Project 2 GSCM 450

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Liberty University *

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Business

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May 4, 2024

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docx

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Project 2: Drop ‘Till You Shop Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi Team 2 Portland State University Project 2: Drop ‘Till You Shop
Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi GSCM 450 - Winter 2024 Scope Management Plan Operational Overview: The warehouse will function as a central facility for receiving, storing, and shipping our top dropshipping items to maintain our current lead time with our customers. It will prioritize efficiency, accuracy, and timely processing of orders. The operations of this warehouse will be conducted as follows: Number of Docks: For our new warehouse, we will be using the following number of docks for our operations: Inbound Shipments: Two docks designated for receiving goods from suppliers. Outbound Shipments: Two docks for loading trucks and dispatching orders to customers. Storage Method: Products will be stored using pallet racking systems and bin locations to maximize space and accessibility. All inventory will be categorized using the ABC method, and thus, high-demand items will be strategically placed closer to the shipping area for quick retrieval. Though stored items are our top dropshipping items, an ABC classification will be necessary to optimize inventory. Product Movement: Product movement will be facilitated using pallet jacks and forklifts for efficient transportation within the warehouse. Barcode scanning systems will track product movement from receiving to storage to outbound shipments, ensuring accuracy and visibility. Proper providers for receiving and shipping items will ensure consistency and accuracy with the warehouse employees. Cycle counts will be conducted daily for inventory accuracy on all items and transferred to our warehouse management system. Technology Integration: RFID technology will be implemented for real-time inventory tracking and management, enhancing accuracy and efficiency. A Warehouse Management System (WMS) software will be utilized to optimize operations, monitor inventory levels, and streamline order fulfillment processes. All required employees will be trained on the WMS, and we will keep all SOPs on file. Ownership of Trucks: The warehouse will work with a third-party delivery company to save on costs such as labor, vehicle maintenance, registration of vehicles, gas, etc. These carriers will also engage in long-distance shipments. Shifts and Workforce: The warehouse will operate on a three-shift schedule, enabling round-the- clock operations to meet customer demands and optimize productivity. Each shift will be staffed with trained personnel, including supervisors, forklift operators, order pickers, packers, and quality control inspectors, ensuring smooth operations and order accuracy. Annual Revenue: Our company’s annual revenue is $100 Million. 3/6/2024 Page 2
Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi GSCM 450 - Winter 2024 Net Income: Our company’s net income is $18,750,000. Operating Costs: $6,250,000 Return on Investment: 86% Location: We recommend that the company build its storage warehouse in Savannah, Georgia. After doing research, we found that Georgia has a well-developed transportation infrastructure, low operating costs, highly skilled workers, excellent accessibility to the market, and a business-friendly environment (Georgia Power, p.1). Further, according to Georgia Power, there are also 5,000 + miles of rail through Georgia, 9,500 daily transactions at GA ports, and 900 M sq. ft of warehouse space in GA. When it comes to the workforce, Georgia has a total of 346,000,000 warehouse-related jobs, a projected +9% growth from 2021-2031 in warehouse jobs, with a minimum wage of $7.25 and a medium wage of $16.37. The cost-related benefits of establishing a warehouse distribution location in Georgia include but are not limited to a low state corporate tax rate of 5.75%, low overall cost of doing business, competitive wage rates with low unionization, and tax exemptions on warehouse inventory (Georgia Power). Business conditions that are driving this project: There has been a seven-day increase in our lead time, which poses a threat to decreasing customer satisfaction. Therefore, there is a need to explore options to get it back to our promised number of fourteen days. We estimate that we will hit ROI within five years as our year-over-year growth has steadily increased by 35% every year. When it comes to our market share, similarly to our year-over-year growth, it has continued to steadily increase, with Drop ‘Till You Drop currently holding 23% of the market share. What is the warehouse going to be used for? Storing, cross-docking? The warehouse will be used as a storage facility. What product are you storing? The specific product that we plan on storing is our top-selling furniture pieces. This includes chairs, tables, bed frames, etc. Business needs a description of the project from a high view: CEO, As our company continues to thrive and meet customer demands, it has become imperative to address the recent challenge posed by our supplier’s increased lead time to 21 days. This adjustment has the potential to impact our ability to maintain our current 14-day lead time to customers, which is a key differentiator in the market. To counteract this, I propose the 3/6/2024 Page 3
Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi GSCM 450 - Winter 2024 construction of a 100,000 sqft warehouse dedicated to storing our top-selling items. This strategic move will not only safeguard our commitment to customers but also position us as a reliable and efficient supplier in the face of industry uncertainties. The construction of this warehouse is not merely a response to a short-term issue but a strategic investment in the long-term sustainability and growth of our business. By having a facility dedicated to our best-selling products, we can ensure that we always have sufficient inventory on hand to meet customer demands within our committed 14-day lead time. This not only preserves our reputation for reliability but also demonstrates our commitment to customer satisfaction, a cornerstone of our brand identity. In addition to safeguarding our lead time commitments, the warehouse can be designed to accommodate future growth. With modular storage solutions and scalability in mind, we can adapt to changing market dynamics and increased product demand. This flexibility positions us to navigate uncertainties in the supply chain landscape effectively and maintain a competitive edge. Furthermore, the warehouse provides us with the opportunity to implement cutting-edge technologies and automation in inventory management. Advanced logistics systems can optimize order fulfillment processes, minimizing the time it takes to pick, pack, and ship products. This operational efficiency not only supports our commitment to timely deliveries but also contributes to overall cost savings, investing in the warehouse is a financially sound decision. The construction of a 100,000 sqft warehouse represents a strategic imperative for our company. It not only addresses the immediate challenge posed by the supplier’s extended lead time but also sets the stage for enhanced operational efficiency, cost savings, and future growth. Success Criteria and who buys off at end: “The customer has a fully functioning and operationally complete facility that meets all local building codes”. Project Milestone Schedule (12-Month Timeline) Table 1: Milestones Milestone Start date End date Secure funds and location of warehouse January 1st, 2024 January 31st, 2024 Design a warehouse layout and flow February 1, 2024 February 28, 2024 Get project approval and permits necessary April 1, 2024 May 1, 2024 3/6/2024 Page 4
Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi GSCM 450 - Winter 2024 Site preparation and excavation. Determine the depth of foundation and concrete pouring. June 1, 2024 June 31, 2024 Framing, structural, roofing, and exterior work July 1, 2024 August 1, 2024 Electrical, plumbing, fire protection, and alarm systems August 10, 2024 September 10, 2024 Drywall, interior, flooring, and light fixtures September 12, 2024 October 12, 2024 Landscaping October 15, 2024 November 15, 2024 Final inspection and occupancy November 17, 2024 December 17, 2024 Move-in coordination and facility setup December 17, 2024 December 31, 2024 The milestones above are sequenced steps required to execute a warehouse project. It is essential to include a schedule for preparing, developing, evaluating, and reporting the project's execution. In order to have a successful project, milestones are important and must be on schedule. Key Stakeholders Table 2: Key Stakeholders Stakeholder Role Key Stakeholder Responsibilities Chief Executive Officer (CEO) Endorses and drives strategic initiatives The CEO is responsible for providing the overall strategic direction and vision for the company. In this project, the CEO's role involves endorsing the initiative and ensuring its alignment with the company's long-term goals. Chief Operations Officer (COO) Oversees logistical and operational aspects of the warehouse, ensuring integration with existing processes The COO is tasked with overseeing the day-to-day operations of the warehouse. This includes managing logistics, optimizing operational processes, and ensuring seamless integration 3/6/2024 Page 5
Yatnary Villanueva, Joanna Nghiem, Alex Casillas, Ana Nunez, Hamed Al Balushi GSCM 450 - Winter 2024 and communication with the company's existing supply chain and manufacturing operations. Chief Financial Officer (CFO) Analyze financial feasibility and assesses long-term sustainability of the investment The CFO assesses the financial viability of the warehouse construction. This involves conducting a cost- benefit analysis, evaluating return on investment, and ensuring the long-term financial sustainability of the project. Supply Chain Manager Manages the flow of inventory and optimizes warehouse processes The Supply Chain Manager is responsible for the efficient flow of inventory within the warehouse. This includes inventory management, demand forecasting, and implementing strategies to optimize warehouse processes for increased efficiency and productivity. Head of Customer Relations Maintains commitment to customer satisfaction, which is crucial for preserving the company's reputation for timely deliveries The Head of Customer Relations is essential for ensuring that the warehouse project aligns with the company's commitment to customer satisfaction, which is similar to a feedback process. This involves maintaining communication with customers and addressing any concerns related to order fulfillment and delivery timelines. Customers (Consumers) Buys the product, their Customers are important 3/6/2024 Page 6
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