Case study based assignment on supply chain model

Logistics And Supply Chain Management Case Analysis Report

This assessment task will be based on the Case Study – “Ultratex supply chain”, which will be provided on Assignment 3 folder of Canvas. Each student will require to complete the assignment and submit the report on Canvas.

The case analysis report provides an opportunity for students to demonstrate what they have learned during the semester in the course. It requires you to analyse the problems and the likely causes of these problems. To support your answer, you may refer to lecture note (insert reference as RSL 2020 Lecture Note- week no.) and other authenticated sources. A bibliography of all articles and sources of information referenced in the report is mandatory.

Please use the RMIT Business (AGPS) Harvard referencing style.

This assignment must be delivered in a report format containing:

- Title page

- Table of contents

- Introduction

- Case analysis (addressing questions) and discussion

- Recommendation

- Conclusion/

- Reference list

- Appendices (if any)

The report will be evaluated based on the following outline:

A. Introduction (brief); provide explanation of the case, the purpose of the report, key

terms/issues to discuss and the report structure. (2.5 marks)

B. Case analysis and discussion: Identify issues relevant to the questions and discuss

the situation/s using relevant knowledge area (covered in class) and references. (27 marks)

C. Recommendation: provide your recommendations and justifications where applicable (5 marks)

D. Conclusion: Summarise the major issues you have identified and conclude the answers in response including lessons learned. (2.5 Marks)

E. Others presentation; easy to follow/clarity of language, coverage and completeness, page numbers, table of contents, use of references and citation, conciseness.

Assignment 3 (Individual): 40% weight

CASE ANALYSIS REPORT Important note: This ‘case study analysis report’ (individual) is an equivalent to a final exam, You will receive the final results from RMIT and no feedback will we provided following the release of the results on Canvas. Details This assessment task will be based on the Case Study – “Ultratex supply chain”, which will be provided on Assignment 3 folder of Canvas. Each student will require to complete the assignment and submit the report on Canvas.

The case analysis report provides an opportunity for students to demonstrate what they have learned during the semester in the course. It requires you to analyse the problems and the likely causes of these problems. To support your answer, you may refer to lecture note (insert reference as RSL 2020 Lecture Note- week no.) and other authenticated sources. A bibliography of all articles and sources of information referenced in the report is mandatory. Please use the RMIT Business (AGPS) Harvard referencing style ( https://www.dlsweb.rmit.edu.au/bus/public/referencing/index.html). This assignment must be delivered in a report format containing:

o Title page o Table of contents o Introduction o Case analysis (addressing questions) and discussion o Recommendation o Conclusion/ o Reference list o Appendices (if any)

The report will be evaluated based on the following outline:

A. Introduction (brief); provide explanation of the case, the purpose of the report, key terms/issues to discuss and the report structure. (2.5 marks)

B. Case analysis and discussion: Identify issues relevant to the questions and discuss the situation/s using relevant knowledge area (covered in class) and references. (27 marks)

C. Recommendation: provide your recommendations and justifications where applicable. (5 marks)

D. Conclusion: Summarise the major issues you have identified and conclude the answers in response including lessons learned. (2.5 Marks)

E. Others presentation; easy to follow/clarity of language, coverage and completeness, page numbers, table of contents, use of references and citation, conciseness. (3 marks)

https://www.dlsweb.rmit.edu.au/bus/public/referencing/index.html
Page 2 of 5

RMIT Classification: Trusted

Word limit: 2500+10% words (excluding references, title page, table of contents) Assignment submission due date: Final copy of report (softcopy) is due by 11:59PM (Singapore time), on 26th October 2020

Report submission: Submit individual report through assignment-3 submission folder of

Ultratex Supply Chain Ultratex an integrated apparel manufacturing company in South Asia started its operation in

1992 and since then has evolved into a rapidly growing multi-dimensional conglomerate.

Ultratex considers itself as an end-to-end apparel solution provider, starting from sourcing the

cotton and going all the way to providing logistical services to its’ clients. It employs over 300

Management staff and over 15,000 workers. With a vertically integrated setup, the

incorporation of advanced technology and a proficient management team, Ultratex is

emerging strongly as one of the most regarded organizations in South Asia.

Like other companies in fashion industry, Ultratex is dealing with the products which are

characterized by short product life cycles, volatile and unpredictable demand, tremendous

product variety, long and inflexible supply processes, and a complex supply chain. In Ultratex,

supply chain demand uncertainty, lack of historical data and seasonal trends usually coexist.

Ultratex receive orders from western buyers such as H&M, Zara, Target, PUMA, Marks and

Spencer to name a few. They experience the variation in demand of the products they

produce. For example, some of products are in high demand during winter like Jackets,

hoodies and basic t-shirts in summer. They also have noticed significantly increased demand

for some of the products in their portfolio in last 10 years. The reason for the increased demand

is because of increased popularity of new styles among young population group in western

society. Ultratex have some historical data based on which different functional departments

develop their own plan however quite often they experience conflicts among the departments.

In 2019 summer season, Ultratex received an order of 200,000 pieces of tank-tops from one

of the leading buyers. When they receive the order they didn’t have enough capacity to

produce this huge quantity within the deadline. The product was in development stage and in

negotiation with marketing and product development department however, marketing

department could not anticipate any quantity. As a result, production department could not

prepare extra capacity for the order. The suppliers were not able to provide the right quantity

fabric, trims and accessories in time. The distribution and logistics facilities were overloaded

and eventually the shipment was delayed. This resulted in loss of profit because they had to

ship by airfreight which is costly, and customer also dissatisfied.

Page 3 of 5

RMIT Classification: Trusted

Ultratex purchases a lot of items to support company operations and has large supplier base

for each of the item. They purchase items from both local and overseas market. They have

cotton supplier from Uzbekistan, China which is the major item for their production. Other

items such as buttons, zippers, and interlining, gasoline for car in pool, paper for the employee

newsletter, delivery service to the nearby seaport. They need huge quantity of sewing threads

and many suppliers are available in the market. However, high density print is sometimes

asked by their important customer but only a few suppliers can do that, so production line

sometimes need to wait long in the queue of supply line. They have limited number suppliers

for embellishments such as high-quality print and embroidery but as this contributes a lot in

their profit they always look for new suppliers who can provide them economies of scale.

As mentioned before, Ultratex has a number of product line. Due to the increasing demand of

the products, the company is struggling to manage inventory. Therefore, the company

president, Mr. Xavier Tong, has decided to analyse the company’s inventory requirements

utilising the ABC analysis of the existing product lines, as shown in Table 1. Accordingly, Mr.

Xavier Tong has asked Ms. Maria Omor, the inventory manager, to perform the ABC analysis

based on the previous year sales data, as presented in Table 1, and formulate inventory

management strategies for each category.

Table 1: Annual Sales Data

Product line Code Units sold Unit price (SGD)

RHS101 8,800 120

RHS102 800 15

RHS103 1,600 18

RHS104 7,200 114

RHS201 200 24

RHS202 1,000 24

RHS203 11,200 72

RHS204 3,200 18

RHS301 240 36

RHS302 280 48

RHS303 3,400 12

RHS304 6,400 36

RHS401 80 54

RHS402 200 120

RHS403 4,800 6

Page 4 of 5

RMIT Classification: Trusted

RHS404 2,800 15

RHS501 8,400 15

RHS502 1,600 300

RHS503 1,520 156

RHS504 280 18

One of the key components that Ultratex requires for the manufacturing is Yarn. The yarn

comes from a spinning mill of their sister concern. However, they are separate entities and

need to place formal order and logistics management system. The monthly demand of Yarn

is 1,000 pallets where each pallet has 75 units. Currently, there is no order management

system as such but Ultratex fabric management team create order when they need and

organise letter of credit and other financial documents. The price per unit of Yarn is $20. The

cost to place an order to the supplier is 300. The capital cost related to inventory carrying is 5

percent of per unit price of the materials (such as Yarn). The cost of storage space of the

materials are 10 percent of the per unit material price. Both insurance and other inventory

carrying costs related to weight lost, damage and obsolescence is 5 percent of the per unit

material price. Ultratex doesn’t want to stock yarns as it takes up spaces however, they are

also concerned about stock out they are experiencing quite often these days. This hampers

their production line badly.

As mentioned above, Ultratex has vast supply base to keep their production system up and

running. The main raw material is cotton for which supply comes from Uzbekistan, Kakhanstan

and China. They often problem face with supplies due to long distance and impacted by many

factors along the travel like government policy, disruptions, logistics cost etc. However, they

have very limited options as not many suppliers can produce variety of cotton that can meet

customer demands. Historically, Ultratex purchases cotton from their suppliers when they

need using short term contract. As cotton is a prime supply material for Ultratex, they often

struggle with smooth flow of cotton in the supply chain. Ultratex is really in need of supplier

who is capable of high volume and at the same time produce variety of cottons for them. At

the same time, Ultratex also purchases a lot of chemicals from Germany and other European

buyers for their dyeing and colouring plant. There are lot of companies that can supply

accessories like Zipper, buttons, and sewing thread. Ultratex decided to build partnerships by

investing on them and building long term relationships with them. The company need to deliver

the products to the nearest port where buyer vessel waits for the shipment. Now, Ultratex uses

Karingo Logistics as a 3PL service provider to deliver the products to the port. They have

recently decided to create their own logistics network and facilities as demand has increased.

Page 5 of 5

RMIT Classification: Trusted

As part of the increased global concern triggered by the incidents like Rana Plaza, fashion

manufacturers are under intense scrutiny of governments and other stakeholders. Ultratex is

also a facing intense pressure from buyers to eradicate any child labour, providing safe

working conditions for their workers, minimum wages and source environmentally friendly

chemicals and materials in production. They are also currently setting up a source for organic

cotton from Indonesia. Going forward, Manager for sustainability initiatives at Ultratex Mr.

Anirudh Paul currently working on strategic directions the company should go for. He is using

the McKinsey report ( Fashion’s new must have: sustainable sourcing at scale McKinsey

Apparel CPO Survey 201(URL:

https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Fashions%2

0new%20must%20have%20Sustainable%20sourcing%20at%20scale/Fashions-new-must-

have-Sustainable-sourcing-at-scale-vF.pdf) for understanding the future industry-wide

sustainability disruption and wants to ensure his company remains competitive in the future

market.

Questions: 1. Critically examine Ultratex demand management strategy. What sort of demand

management strategy could be implemented to improve demand management at Ultratex and

how? In your opinion how could Ultratex influence customer’s order?

2. Using the quadrant technique, categorise the importance of the items that Ultratex

purchases. Describe the rationale for each item you have identified in each category.

3. Based on the information provided conduct an ABC analysis and explain how Ultratex could

be benefited by categorising the inventory items as A, B, and C.

4. Using the information related to the demand of cotton and by applying the concept of

economic order quantity, determine how many orders should be placed in each year? In

addition, determine the order quantity per order and cost of EOQ.

5. Assess and evaluate the supplier relationship building strategy at Ultratex. Provide pros and

cons to their current relationship building strategy.

6. Review the McKinsey report. Do you think ‘social and environmental sustainability’ will be

the dominant selection criteria for suppliers in future fashion supply chains? Justify your

answer. What are the key areas you would suggest Mr. Anirudh Paul to consider and act on

for future social and environmental sustainability of Ultratex operations?

https://www.mckinsey.com/%7E/media/McKinsey/Industries/Retail/Our%20Insights/Fashions%20new%20must%20have%20Sustainable%20sourcing%20at%20scale/Fashions-new-must-have-Sustainable-sourcing-at-scale-vF.pdf
https://www.mckinsey.com/%7E/media/McKinsey/Industries/Retail/Our%20Insights/Fashions%20new%20must%20have%20Sustainable%20sourcing%20at%20scale/Fashions-new-must-have-Sustainable-sourcing-at-scale-vF.pdf
https://www.mckinsey.com/%7E/media/McKinsey/Industries/Retail/Our%20Insights/Fashions%20new%20must%20have%20Sustainable%20sourcing%20at%20scale/Fashions-new-must-have-Sustainable-sourcing-at-scale-vF.pdf