Case Study: AusCotton
AusCotton is a Multinational Company Manufacturing Winter and Summer Outdoor sports apparel. The range of winter outer clothing includes Ski Jackets, fleece, windbreakers and footwear. The summer range is totally different which includes running attires like shorts, shirts, windbreakers, backpacks, hydration systems, and footwear. The headquarters of the company is in Geelong but it operates its business through retail outlets in different areas such as Australia, New Zealand, Europe, and North America. In addition to its physical retail outlet's company has started its online retailing store with a full product range. The company has become a trendsetter and the most profitable company in the clothing industry of Australia.
At present, Auscotton has many contacts with different manufacturers in China, Taiwan, Vietnam and India to make different variety of clothes for the wide product line, which are produced in the manufacturing lead time of 4 to 12 months depending upon the range of clothes, complexity of arranging raw material and manufacturing process of single item. The shipment of the products and supplies is being done through sea or air routes to the destination country. The selection of route depends upon the urgency of delivery, to ensure efficient delivery in various countries every day the company has tie-up eight distribution centers over a globe. To utilize the manufacturing unit of the company and owned distribution centers a year around, the company has started its new seasonal product line. The major areas of concern experienced by AusCotton over the past few years are as follows:
The Intense competition from competitor manufacturers dealing in the same winter and summer product range has provided high-profit margins because of emerging of few competitors in recent times.
The demand forecast of the company for summer and winter products is not appropriate, which is raising the problem of stock out, variations in the lead time of manufacturing, consistency of operations and cost of transportation of products. It could create a bad impact on the company in the market.
AusCotton has to formulate the meaningful strategy to improve the supply of products of the company on a wider scale and which can guide for overall approaches of the company.
The manufacturer partners of the company are dealing with illegal and counterfeit merchandise. They are cracking counterfeit dealings through the gray market which also affects the reputation of the company.
In this assignment, a student has to play the role of Senior Vice President of Supply Chain at AusCotton and evaluate the challenges of procurement and supply chain faced by the company. The analysis of all the situations, problems, and challenges faced by the company will be done by visiting the global facilities of the company and answer the following questions to help the company:
1. As the company has global existence, so the global environment and the market positioning of Auscotton has to be analyzed in respect to market supply and strategic sourcing.
2. What is the impact of inappropriate forecasting of demand for AusCotton products, volatility in the lead time, cost of transportation from manufacturer to the distribution center? What measures should a company adapt to resolve this issue?
3. Which factors of strategic sourcing process of AusCotton must be resolved at priority?
4. Which contracted manufacturer companies are involved in illegal merchandise that will affect the competitiveness of AusCotton in the market?