Woodmere case study question 1

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.

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Woodmere case study question 1

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 (Al Serhan et al., 2015).

As a result, the firm would gain better revenue as well as increase customer satisfaction,

thanks to the better responsiveness to the customers. It also reduces overall response time

of the firm and could be considered as an expansion of JIT method (Al Serhan et al.,

2015). However, this strategy might put a high pressure on time factor, which, in turn,

affected the behaviour of individual and team in workplace (Maule et al., 2000).

Furthermore, this strategy requires huge investment in compatible technology. In the case

study, it is stated that JeanJean 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

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requires modification in company business process with customer and improves flexibility

in production.

Currently, 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 JeanJean 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.

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Woodmere case study question 1

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.

However, time based strategy also brings many benefits for Woodmere. Firstly,

Woodmere is using national carriers for shipment to interfacility and to customer. This

carrier is applying time-based strategy in its business. Therefore, the collaboration with

this carrier will create the chance to establish a strategic alliance in this industry

Secondly, Woodmere currently needs to create new business relationship as its main

alliance is in financial trouble (Bowersox et al., 2013). HomeHelp has a great potential in

future, especially when exhibiting this strategy. Therefore, co-operation with HomeHelp

in setting up time-based strategy helps Woodmere share benefits with HomeHelp. One

important detail we should attention is HomeHelp determined to do this strategy at any

cost. Thus, if Woodmere does not take this chance, they may lose this attractive opportunity

to its competitors.

Thirdly, HomeHelp is planning to enhance relationship with decorators and this

group of customers is also target customer in future of Woodmere. Board of manager

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knows that Woodmere has been spent long time to build up and keep relationship with

HomeHelp and it will be a huge lost if company lose those important customers.

Recommendation

It is recommended that Woodmere and HomeHelp take this investment into

consideration as the initial fund requirement is 1 million dollars. Besides, continual

technological upgrading is necessary.

In addition to, both companies must determine if their prospective partner in the

project is operationally sound, to avoid a repeat of the Happy Home & Living “false sense

of security” (Bowersox et al., 2013).

Conclusion

Time based logistics is the right strategy for both companies. This strategy appears

to offer both companies a significant upside potential. HomeHelp will be able to offer more

efficient service to customer. Woodmere will get an exclusive partnership with an

emerging force in this industry. Both companies will be also to reduce inventories

throughout the system. The proposal also creates a collaborative alliance and increased

communications between HomeHelp and Woodmere and it brings upon an exclusive

distribution arrangement for both companies. It is recommended that both companies

should look at the financial aspect when performing this strategy. However, there is no

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Woodmere case study question 1

reason to turn down this offer regarding to a promising scenario for both companies in the

future after operating time-based logistics strategy.

Reference

Al Serhan, Y.N., Julian, C.C. & Ahmed, Z., 2015. Time-based competence and

performance: an empirical analysis. Journal of Small Business and Enterprise

Development, 22(2), pp.288-301.

Bowersox, D.J., Closs, D.J., Cooper, M.B. & Bowersox, J.C., 2013. Supply Chain Logistic

Management. 4th ed. New York: McGraw-Hill.

Maule, A.J., Hockey, R.J. & Bdzola, L., 2000. Effects of time-pressure on decision-making

under uncertainty: changes in affective state and information processing strategy.

Acta Psychologica, 104(3), pp.283-301.

Muilerman, G.-J., Hoorn, T.v.d. & Heijden, R.v.d., 2005. Determining the impacts of time-

based logistics strategies in the Dutch food industry. International Journal of

Logistics Research and Applications, 8(3), pp.237-47.

Thomas, R., 2008. Exploring relational aspects of time-based competition. International

Journal of Physical Distribution & Logistics Management, 38(7), pp.540-50.

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