Brief description of the company and its environment
SportStuff.com began its operations in 1996. The mission of the company is to supply parents with sports equipment for their children at a lower cost than its competitors. The parents realized that they were discarding expensive clothes because as their children grew, the clothes became too small for them.
Sanjay Gupta, the founder of SportStuff.com and his team decided to buy these clothes for re-sale. They also started buying surplus products from retailers and manufacturers, and selling them via the internet. They used the SportsStuff.com web site to market and sell these items, which increased their sales, profits, and revenues.
Within a year, the sales rose by more than 80%, which increased their profits and revenues (“Supply chain optimization: managing growth at SportStuff.com” 3). In 2000, the management decided to evaluate the performance of the company over the previous years. The rapid increase in demand for the company’s products instrumented the decision made by the management.
The management of which Sanjay was a part of saw the need to re-design the supply chain network in order to comply with the increasing demand for the company’s products (“Supply chain optimization: managing growth at SportStuff.com” 3). This is because the increase in demand also translated to an increase in costs, which would eventually surpass the revenues collected. SportStuff.com therefore required a large storage capacity.
This would help it curb the challenges associated with the expected growth in demand for its items. The company needed an optimal model solution to cut down ware-housing and transportation costs and maximize on profits. In order to manage SportStuff.com efficiently, the company had two options.
The company could either lease some ware-houses countrywide, or was to expand its ware-house space by leasing more space at the ware-house in St. Louis. The company had to weigh different variables in order to come up with sound managerial decision.
These included the regional demands for sports clothes, fixed and variable ware-housing costs, inventory costs, transportation costs, and customer charges in every 4 units among others.
Summarize the problems and your recommendations
One of the significant problems facing the company is that the demand for sports clothes is high for the current supply chain network. SportStuff.com does not have enough ware-house space for items demanded by customers across the country. It is recommended that this company should distribute its network across different cities within the country.
This will assist the company avail its products to the customers at the right time, place, quantity, and quality (Geunes and Pardalos 209). Customers will be able to access the products, and hence get satisfied.
The SportStuff.com Company will be able to cut on transportation and ware-house costs, maximize on profits, and satisfy the needs of customers profitably. The company will also benefit because it will increase its market growth and market share. This will lead to increased sales, profits, and revenues; and hence gain a competitive advantage over its competitors.
The other problem is that the company’s current methods are not efficient in relation to costs. It is recommended that the management of SportStuff.com should adopt and use the non-linear method.
This is because the model is the most efficient strategy considering that it provides low costs for the company compared to the other methods. If the SportStuff.com Company adopts this method, it will be able to cut down on the costs and maximize on the profits. It will also have no problems in offering the items to customers at affordable prices, and hence the company will continue to gain a competitive edge.
Works Cited
Geunes, Joseph, and P M. Pardalos. Supply Chain Optimization. New York: Springer, 2005. Print.
Supply chain optimization: managing growth at SportStuff.com. n.d. Web.