In-Course Assessment Brief Post-Graduate Programme Academic Year 2017/2018 Module: ENG7056 Operations and Supply Chain Management Assessment Title: Procurement Case Study – Supply Chain Management Assessment Identifier: CWRK001 School: Module Co-ordinator: Assessment Details and Deadlines: Presentation to be conducted in Week 10 Submission of assignment to be in Week 11 Brief Assessment Details In this assessment you will undertake: Two Pieces of coursework: Individual Presentation of 30 marks: 1. Overview of current scenario and analysis of the key issues in the case study, 2. Identification of the current costs allocations and vendor rating system 3. Harmonization of key processes and operations The report (70 marks) will address the following 1. Overview of the current scenario and the current problems being encountered. 2. Plan to include optimisation of operations 3. Frame work for the current costs allocations 4. Recognise pricing point of product (what the market sustains) 5. Vendor Rating system (Supplier selection) 6. Inventory control methods to be deployed 7. Implementation plan for new framework of the system An individual typed report in MS Word of 3000(+/- 10%) words excluding bibliography and appendices. Total Marks 100 IMPORTANT STATEMENT Plagiarism: the presentation of the work of another (from whatever source: book, journal, and the Internet) as if it were one’s own independent work. This can be anywhere on a continuum ranging from sloppy paraphrasing to verbatim transcription without crediting sources. You are advised to refer to the Student Handbook on matters of cheating and plagiarism as they relate to coursework, group assignments, class tests and examinations. Both cheating and plagiarism are totally unacceptable and the University maintains a strict policy against them. It is YOUR responsibility to be aware of this policy and to act accordingly. The University requires that the following statement is included in all module documents. “You are reminded of the University Disciplinary Procedures which refer to cheating. Except where the assessment of an assignment is group-based, the final piece of work which is submitted must be your own work. Close similarity between assignments is likely to lead to an investigation for cheating. It is not advisable to show your completed work to your colleagues or to share and exchange disks. You must also ensure that you acknowledge all sources you have used. Work which is discovered to be the result of collusion or plagiarism will be dealt with under the University’s Disciplinary Procedures, and the penalty may involve the loss of academic credits. If you have any doubts about the extent to which you are allowed to collaborate with your colleagues, or the conventions for acknowledging the source you have used, you should first of all consult module documentation and, if still unclear, your module tutor.” You will be asked submit electronically via MyCourse/Moodle It is the STUDENT’S responsibility to accurately complete the form and comply with its rules and guidance as described in the student handbook for this academic year. Learning Outcomes to be Assessed: 1. Demonstrate an understanding of issues in operations management using a variety of delivery modes. 2. Demonstrate an understanding of sales order planning. 3. Analyse and demonstrate best practices of the procurement cycle concepts. 4. Critical analysis of organisations operation processes and the integration of processes for effective operations management. 5. Evaluate and interpret the nature, scope and purpose of strategies for efficient logistics and supply chain management. Assessment Criteria: See Attached. Assessment Details: All reports to be submitted on the “moodle” site in MSWord Assessment Details: Procurement Case Study: Johnson Skin Care Products Refer to text of Supply Chain Logistics Management on page 468 to 470 by Bowersox, et al. 2013. Background: Johnson Skin Care Products is a manufacturer of men’s and women’s organically based skincare products. The company is based in Kentucky and has developed several new and exciting products for sales through retail stores in the U S market. Historically, the company has distributed its products to the institutional market. Its direct customers included spa, hair salon which provide services such as facial treatments, and other such businesses. These customers had been enthusiastic in their reception of Johnson products and sales have grown rapidly. The recent year sales were slightly over $36 million and operating profit was over $4.8 million. The company’s Return on Assets, measured as Operating Profit divided by Invested Capital, was an admirable 28 percent. After considered market research, the company decided to enter a more traditional market by selling and distributing its products through a network of retail stores for sale to consumers. Being new to this type of channel, the company president, Jim Johnson, hired Bob Basset into a new position at the firm, Director of Logistics. Bob is a relatively young man, age 34, who received an MBA with a concentration in supply chain management from a major Midwestern university. Following college he worked for six years in several different positions at a large health and beauty aid manufacturer. Bob had progressed rapidly in his short career and Jim felt confident in his choice despite Bob’s youth. Bob settled into the new position, spending the first few years familiarizing himself with the company’s and current operations. He learned that Johnson Skin Care’s product line consisted of slightly over 100 SKU’s but the vast majority of sales were accounted for by three product categories: mainly women’s foot care (WFC), men’s foot care (MFC), body butter (BB). It was expected that the same sales pattern would be true in the new distribution channel. The market research team had developed an initial year forecast for the new channel (Table 1) based on expected average unit selling price to the retailer for these three categories. Table 1: Forecast Sales and Selling Prices WFC MFC BB Annual Sales $15,000,000 $4,500,000 $2,000,000 Average Unit Price $5.00 $4.50 $6.25 Having worked in a large manufacturer before joining Johnson SKIN Care, Bob was not surprised to learn that the primary components of each of these products were quite similar to each other. While there are other minor ingredients costing only a few cents each, the five major components consist of: • Bottle • Shea Butter • Ocean Mist Scent • Fresh Sky Scent • Mountain Air Scent Each product is made of three or more of these components: • WFC is comprised of Bottle, Shea Butter, and Ocean Mist Scent. • MFC is comprised of Bottle, Shea Butter, and Fresh Sky Scent. • BB is comprised of Bottle, Shea Butter, and a combination of both Fresh Sky and Mountain Air. The manufacturing cost of each product can be determined from the data in Table 2. These costs include the contract manufacturer’s profit margins. Table 2: Manufacturing Cost Data Bottle $0.60 Shea Butter $0.80 Ocean Mist $0.25 Fresh Sky $0.20 Mountain Air $0.30 Labour $0.40 Packaging $0.50 Bob visited each facility in Johnson’s current supply chain. The company uses two contract manufacturers to actually mix the ingredients, bottle and package the finished products. The two contract manufacturers are allocated in New Jersey and California. The California plant produces WFC. The New Jersey plant produces MFC and BB. All products are single sourced, so neither of the plants produces the same product within a category. Table 3 provides case pack information from the plants. Table 3: Case Pack Data Average Unit per Carton Volume per Carton (cub. M) WFC 27 0.05 MFC 12 0.034 BB 20 0.05 The company has three staging warehouses (SWs) located in New Jersey, Kentucky and California. Regional demand has been aggregated into five regional distribution centers (DCs). Each plant ships its production to the staging warehouses which, in turn, ship to the five regional distribution centers. Any staging warehouse can ship to any distribution center. The forecasted demand by region is provided in Table 4. Table 4: Forecast Demand by Region North East Midwest South Northwest Southwest 30% 20% 30% 5% 15% Transportation lanes from the plant to staging warehouses and from staging warehouses to the regional distribution centers will consist of full truck loads. A full truck contains of 100 cubic meters. Johnson Skin Care products typically weigh-out a truck before cubing out a truck. The products will only fill 70 percent of a truck’s cubic capacity before it weighs out. Bob spent considerable time researching transportation cost data and developed Table 5 regarding transportation cost. Table 5: Transportation Cost per Truckload Plants to SW New Jersey Kentucky California New Jersey $ 100 $ 600 $2,000 California $2,000 $1,700 $2,000 SW-DC North East Midwest South Northwest Southwest New Jersey $ 100 $ 800 $1,000 $5,000 $5,500 Kentucky $ 700 $ 200 $1,500 $3,000 $3,500 California $5,000 $3,750 $3,250 $ 600 $ 300 The distribution centers will deliver to stores throughout the United States. Bob felt that he could omit that cost for the moment as he pondered what the total cost of distribution. There are certain alternative networks, particularly related to the assignment of staging warehouses to the distribution centers. To complete his analysis, he assumed that the overall inventory turnover rate would be would be five per year. He also knew that Johnson Skin Care historically had an inventory carrying cost of 18 percent based on average inventory for the year. Written report to include the following: • Overview of the current scenario and the current problems being encountered. • Plan to include optimisation of operations • Frame work for the current costs allocations • Recognise pricing point of product (what the market sustains) • Vendor Rating system (Supplier selection) • Inventory control methods to be deployed • Implementation plan for new framework of the distribution system • Recommendations regarding the company’s policy of offering all its customers for the same service level In your report you will need to consider and develop: • A cost allocation policy • A pricing policy in terms of price fluctuations • Identify a recognised pricing point for relevant products • Develop a Supplier Selection policy and system • Streamline/reduce the processing time • Action plan for the project Written report to include the following: • Overview of the current scenario and the current problems being encountered. • Plan to include optimisation of operations • Frame work for the current costs allocations • Recognise pricing point of product (what the market sustains) • Vendor Rating system (Supplier selection) • Inventory control methods to be deployed • Implementation plan for new framework of the distribution system • Recommendations regarding the company’s policy of offering all its customers for the same service level (three-day fulfilment cycle) In your report you will need to consider and develop: • A cost allocation policy • A pricing policy in terms of price fluctuations • Identify a recognised pricing point for relevant products • Develop a Supplier Selection policy and system • Streamline/reduce the processing time • Action plan for the project Table of Assessment Criteria and Associated Grading Criteria: Assessment Criteria  Presentation Individual Report Supplier Selection Interaction Written Communication Weighting 30% 30% 30% 10% Grading Criteria 0-29% No or limited presentation, does not address criteria. No coherence and logical format. No real effort on developing a Supplier selection or vendor rating system. No real effort on developing a strategy, no participation. No diagrams/tables used. Limited number of sources used. No analysis undertaken Some attempt to structure the report. No tables/diagrams used. No indication of academic language has been used. Report is descriptive, no analysis has been undertaken. Poor quality sources (e.g. Wikipedia and commercial internet sites). Over reliance on lecturer slides and notes. Limited number of sources, no citation list of references. Evidence of plagiarism. 30-39% Attempted presentation and limited responses to assessment criteria. A poor effort at developing a Supplier selection or vendor rating system Little research, limited plan of use of criteria Basic structure of a report used with inappropriate content used in the headings. Few diagrams/tables uses, cut and pasted, and no appropriate sign posting. No indication that academic language has been used. Report is descriptive. No analysis has been undertaken. Poor quality sources taken from the internet or only lecturer’s notes. Limited number of sources used. No citations or list of references. Evidence of plagiarism. 40-49% Partly developed presentation but in sufficient to achieve a pass mark. Good effort at developing a Supplier selection or vendor rating system Partly developed a plan and strategy based on limited research and the use of criteria, partly developed a plan of integration, limited interaction. Correct structure but with some inappropriate content used in the headings. Diagrams/tables used, cut and pasted and no appropriate signposting. Basic use of academic language. Has attempted analysis but there are errors in understanding 50-59% Good presentation based on all assessment criteria. Follows a logical format. Detailed effort at developing a Supplier selection or vendor rating system which shows a logical conclusion how suppliers have been chosen A detailed plan and strategy based on extensive research and the use of criteria, partly developed a plan of integration, good interaction. Good structure and content used in the headings. Diagrams/tables used, Good use of academic language. Has attempted analysis but has errors 60-69% Very good and detailed presentation but strategy based on limited research and the use of selection criteria and partly developed a plan of integration. Detailed effort at developing a Supplier selection or vendor rating system which has been developed and compared against other systems, this shows a logical conclusion how suppliers have been chosen A very detailed plan and strategy based on extensive research and the use of criteria, partly developed a plan of integration, good interaction. Good structure and content used in the headings. Diagrams/tables used which have been well referenced. Good use of academic language. 70+% Excellent presentation which has good references and a defined strategy based on research and the use of selection criteria, and partly developed a plan of integration. Very detailed effort at developing a Supplier selection or vendor rating system which has been developed and compared against other systems, but the system has been developed with a for criteria and shows a logical conclusion how suppliers have been chosen A very detailed and extensive plan and strategy based on detailed research and the use of criteria, which has been developed a plan of integration, good interaction. Excellent structure and report. Diagrams/tables used which have been well referenced. Good use of academic language.