Supply Chain Engineering -
Dollar Tree
Product Contents Project
Earphones
White Team
Jin Cao, Haosen Xu, Utsav Dedhia,
Jonathan Wang, Ishani Prachchhak
PROJECT TEAM
Utsav Dedhia
Jining Cao
Haosen Xu
Jonathan Wang
Ishani Prachchhak
Contents
Packaged Product
Introduction
From our Network Container part we profitably delivered 1,000,000 wired Earphones per year for 60.23 cents/unit from a qualified factory located in China to the United States market through Dollar Tree Distribution Centers.
Furthemore, we were able to fill a pallet with 2,560 units and a FEU with 102,400 units.
Dollar Tree is expected to grow revenue through the acquisition of new retail stores this year.
To support this investment new Product Contents were planned to reliably deliver greater than 1,200,000 wired Earphones per year with greater than 7 Inventory Turns/Year.
To achieve that we used a Forward Supply Chain Network, to connect Chinese wired Earphone with the United States Market through 15 Dollar Tree Distribution Centers and a total of 7,580 Retail Stores.
SUPPLY CHAIN CONSTRUCTION REQUIREMENT SPECIFICATION
Attribute | Description | ||
Network Type | Forward Network | ||
Market Segment | Dollar Tree Store Customers | ||
Product Family | $1.0 Sport Earphones | ||
Project Objective | Design a Forward Supply Chain Network, to connect Chinese Sport Earphone with the United States Market through 15 Dollar Tree Distribution Network and Retail Stores. Deliver greater than 1,200,000 Sport Earphones/Year with greater than 7 Inventory Turns/Year. | ||
Specification | Value | Dimensions | Validation |
Throughput | >1,200,000 | Units per year | Accept / Reject |
Factory Cash-to-cash cycle | Velocity: 64 Variability: +/- 7 | Days +/- +/- Days | Accept |
Distributor Cash-to-cash cycle | Velocity: 42.4 Variability: +/- 7 | Days +/- +/- Days | Accept |
Factory to Distributor Price | 0.5233 | Dollars per unit | Accept |
Distributor to Store Landed Cost | 0.6023 | Dollars per unit | Accept |
Finished Goods (FG) Inventory | > 7 | Turns per year | Accept / Reject |
Distributor Cycle Stock Inventory | > 7 | Turns per year | Accept / Reject |
Delivery Lead Time | Vocalize / Visualize | Days / Days | Accept / Reject |
ROIC | | Percentage | Accept / Reject |
Operating Strategy & Push-Pull Boundary
Echelon 4
Supplier A
Supplier B
...
Supplier J
Supplier K
Echelon 3
Echelon 2
Echelon 1
DC 1
Customer
DC 2
...
DC 14
DC 15
Factory
Dollar Store
Push Zone
Pull Zone
Operating Strategy: BTS (Build-To-Stock)
Push-Pull Boundary: Distribution Center
Composite BOM
Stores Allocation
Forecast Demand
EOQ & Lot Size Calculation
Pallet Size: 2,560 units
Set Up Cost: $50/ order
Holding Cost $2/unit/year
EOQ:
Example: Joliet, IL
EOQ=3,352 units
Base lot: 2 pallets = 5,120 units
Two-week Demand: 11,238 units
Lot Multiple: 3 X 2 base lot = 15,360 units
Network Constraint
Inventory turns
Minimum Turn: 7.49
Distribution Resource Planning (DRP)
6496-5120=1376 < 1455
Lead Time: 7 weeks
Containerization Plan
Master Production Schedule (MPS)
EPQ= (√((2*Annual Demand*Setup Cost)/Holding Time))*(√(Production Rate/(Production Rate-Usage Rate))
Chinese New Year
ROIC Calculation
Inventory Days of Supply = ($Merchandise Inventory/ $COGS) x365 days
ROIC = ($Net Income x100%) / ($Assets Net of Depreciation +$Merchandise Inventory +$A/R -$A/P)
Value Circle
Risk Analysis of Dollar Tree Supply Chain
Risk | Threat | Consequence of Threat | Probability of Occurrence (High-Low) | Plan to mitigate impact | Severity and Recovery Period |
Operational Risks | Theft | Loss of goods | low-medium | Better security and insurance on goods | Low Severity (Weeks-Months) |
Inability to hold onto trained personnel | Wasted time rehiring and training new personnel | medium | Better wages and employee benefits | Medium Severity (Months-Year) | |
Product Quality | Loss of revenue and wasted product | low | Better supervision, change supplier if supplier isn’t up to standard | Medium-High Severity (Months-Years) | |
Economic Risks | Inflation | Negatively impact the revenue/COGS structure | Medium | Secure the cost with long-term contracts | Low Severity (Years) |
Volatile exchange rates | Lower the profit margin | low | Buy option to hedge the exchange rates | Medium Severity (Months-Years) | |
Critical Risks | Political Trade Sanctions (Tariffs) | Future Instability, strategic changes | Medium | Adjust company policy to keep in line with current and new policy changes | Medium Severity (Months-Years) |
Bad Media Press | Lower sales and future revenue | low | Hold press conference and address grievances made against the company | High Severity (Many Years) | |
Hazardous Risks | Coronavirus Disease | Loss of customer flow, decreased sales, increased operational costs | high | Follow policy changes and ensure stores are up to speed with rules | High Severity (3+ Years) |
Weather Instability / Shipping Delays | Transportation delays and decreased revenue | medium | Look for short term/nearby suppliers able to provide products | Medium Severity (Months) | |
Cyber-Attacks, Security Failure | Lowered revenue, Growth Delay, Substantial Costs to replace | low-medium | Use the highest levels of security for customer information and constantly monitor site for potential attacks | Medium Severity (Months -Years) |
Risk Factors Associated with Family Dollar
1. In fiscal 2019 and 2018, the group recorded a $313.0 million and a $2.73 billion non-cash pre-tax and after-tax goodwill impairment charge, respectively, related to Family Dollar reporting unit. Additional impairments to goodwill, intangible assets and other long-lived assets are expected.
2. Family Dollar segment has a substantial number of private brand items, and the number of items has been increasing. They may not achieve or maintain our expected sales for private brands, and, as a result, business and results of operations could be adversely impacted. Additionally, the increased number of private brands could negatively impact our existing relationships with non-private brand suppliers.
SCCRS
THANK YOU!