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02/09/2015
You are getting this mail because you are registered for
the BADM 378 class - The world class course at the College of Business!
This mail is the first in a series of about 30 emails that you all will receive
throughout the semester. The emails will comprise my notes and
observations, class slides if applicable, and general information. Please note
that if you want to email me, do not forget to put BADM 378 in the subject,
else chances are near to 100% that I will not answer; I have strong filters in
place to remove junk, and your email without that subject line would go
directly to my junk folder.
On this Wednesday, we had our introductory session. This predominantly
case-based course is built around the theme of matching supply with
demand. Class slides are attached. Note that this file is password-protected,
the password is your three digit course number. All subsequent slide files
will also be password protected, with the same password.
Class syllabus is on Compass, please let me know if you have any issues.
Your coursepacks are to be subscribed to from two sources: Study.Net and
Harvard Business Publishing; links are on Compass. The coursepacks are
complementary, and together they comprise the complete material
(including problem sheets) that we will cover in this course.
Now to next week. We will go over the basics of matching supply and
demand under uncertain scenarios in the next two sessions. For these
sessions, the note "Abdul" in your Study.Net coursepack provides the basic
material. Please come prepared to the class, after skimming through the
note. Please try to get a hard copy of the Abdul case with you.
I-Clicker : In- Class Registration on 26-Jan
As detailed in your syllabus, you are required to get the I-clicker remote for
in-class participation. I-clicker is a response system that allows you to
respond to questions I pose during class; you will be graded on that
feedback and/or participation.
You will need to register your I-clicker remote in class on 26-Jan.
I will project a Registration screen with 3 steps to follow (look for your
name, which will alphabetically scroll down the screen). Once your remote is
registered, your name will no longer appear on that scrolling list and you are
registered for the entire semester. We will use I-clicker in almost every
session in class from 26-Jan onwards, and you are responsible for bringing
your remote in every class.
If for some reason, you plan on missing the class on Jan-26, you can always
register your remote in the next class on 28th Jan. There will be no
subsequent opportunity to register. Please keep in mind that I have
programmed my base station such that Iclicker responses will NOT work
without registration. Therefore, unless your remote is registered, you will not
earn any Iclicker points.
substitutes Zara also minimizes (but does not eliminate) the second problem
of supply chain.
Hope this helps. See you on Wednesday with the second darling of Fashion
industry - Benetton. For Wednesday's class, here are some questions to help
you prepare. Remember, starting Wednesday, I will call on some of you (with
randomly picked names) to participate, as the class proceeds. Read the case
carefully, and prepare well before the class.
(1) What is Benetton's approach to solving the two problems of supply chain
- excess inventory and angry customers (lost sales)?
(2) How is Benetton's approach to outsourcing different from that of Zara?
What are the pros and cons?
(3) As per the case, how does Benetton gain advantage over its competition
in Europe? Focus on the elements of logistics, manufacturing,
marketing/advertising and financial policies .
Today was a lot of fun; I thought I would put down the combined
wisdom in a mail.
The main learning from Benetton should be unambiguous:- The firm relied
on two complementary manufacturing processes. One offers significantly
lower costs than competition (reason - outsourced production); the second
provides more flexibility than competition can achieve (reason postponement of dyeing). Lesson - Flexibility is great, but it is costly.
For its production, postponing the dyeing for a minor portion of its products
allows the firm to "meet market needs". But, this is costly - dyeing is
inhouse, and there seems to be a bottleneck in capacity (Why? I hinted at
this in class, but do re-read the case to find out). On the other hand, this
"meeting the market needs" strategy lowers the cost of unsold inventory - so
Benetton saves on costs by matching supply with demand. In addition, the
subcontractors lower costs of production (even though they are the cause of
higher costs of transportation, in addition to higher lead times).
Think about Zara here. Contracting leads to slow response - Zara is fast,
because it is almost vertically integrated. But Contracting provides overall
lower costs.
Benetton's financial strategy is also interesting. The firm passes risk to
subcontractors and retailers. We discussed how the firm finances retail
inventories (payment in 30-60-90 days but guaranteed by "no return"
policy) and paid its subcontractors after 70 days. So, overall, its working
capital requirement was very low.
The firm is known for its marketing strategies as well. It relies on good
design and color palettes on retail shelves, customer access to merchandise,
chooses high traffic locations - bringing product to customer, uses vibrant
colors and fashion, multimedia advertising...
****
At this point, we have covered the analytical tools required for you to take a
shot at the problem sheet 1. (The sheet is in your Study.net course pack).
There are 3 problems - Problem 1 needs the basics discussed in session 2,
and problems 2 and 3 need the details of session 3. You should try to solve
the problems individually.
I distributed the solutions to the problem sheet in class today. My suggestion
will be to peek at the solutions only after you have made a very thorough
attempt at each problem and problem sub-parts.
Why so? If you do not attempt the problems yourself, you will never know
why you were arriving at the wrong solution!
I believe that the problems in your sheet cover a very wide variety of
situations. They are not difficult, but it is extremely tough to catch up with
problem solving later in the semester, when all your courses demand your
attention.
Please note that the problem sheet solutions are not to be submitted (and
therefore will not be graded).
Hope this helps. Please let me know if you have queries. See you on
Monday with the third case in fashion industry! Stay tuned for preparation
mail for theMonday case (Sport Obermeyer).
Attached are the main slides for Zara and Benetton sessions.
Now for Sport Obermeyer : The third fashion case to be discussed
in Monday's class. For this case, my suggestion will be to concentrate on the
case study itself, which is very rich (so web surfing is not required).
Prep Q1. Sport Obermeyer has difficulty in predicting the demand for ski
wear. What operational changes would you recommend to Wally to reduce
costs? Take a look at each of the following questions, and think about them,
with reasons and analysis, supported with case data.
(a) Where should he produce? Why? If you advocate producing both in China
and HongKong, can you analyze the case data as to how much should be
produced at these two locations?
(b) How can he improve forecasts? Use your knowledge of previous courses.
(c) How can he reduce lead-times? Which products or components require
lead-time reduction? Pick up examples from case, justify.
(d) What changes should he make in the product portfolio?
Prep Q2. What is the value that Obersport adds to the supply chain? Can
Obermeyer directly deal with Lo Village factories? Why or Why not?
Finally, as a prep for Quiz 1 (scheduled ....shezuled?) on Feb 18th: 2013
Final Exam question.
Prep Q3. You operate a small tee-shirt silk screening company. "Illinois
Professional" football team has just made it to the NFC Championship game,
which will be played in one week. You are considering selling tee-shirts with
NFC Champions blazed across the top of the shirt along with the Illini
mascot. If the team indeed wins, these shirts will sell extremely well, but if
they lose, then there will clearly be no demand for these shirts.
Unfortunately, you must print the shirts before the game because otherwise
there will not be enough time to take advantage of the hype. You estimate
that there is only a 40% chance the local team will win, but if they win, you
figure your demand will be normally distributed with mean 15000 and
standard deviation 6000. It costs $5.50 to buy and silk screen each shirt,
you will sell these shirts for $12.50 each and any leftover shirts (whether the
team wins or loses) can be sold to a liquidator for $0.50 each.
Suppose you print 18,000 shirts and suppose you get lucky and the team
wins. What is your expected profit?
I will detail the solution to this problem in the review session on Feb 16th.
Till then, practice!