Case Assignment – Death By Denim
Thomas Fung Chun Wing / S130845 Lisa Schneider / S130865 Katja Zur Nieden / S130873 Marian Karjus / S130880
COMPANY PROFILE VISION, ! 
Company Profile (Picture)
Giving denim a new sense by offering a mix of exclusive, basic and innovative denim products for all who love it.
Business Concept,
Be different while offering products for almost everyone in different styles and fashion degrees. Service for customers to bring back their old denim products for recycling and if they want, designing something new out of it. All about denim in the store! Shirts, jackets, tights, dresses, blouses, Jeans & accessories. Creating a denim story for the customer
GOAL,
Establishing a unique denim brand with specialised products in Europe
Content
! 1. COMPANY PROFILE 1.1 Business concept 1.2 Strategy & Critical Success Factors 1.3 Customer target groups 1.4 Competitors 1.5 Geographical market 1.6 Price level and expected volumes (annual) 1.7 Resources
1 1 1 2 2 2 3
2. SUPPLY CHAIN 2.1 Production Process 2.2 Retailing 2.2.1 Retail Process
4 4 5
3. BUSINESS MAPPING
6–8 9 – 10
3.1 Customer Order Decoupling Point
4. MARKETING STRATEGY
11
5. SOURCING MARTIX
11 – 12
6. KEY FACTORS 6.1 Forecast error, Lost sales & Sell Through 6.2 Average Markdown 6.3 Average Service level 6.4 Open to Buy (OTB) 6.5 Gross margin 6.6 Stockturn 6.7 GMROI
12 12 – 13 13 13 14 15 16
7. GENERAL BUSINESS PROCESS 7.1 Design Process Chart 7.2 Sourcing Process Chart 7.3 Manufacturing Process Chart 7.4 Logistics & Distribution Process Chart 7.5 Retail Process Chart 7.6 Tool Kit for product design, development and construction process 7.7 Upfront Process Chart 7.8 Quick Response Process Chart 7.9 Flow of Material, Information & Order
8. CONCLUSION
16 17 17 18 18 19 20 – 21 22 – 23 24 24
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1.7 Resources DeathByDenim is a Branded Retailer which sells their own collections in own stores directly to the customer. The design and product development department is located in the headquarters in Berlin, Germany, which is responsible for trend research, product specifications, collection designing and sampling. The marketing and sourcing departments are also located in the headquarters. For a complete overview of resources and tasks please see 3. Business Mapping, page 6 – 8.
2. Supply Chain Manufacturing Segment Outsourcing Production Fabrics: Italy, Portugal, Turkey Products: CMT: Romania Turkey
Wholesaler Segment Integrated Retailer
Distribution
Logistics
Distribution Centre in Berlin, Germany
Headquarter in Berlin, Germany
Retailer Segment Retail branch company Sales Channel
Own Stores
Consumer
Men, women & teenagers who want to explore the world of denim.
Full Price: Turkey, China
Germany
Sweden
United Kingdom
Full package CMT China
Turkey
3
Romania
Design
Sourcing
Manufacturing
Distribution & Logistics
Marketing
Retail
Number of Styles ? 100/ Collection How the sourcing of raw materials is done? -
By you/ Manufacturer Where from?
CMT: Own Sourcing Full Price: Manufacturer Sourcing
Develop an idea of your company’s Internal 1 Costing Type of Purchasing? -
Fabric Sourcing from: Italy, Portugal,Turkey
CMT from Romania, Turkey Full Price from China, Turkey
Trim Sourcing from: Turkey, Germany Number of Sizes? Women Tops: XS – XL (5) Bottoms: 34 – 44 (6) Men Tops: XS – XLL (6) Bottoms: 48 – 58 (6)
-
Shipping Costs Transport Costs Ordering Costs Inventory Carrying Costs Handling Costs Store Costs Salaries Overhead Costs
No. of Shops: 10 Retail Stores -
Germany (4) UK (3) Sweden (3)
Purchasing Strategy? -
Traditional VMI QR
Number of Colors? Tops: Ø 5 / collection Bottoms: Ø 5.5 / collection No. Of Planned SKUs
Planned no. of units to sell
2420 / collection
5020/ Shop
7
Design
Sourcing
Manufacturing
Distribution & Logistics
Marketing
Retail
No. of Samples Protosample (1-3) Counter/ Per-production sample (1-2) Shipment Sample (1)
Anticipated Selling Cycle Continuous Products (1) Seasonal Basics (4) Seasonal Fashion (6)
No. of Protosample 1–3 Style Designed ~ 400 (for all product categories / collection) No. of Designer Head Designer (1) Designer *Women, Men, Teens (3) Designer Assistants (3) Interns (1-2)
SKU Range 7.17%
Lead Time In – Season QR : 4 Days AR : 4 Days
1 Day 1 Day
12 Days 5 Days
5 Days 5 Days
– –
– –
–
Continous Product : 52 Weeks Seasonal Basics : 13 Weeks Seasonal Fashion : 8.7 Weeks
Lead Time before Season 16 Weeks Throughput Rate -
1/3 (style per day) = 0.333 Upfront
12 Weeks
14 Weeks Throughput Rate 9 Weeks upfront (for all products) 3 Days QR + VMI (for all products)
8
8 Weeks
6.5 Gross Margin The Gross Margin depends on the forecast errors, the mark-up factor and the markdown factor. Our store is mostly selling fashionable clothes so that our mark-up factor is quite high with 2,8% whereas the mark-down is not that high. The forecast errors are in the average range so that we come up with a good profit in the end. CALCULATIONS Total Upfront 35.000.000 x 60.5 % = 21.175.000 Full Price – 67%= 21.175.000 *2.8 *0.67 = 39.724.300 SEK Mark Down – 33% = 21.175.000 *2.8 *0.33 *0.3 = 5.869.710 SEK Total In Season 35.000.000 x 39.5% = 13.825.000 Full Price – 91% =13.825.000 *2.8 *0.91 = 35.226.100 SEK Mark Down – 9% =13.825.000 *2.8 *0.09 *0.3 = 1.045.170 SEK Actual Sales Total Upfront + Total in Season = (39.724.300 + 5.869.710 + 35.226.100 + 1.045.170) SEK = 81.865.280 SEK Gross Profit Actual Sales – COGS = 81.865.280 – 35.000.000 SEK = 46.865.280 SEK Gross Margin Gross Profit / Actual Sales = (46.865.280 / 81.865.280) SEK *100 = 57%
14
7.2 Sourcing Process Chart
7.3 Manufacturing Process Chart
17