Group 17: Yasmin Mousa, Alveena Rehman, Paul Tran, Huyen Vu, Omar Almaaz
MISSO x BCO Case Competition FA24
MISSO X BCO CASE COMPETITION
OPTIMIZING SHOPX OPERATIONS
Shop X
Agenda
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02
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Overview
Key Finding
Problems
Risks
Impact
Solutions
Future Outlook
Overview
This report aims to identify operational bottlenecks and inefficiencies in ShopX’s order fulfillment and inventory management processes.
We utilized Excel to analyze customer orders, product inventory, and delivery data, focusing on three key areas for improvement:
Approach
Summary:
1. Order Processing: Identifying delays and peak sales periods
2. Inventory Management: Analyzing stock levels, restocking patterns, and instances of stockouts
3. Delivery Efficiency: Assessing average delivery times and shipping vendor performance.
KEY FINDING
2023
998,639$ Revenue
27, 444 Items
10 Countries
5 Continents
14,972,751 Customers
5 Vendors
20 products
~ 5 items/day
Top 10 Products
with Most Revenue
Revenue Analysis
Revenue by Country
Top 10 Products with the
Most Sales Volume
Highest Revenue Item
Best-Selling Item
80% of Revenue
37% of Revenue
Top 5 Revenue
Sales Trends: Total by Month
Total Sales By Month
Highest Sales Month
Total Quantity Sales
Total Revenue By Month
Highest Revenue Month
PROBLEMS
Inventory Current State
Lack of tracking leads to insufficient orders for inventory (Inbound Logistics)
01
02
Missing records regarding vendor delivery dates and inventory data
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Products frequently out of stock during high-demand periods
JB Hunt identified as having the slowest shipping times
Introduce the project. Provide a quick background and rationale. Briefly share its overall scope as well as expected outcomes.
Inventory Tracking
Stockouts During Peak Sales
Incomplete Records
Shipping Delays
Out of Stock Trends By Day
Out of Stock Trends By Month
Stock-outs During Peak Sales
No sales consistently occur at specific times of the month, suggesting patterns linked to operational or inventory factors:
Following the peak sales months of August, December, and October, we observed notable out-of-stock trends in:
Assumption: Due to the absence of complete inventory data, we assume that the days without sales following peak sales periods are indicative of out-of-stock conditions. This assumption is based on the understanding that a lack of available inventory would directly impact sales performance.
Data Analysis
J.B Hunt proven to have the slowest average shipping times (where 1=UPS, 2=FedEx, 3=Maersk, 4=DHL, 5=J.B Hunt)
97%
of Inventory Records missing Arrival Dates
SOLUTIONS
Incorporate Real-Time and Order Tracking Software
Partner With a Third-Party Logistics Provider
Establish a Vendor Managed Inventory (VMI) System
Address Inbound Logistics
Work with vendors to set up a VMI system where they monitor ShopX’s stock levels and automatically restore inventory as needed. Providing vendors access to ShopX’s inventory data will allow them to proactively manage stock and prevent shortages.
Why it works: This shifts the responsibility of managing stock levels to the vendors, ensuring that they can anticipate and meet the demand without ShopX having to manually place orders.
Implement a comprehensive inbound logistics tracking system that provides real-time status updates on shipments, delivery schedules, and potential delays.
Why it works: Real-time visibility into ShopX’s inbound logistics pipeline enables proactive decision-making. ShopX can track shipment status and adjust operations accordingly, such as rerouting stock from backup suppliers or prioritizing urgent shipments.
A good third-party logistics provider (3PL) can offer scalable fulfillment solutions, where ShopX can outsource order fulfillment for peak periods.
Why it works: By outsourcing fulfillment and warehousing during peak times, ShopX can avoid the fixed costs of maintaining high inventory all year round, while ensuring demand can be met without delays. This also offloads some of the logistical burden to experts in the field.
Pre-Sale Inventory Buildup
Analyze historical sales data and forecast demand well in advance of peak sale period.
Work with vendors to increase inventory before these periods to ensure sufficient stock on hand. By proactively building up inventory, ShopX can reduce the risk of running out of stock during high-demand periods.
Write your topic or idea
Elaborate on what you want to discuss.
Elaborate on what you want to discuss.
Implement Inventory Tracking Software
Set up automated inventory tracking software that triggers alerts when stock levels fall below a certain threshold.
Automated systems ensure that you always have visibility into stock levels and can take action immediately when they fall below your target.
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Write your topic or idea
Elaborate on what you want to discuss.
Elaborate on what you want to discuss.
Product Prioritization
Identify your best-selling products and prioritize stocking these items during peak sales periods.
For example: Succulent Plants are least in demand and provide the lowest amount of revenue, so discontinuing would mean putting more resources towards more popular products to decrease their stockouts.
Address out-of-stock products during peak sales
Address Out-Of-Stock Products
Chart Page
Address out-of-stock products during peak sales
Address Slow Shipping Vendor
Improve Internal Process
Consider Replacing the Vendor
Review and optimize your internal order processing systems to ensure that orders are processed to the shipping vendor as quickly as possible. Minimize the time between order placement and handoff to the shipping vendor.
Why it works: While the vendor may be slow, speeding up your internal processing time helps minimize the overall delay. Fast internal processing gives the shipping vendor more time to meet their delivery deadlines.
If after attempting to improve performance the vendor still underperforms, consider replacing them with a more reliable shipping partner.
Why it works: Replacing an underperforming vendor ensures that your customers receive their orders on time, improving customer satisfaction and loyalty. This also helps prevent further disruptions to your outbound logistics.
RISKS
RISKS
Software Implementation
Product Discontinuation
Dropping Shipping Vendor
Economic: Can be incredibly expensive to purchase the selected system based on the plan and expansion. Depending on the number of warehouses and size of the global network, it could easily cost up to $500k depending on licenses, tier of plan, integration and infrastructure costs, maintenance upkeep, and security measures.
Social: Could have an established solid reputation with certain customer bases and have an outreach into markets that are harder to reach.
Labour: It has a strong US labor force that could see a loss of jobs for truckers, warehouse workers, and other employees if ShopX drops them.
Economic: It might be more costly to ship with other vendors in certain places based on negotiations, customs and other economic barriers.
Social: Succulents are trendy with younger and health-conscious consumer bases, so discontinuing them could alienate these consumers or attract negative attention.
Environmental: It could lead to a waste of unused resources and unsold products if immediately discontinued, as well as money invested in production.
FUTURE OUTLOOK
Improved Inventory Management
Employee Training
Product Line Reprioritization
Faster Shipping Vendors
Strategic Future Impact
Strategic Future Impact
Global Warehouse Expansion
Better Peak Sales Forecasting
Environmental & Sustainability Benefits
THANK YOU!
QUESTIONS?
ShopX