow moving products Stock-out in fast moving items Particular size /design/colors is not available Replenishm ent frequency is less

Lack of new arrivals

Loss of sales
Consumers Buying from competitors

Stores are not properly located in some malls

Pricing of products is high

Production in bulk at a time

INJECTION
We are using the differentiation approach of injection
Large Throughput Provide a large variety /design of products

Profit maximization Focusing on fast moving products & reducing expenses Reduce the variety

FRT

Increase in customer loyalty

Increase in sales and profit Less excessive inventory Reduce the variety

Lots of varieties /size available Provide a large variety /design of products

Operating expense reduced

Large Throughput
Profit maximization

Focusing on fast moving products & reducing expenses

PRT
Large no of varieties/designs

Availability

Procurement of fabric
Availability of designers

Selection of designs

PRT
Less varieties and focus on standardization of fast moving products
Availability of past sales data To find out the items having consistent sales