Supply Chain Management Department Rutgers, The State University of New Jersey 1 Washington Park, Room 974 Newark, NJ 07102-3211, USA Tel: 973-353-2791; Fax. 973-353-1325 www.business.rutgers.edu/SCMMS Supply Chain Fashion Simulation (Roles and Responsibilities and Pricing) Challenge: Source, Make and Deliver 100,000 Men’s Dress Shirts to 16 Macy’s NE Background Information Cotton is used in 40 percent of the world's clothing -Cotton Farm Location: a man's dress shirt that requires 10 ounces of cotton a pair of jeans (24 ounces) a diaper that takes just 2.5 ounces One 500-pound bale can provide 800 men's shirts What history do we need to know? 16 ounces = 1 pound COTTON Commodity 1.22+0.01+0.83% Cotton Price Per 1 Ounce $0.08 USD Plastic (Buttons, Collar Pointers): Labor Costs: 0.45 ounces of pesticides to grow enough cotton for one dress shirt 2,700 liters of water needed to make one shirt What else do we need to know? Leading cotton producing countries worldwide in 2020/2021 (in 1,000 metric tons) China India United States Brazil 6,423 6,162 3,181 2,341 Supply Chain Management Department Rutgers, The State University of New Jersey 1 Washington Park, Room 974 Newark, NJ 07102-3211, USA Tel: 973-353-2791; Fax. 973-353-1325 www.business.rutgers.edu/SCMMS Supply Chain Fashion Simulation (Roles and Responsibilities and Pricing) Supply Chain to Retail Build: Actors/Players Supply Chain Manager Retail Manager Buyer/Purchasing Officer Logistics Manager Sourcing Manager Trucking Firm (Independent) Legal Counsel Air Freight Firm (e.g., UPS, DHL, Federal Express) Manufacturing/Production Manager Maritime Firm (e.g., Maersk) Maritime Firm (e.g., Maersk) Consumer Warehouse Manager Designer Farmer Facilities/Operations Department Store (Macy’s, Kohl, etc.) Manufacturing – Factory (how many?) Distribution Warehouse (e.g., Walker Port (Shipping) SCM) Farm Airport Commodity Exchange Distribution - Warehouse Tools Stock Market/S&P/Commodity Price Specifications (min requirements …) Contract Freight/Manifest RFP/Q Supply Chain Management Department Rutgers, The State University of New Jersey 1 Washington Park, Room 974 Newark, NJ 07102-3211, USA Tel: 973-353-2791; Fax. 973-353-1325 www.business.rutgers.edu/SCMMS Supply Chain Fashion Simulation (Roles and Responsibilities and Pricing) Supply Chain to Retail Build: Process and Steps: Phase 1: Designer (time invested in design) Farmer Cotton: 1oz=$0.08 = $1.28/lb Sourcing Professional Research, writing RFP/contract, etc. Sourcing Manager Legal Counsel (contract review) Phase 2: Production/Manufacturing Trucking (brazil) Sourcing (checking in) Post-Production Activity (Brazil) Brazil Export Fees/Taxes Phase 3: Maritime Shipping Port Activity (security, taxes, etc.) Trucking (Inbound to Warehouse) Warehousing (receiving, sorting, breakdown, stocking and loading) Trucking (Outbound to Macy’s) Phase 4: Retailing Professional Stocking Cost Impacts: $2,000/USD 500 lb bale = 800 shirts for 100,000 shirts you need 125 bales (62,500 lbs) x $1.28/lb = $80,000/USD $1,500/USD (based on ~2 hours of work) $2,500/USD $5,000/USD Ave Brazilian factory worker makes $34,805 Brazilian Real = $7,000/year or $3.42/hour (30 min to complete one shirt) 100,000 x $1.71/30 mins = $171,000/USD $0.20/lb x 62,500 = $12,500/USD $1,500/USD ~$20,000/USD ~$0.25/per item ($15,625/USD) 62,500 lbs = 28,349kg @ $3/kg = $85,047/USD $23,582/USD $0.40/lb x 62,500 = $25,000/USD $20,000/USD $0.50/lb x 62,500 = $31,250/USD $3,000/USD $1,500/USD Supply Chain Management Department Rutgers, The State University of New Jersey 1 Washington Park, Room 974 Newark, NJ 07102-3211, USA Tel: 973-353-2791; Fax. 973-353-1325 www.business.rutgers.edu/SCMMS Supply Chain Fashion Simulation (Roles and Responsibilities and Pricing) Total Contract: $429,129/USD $501,004/USD Consumer Pays: $62.00/shirt. How many purchased shirts will it take to recoup investment? $6,200,000/USD If all shirts are sold at $62/each Landing Price (per shirt): Profit (per shirt): What is the profit used for? $4.29 $5.01 $57.71 ($5,770,871) $56.99 ($5,698,996) Advertising/Marketing, Payroll, Taxes, Shareholders, R&D, etc.
