Woodmere Case Study

WOODMERE CASE STUDY

The major business propositions for Woodmere and HomeHelp to consider in evaluating this proposal

The major business proposition for Woodmere and HomeHelp to consider in evaluating this proposal is to establish strategic collaboration between retailer and manufacturer in order to create the best exercises for logistic system as well as reduce costs and stock level. 

As a leading company in home decorating industry, HomeHelp is emphasizing on keeping the low costs but also not compromise the premium service (EDLP strategy), they are looking to further grow their businesses with the time-based logistics strategies to reduce overall channel costs and offer customers quality products. HomeHelp has been concerned about the lagging of furniture industry in terms of logistics operations, and they have a great interest in collaborating directly with window fashions manufacturer which is believed to be a solution to improve profitability.  

On the other side, Woodmere is the reputed organisation with the leading-edge logistics strategies in distribution channels. The collaboration with HomeHelp would also result to implementation of a customised delivery system which could be difficult-to-duplicate competitive advantage over its competitors. 

Another major business proposition to consider is the effectiveness of the time-based logistics strategies. Hence, Woodmere and HomeHelp must consider the several facts which need to implement the program. . 

Definition of time-based logistics

Time-based logistics strategies emphasize on achieving and maintaining a sustainable competitive advantage where the time required to propose, develop, manufacture, market and deliver products are significantly reduced. As a result, the firm would gain better revenue thanks to the better responsiveness to the customers. Moreover, this would increase customer satisfaction therefore it leads to steady advantage compare to other competitors. So, it could reduce overall response time of the firm and could be considered as an expansion of JIT method (time-based competence and performance: an empirical analysis). However, this strategy might put a high pressure on time factor, which, in turn, affected the behaviour of individual and team in workplace (Maule, 2000). Furthermore, this strategy require a quite big investment in compatible technology. In the case study, it is stated that Jean Jean has invested over $1 million in scanners, lasers needed to make distribution operations faster and ticket printers to label products with retailers’ unique bar codes. It is also stated that the key retailers need similar investment and the need of continual technological upgrading is necessary.

The influence on HomeHelp

This strategy is suitable for retailer as HomeHelp. According to Propartners indication, HomeHelp is facing with increase in customization orders. This situation requires company change its business process with customer and improve production more flexible.  

At current time, the value of window fashions in home decorating retail market is estimated about $4 billion (5% of $80 billion). With 10% of market share, HomeHelp gets $400 million annually. The market is forecasted grow up to 100 billion (increase 25%) in next five years and HomeHelp is aiming to take 20% of market (Bowersox et al 2013). Based on this analysis, HomeHelp can earn $1 billion from window factionist. If the capital requirement is $1 million (same as Jean Jean chain), the profit would be 1000 times bigger, a promising opportunity. Some maybe concern about the transportation cost, which is expected to double when exhibit this strategy. However, while this cost surges significantly, the remarkable decrease in other costs such as: inventory, cost of obsolescence, cost of paperwork and clerical tasks…would cover the transportation cost.

The influence on Woodmere

Regarding to Woodmere, applying time-based strategy may challenge the current operation of this company. This process requires an investment in technology and customer support. Increasing in cost may give adverse effect to traditional customers who see time-based strategy like oversea and penalty cost. Thus, managers should consider about cost of deloading the channel which is generated from reducing sales. In addition to, the collaboration with HomeHelp may trigger a risk of replying on a major customer.