SlideShare uma empresa Scribd logo
1 de 22
Kemilembe Mjungu
Christina Bills
Evelyne Ringia
Case-Study Overview
• Background
• Statement of a problem
• Alternative Solutions
• Recommendations
• Conclusion
 1988 The song How Soon is Now? by The Smiths was used
to advertise the brand.
 1998 Tommy Hilfiger Canada Inc. acquired a portion of
Pepe Jeans USA for $1.15 billion
 2006 Pepe Jeans London has announced Sienna Miller,
British actress and Hollywood superstar as new face of the
brand.
 2008 Pepe Jeans is now one of the most successful jean
companies in history with sales in over 60 markets and
locations all over the world.
 Currently Pepe Jeans is present over 100 countries and
employs more than 5000 employees all over the world.
Pepe jeans has created a global brand awareness
 1973 Pepe Jeans was established as a road side stall
by three brothers Nitin Shah, Arun Shah and Milan
Shah from Kenya at Portobello Road Market in West
London’s trendy Notting Hill district.
 1975 Pepe Jeans started becoming well known brand
name in Europe. Due to this fact that Pepe was
growing bigger it was necessary to open the boutiques
and later warehouse, and offices in London.
 In the 80s the brand grew even more and it became
one of Europe's best clothing brands
Technology
• The main technological development in the Apparel Wholesaling has been the
electronic management of the supply chain. Wholesalers do this through a
number of technologies, including electronic data interchange (EDI), extensible
markup language (XML) and radio frequency identification (RFID).
Revenue Volatility
• According to IBIS World report, during the five-year period to 2014, it is
estimated that revenue for Global Manufacturing this industry has fallen at an
annualized rate of 4.0% per year, to $4.6 billion.
Regulation and Policy
• Wholesalers must abide by UK Patent and Trademark laws, which relate to the
protection of intellectual property rights. Penalties are imposed on the
infringement of patents, such as patents for clothing designs.
Demand Determinant
• Demand for products within the Women's and Children's Apparel Wholesaling
industry is influenced by per capita disposable income and consumers' feelings
about their financial futures. When consumers' have high levels of disposable
income and believe that they will have steady or higher levels of disposable
income in the future, then they are more inclined to buy apparel.
Key buying
• Women’s clothing stores, department stores, family clothing stores, warehouse
clubs and super centers etc.
Key Selling
• Cut and Sew manufacturers, General Apparel manufacturers
Denim Industry Overview.
Pepe jeans has been enjoying considerable
financial success in its current business
model. Last year the company made profit
before taxes nearly 32% of sales as per the
financial analysis below.
(Million ₤)
Sales 200
Cost of sales (80)
Gross Profit 120
Operating expenses (56)
Profit before taxes 64
Current Status.
• Majority of Pepe’s sales are through about 1500
independent outlets throughout UK. They
maintain contact with its independent retailers via
a group of approximately 10 agents who are self
employed and work exclusively for Pepe and
each of them is responsible for retailers in the
particular area of the country
• Agents meet with each retailer 3 to 4 times a year
to present new collections and take order Contact
is done by holding presentation in a hotel for
several retailers. Orders are taken for 6 months
delivery.
•
• After Pepe receives an order a retailer has 1
week to cancel or make changes
• Pepe has long standing policy to not hold
inventory
• After orders are placed status can be seen online
How Pepe manages its distributers
Pepe’s current supply chain
Retailers have to
place orders 6
months before
they arrive
•1 weeks to
amend
Pepe takes the
orders to the
agent in china
The agent
conduct a bidding
to about 1000
potential
supplier’s
•Every 2
weeks
weeks
The winner works with Pepe
Jeans designers for
specifications and quality
assurance
Production starts
Manufacturers
transport Jeans
from China to
Retailers
•Total Lead Time is 6
months
• A recent survey of independent retailers
indicated some growing problems.
Complaints from Independent retailers
• Pepe has become less of a trend setter than in the
early days
• Retailers are unhappy with Pepe’s requirements to
place orders 6 months in advance with no possibility
of amendments, cancellation, or repeat ordering.
• The inflexible order system forced retailers to order
less resulting to stock outs of particular sizes and
styles and they estimated that Pepe’s sales would
increase by 10% in sales with a more flexible ordering
system
(Current sales - £200 Mil. therefore 10% of would be
£ 20 Mil. Profit before taxes (PBT) at the rate of 32 %
would mean an increase in the PBT of £ 6.4 Mil. )
Why is Pepe Concerned?
How were the retailers affected by Pepe’s ordering system?
• The six months ordering time made it difficult for retailers to accurately forecast and
order.
• The fashion market is very impulsive and therefore the current favorites are not in
Vogue 6 months in the future
• When demand exceeded expectations it took a long time to fill the gap
Why is Pepe Concerned?
What retailers wanted:-
• Some limited returns, exchange, or re-ordering
to overcome the problems.
• Pepe felt some pressure to respond because
some of smaller competitors offered delivery in
only a few days.
• The desired Outcomes
• Reduced Lead Time
• Possibility of amendments, cancellation,
or repeat ordering for the Retailers
• Have more robust designs that set
trends like it used to be
What Can Pepe Jeans Do to address
complaints?
• Shorten the lead time to as little as six weeks with the
current agent
Pros
• The advantage in this alternative is that the company does not
have to make any initial investment but has to incur this
additional cost every year. Since no investment is made , no
payback period is calculated
Cons
• Significant increase in costs to as much as 30%.
Currently the yearly cost of sales is 40% of sales of £ 200 M that
is £ 80 000 000 ( 40%x £ 200 000 000)
If the cost goes up by 30% it would mean 30% of £ 80 000 000M
that is £ 24 000 000
In return for this increase in cost the company could make an
approximate increase in the PBT of £ 6 400 000 but it will cost
extra £ 24 000 000 therefore the cost outweigh the profit by
£ 17 600 000.
How can Pepe Jeans achieve the desired Goals
Solution 1:
• Building a finishing operations in the United Kingdom.
According to the agent a retail chain moved to this type of
structure and it was very successful
• Feasibility:
Solution 2:
Initial fixed cost for equipment £ 1,000,000
Renovations £ 300,000
Total Initial cost £ 1,300,000
Operations costs £ 500,000
Current COS (200M*40%) £ 800,000
Lead = 6 weeks (6/52 X £ 80,000,000) £ 9,230,000
Inventory carrying cost is
(30%x £ 9,230,000)
£ 2,769,000
Total recurring cost inventory carrying cost+
operations costs ( £ 2 769 000 + £ 500 000)
£ 3,269,000
Pros
• A US firm found that it could give a 2 day response time
to retail stores.
• The costs for basic jeans reduced by 10 due to
utilization of economies of scale
• Lead time reduced from 6 to 3 months
• It will increase inventory carrying cost by £3 269 000
and increase PBT by £ 6 400 000 .The benefit outweigh
the cost by £ 6 400 000 – £3 269 000 = £ 3 130 000
• Now, the fixed investment made by the company is
£ 1 300 000 so the payback period is (1.3/3.13) x 52 =
21.6 weeks.
Cons
• It require a significant initial investment.
Solution 2: . . . continued
Sourcing from new suppliers overseas
• From the research conducted, there are other suppliers who
are able to make and supply jeans to Pepe’s customers.
• There are suppliers using manufacturing facilities in China,
Vietnam, Hong Kong, Thailand, Sri Lanka and Bangladesh.
These countries have apparel manufacturers who are known
for making cheap and quality clothing.
Pros
• For Pepe Jeans to have this many choices, will automatically
have more bargaining power and ultimately demand fast
delivery of products to the retailers.
• If Pepe Jeans take this option, they might be able to reduce
the lead time to six weeks. This option might even lead to
decrease in cost of sales and increase Pepe Jeans’ profit.
Cons
• Quality control with new manufactures may be difficult
• Will have to establish new supply chains and new business
relationships which might prove to be costly.
Solution 3:
Use manufactures locally
• There are still cloth manufacturers who are
operating in United Kingdom that Pepe Jeans
could start using. There are still cloth
manufacturers in United Kingdom of the like of
Cooper & Stollbrand, Johnstons of Elgin and
Michael Edward Ltd
Pros
• Reduce Lead time.
• Easier to monitor quality
Cons
• More expensive than the current option
• Easier logistics
Solution 4:
Establish own manufacturing facility
• Pepe Jeans can start doing their own manufacturing. Pepe
currently is in a very strong financial position and has no debt. This
position affords them a financial possibility of starting their own
manufacturing facilities.
• Pepe Jeans could locate their facilities in countries which have low
labor cost and low taxes like China, Hong Kong, Vietnam and
others.
Pros
• No Middle Man, Pepe will have full control on all of the supply chain
• There will be optimum flexibility with their retailers
• It will be easier to expand their operations and take advantage of
export business
• Guarantee sustainability and quality
Cons
• It will require a huge initial investment
Solution 5:
Example: According to Forbes magazine, Inditex, owner of fast-fashion emporium Zara,
manufactures almost all of its goods in La Coruña, Spain. “The clothes reach the sales floor
more quickly and efficiently, thus serving more consumers. (Zara’s clothes hit the floor so quickly
that for the first few hours they are kept on cheap plastic hangers to indicate that the items
arrived that morning.)” (Forbes)
The use of Enterprise Resource Planning system (ERP)
• Pepe Jeans should start the use of ERP system. The system will be integrated with the
retailers, the suppliers and all the departments in Pepe Jeans which deals with inventory
movements. This integration will enable the retailers to place their orders in the ERP system
and make sure the person who is responsible with that order receives it instantly without any
delays. That person can also send request to another person in the supply chain instantly
without any delays as well. The system also sends requests automatically to the next person
in the supply chain so as to eliminate delays. The system will act as a reminder of the
process to all the people who are involved in the supply chain.
Pros
• Reduce Lead time.
• Give Retailers more controls over their merchandize
Cons
• The system, deploying it and training can be expensive given the
big number of retailers
Solution 6:
• Study:
• There is an Empirical study performed on the lead time improvement from
the implementation of ERP system done by Cotteleer and Bendoly. The
study was based on a company called Tristen Inc. information was
collected from this company before the company installed the system and
after the company installed the system. The result obtained showed that
lead time was reduced by at least 28%. The study further reveal that there
is a strong correlation between reduction of lead time and increase in
revenue.
Solution 6: . . . continued
• The use of ERP system will come with a certain
financial cost as well as time investment in
training. However, from the empirical study, it has
been proven that the use of ERP comes with a
financial return which is worth the investment.
• Solutions 1: Shorten the Lead time with current suppliers
• Solution 2: Building a finishing operations in the United Kingdom
Financial comparisons between solution 1, 2 and the current situation
Old Model Solution 1 Solution 2
Sales 200,000,000 220,000,000 220,000,000
Cost of sales 80,000,000 104,000,000 72,000,000
Gross Profit 120,000,000 116,000,000 148,000,000
Operating expenses 56,000,000 56,000,000 56,000,000
Inventory holding costs 2,769,231
Facility operating costs 500,000
Profit before taxes 64,000,000 60,000,000 88,730,769
Recommendations
From the 6 solutions we came up with there are some that can be used as a
temporary measure and others for long term considerations
Temporary
Solution 1: Shorten the Lead time with current suppliers
Solution 3: Sourcing from new suppliers overseas
Solution 4: Use local manufacturers (can be used t fill the demand gaps)
Medium term
Solution 2: Building a finishing operations in the United Kingdom
Long term
Solution 5: Establishing own manufacturing facility (smooth transition from the
finishing operation that they will already have up and running)
Solution 6: ERP system
Questions? Comments?
References
• Robert, J & R, B Chase Operations and supply chain management book
• Pepe Jeans official website retrieved from
http://www.pepejeans.com/en_gb/
• IBISI World report on the global Apparel industry retrieved from
http://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?e
ntid=349
• Top 10 destination for clothing manufacturers retrieved from
http://www.thesourcingplace.com/top-sourcing-destinations-for-clothing-
manufacturers/
• Who Makes The Clothes On Your Back? retrieved from
http://www.forbes.com/2008/05/25/style-clothes-foreign-forbeslife-
cx_ls_outsourcing08_0529offshore.html
• Cotteleer M and Bendoly E, (2005) Order Lead-time Improvement Following
Enterprise-IT Implementation: An Empirical Study.

Mais conteúdo relacionado

Mais procurados

Burberry final ppt
Burberry final pptBurberry final ppt
Burberry final pptchelseyxo
 
Fashion terminology (1)
Fashion terminology (1)Fashion terminology (1)
Fashion terminology (1)TUSHAR IQBAL
 
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTON
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTONBRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTON
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTONPOOJA
 
Zara supply chain management
Zara supply chain managementZara supply chain management
Zara supply chain managementStudent
 
6 Month Buying Plan: Nordstrom
6 Month Buying Plan: Nordstrom6 Month Buying Plan: Nordstrom
6 Month Buying Plan: NordstromDanielle Hughes
 
Apparel Internship Report Silver Spark Apparel Ltd Unit-2
Apparel Internship Report Silver Spark Apparel Ltd Unit-2Apparel Internship Report Silver Spark Apparel Ltd Unit-2
Apparel Internship Report Silver Spark Apparel Ltd Unit-2Nitin kumar
 
Levi's Strauss Jeans
Levi's Strauss JeansLevi's Strauss Jeans
Levi's Strauss JeansAadil Ahmed
 
Graduation Project Presentation
Graduation Project PresentationGraduation Project Presentation
Graduation Project PresentationRanvijay Singh
 
Zara - supply chain & value creation
Zara -  supply chain & value creationZara -  supply chain & value creation
Zara - supply chain & value creationZubin Poonawalla
 
Ppt on zara
Ppt on zaraPpt on zara
Ppt on zararoyji
 
Upasana part 2:pdf
Upasana part 2:pdfUpasana part 2:pdf
Upasana part 2:pdfAjit Khatai
 
Retail Ppt on Van Heusen
Retail Ppt on Van HeusenRetail Ppt on Van Heusen
Retail Ppt on Van Heusensaurabh singh
 

Mais procurados (20)

Burberry final ppt
Burberry final pptBurberry final ppt
Burberry final ppt
 
Fashion terminology (1)
Fashion terminology (1)Fashion terminology (1)
Fashion terminology (1)
 
Zara case study.pptx
Zara case study.pptxZara case study.pptx
Zara case study.pptx
 
fab inida
fab inidafab inida
fab inida
 
Time and Action Plan in Garment industry
Time and Action Plan in Garment industryTime and Action Plan in Garment industry
Time and Action Plan in Garment industry
 
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTON
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTONBRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTON
BRAND IDENTITY COMPARISON BETWEEN RALPH LAUREN AND UNITED COLORS OF BENETTON
 
Zara supply chain management
Zara supply chain managementZara supply chain management
Zara supply chain management
 
6 Month Buying Plan: Nordstrom
6 Month Buying Plan: Nordstrom6 Month Buying Plan: Nordstrom
6 Month Buying Plan: Nordstrom
 
Apparel Internship Report Silver Spark Apparel Ltd Unit-2
Apparel Internship Report Silver Spark Apparel Ltd Unit-2Apparel Internship Report Silver Spark Apparel Ltd Unit-2
Apparel Internship Report Silver Spark Apparel Ltd Unit-2
 
Levi's Strauss Jeans
Levi's Strauss JeansLevi's Strauss Jeans
Levi's Strauss Jeans
 
Forever 21
Forever 21Forever 21
Forever 21
 
Graduation Project Presentation
Graduation Project PresentationGraduation Project Presentation
Graduation Project Presentation
 
Zara - supply chain & value creation
Zara -  supply chain & value creationZara -  supply chain & value creation
Zara - supply chain & value creation
 
FabIndia
FabIndiaFabIndia
FabIndia
 
Ppt on zara
Ppt on zaraPpt on zara
Ppt on zara
 
ZARA
ZARAZARA
ZARA
 
Upasana part 2:pdf
Upasana part 2:pdfUpasana part 2:pdf
Upasana part 2:pdf
 
Retail Ppt on Van Heusen
Retail Ppt on Van HeusenRetail Ppt on Van Heusen
Retail Ppt on Van Heusen
 
Zara digital strategy
Zara digital strategyZara digital strategy
Zara digital strategy
 
ZARA Buying Plan
ZARA Buying PlanZARA Buying Plan
ZARA Buying Plan
 

Semelhante a Pepe jeans case study presentation

Pepe Jeans_Operations Management
Pepe Jeans_Operations ManagementPepe Jeans_Operations Management
Pepe Jeans_Operations Managementleli4ka
 
Business plan investor_pitch
Business plan investor_pitchBusiness plan investor_pitch
Business plan investor_pitchYves ivers Pierre
 
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptx
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptxRevisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptx
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptxRevisionstation
 
Hugo Reitzel (Marketing & Sales and Distribution)
Hugo Reitzel (Marketing & Sales and Distribution)Hugo Reitzel (Marketing & Sales and Distribution)
Hugo Reitzel (Marketing & Sales and Distribution)Nilisha Brahmbhatt
 
Business Plan PPT
Business Plan PPT Business Plan PPT
Business Plan PPT Ravi Chhajed
 
Global country report
Global country report Global country report
Global country report Jean Shah
 
Canadian Meat Council Presentation - Improving Supply And Retailing of Meat ...
Canadian Meat Council Presentation -  Improving Supply And Retailing of Meat ...Canadian Meat Council Presentation -  Improving Supply And Retailing of Meat ...
Canadian Meat Council Presentation - Improving Supply And Retailing of Meat ...rowenconway
 
Natureview farm case study by simran tapia
Natureview farm case study by simran tapiaNatureview farm case study by simran tapia
Natureview farm case study by simran tapiaSimran Tapia
 
BIFM North Wales Branch Event 11 November 2014
BIFM North Wales Branch Event 11 November 2014BIFM North Wales Branch Event 11 November 2014
BIFM North Wales Branch Event 11 November 2014Whitbags
 
CMI Portfolio of Work Assignment One + Mood-board Version One
CMI Portfolio of Work Assignment One + Mood-board Version OneCMI Portfolio of Work Assignment One + Mood-board Version One
CMI Portfolio of Work Assignment One + Mood-board Version OneEmmanuelle Kus
 
Misconceived Startup
Misconceived StartupMisconceived Startup
Misconceived StartupBizson SA
 
The sticky sales promotion strategy
The sticky sales promotion strategyThe sticky sales promotion strategy
The sticky sales promotion strategyAkhil Sule
 
Resturant Background-Linkedin-3-16
Resturant Background-Linkedin-3-16Resturant Background-Linkedin-3-16
Resturant Background-Linkedin-3-16David Kebrdle
 

Semelhante a Pepe jeans case study presentation (20)

Assignment 1
Assignment 1Assignment 1
Assignment 1
 
Pepe Jeans_Operations Management
Pepe Jeans_Operations ManagementPepe Jeans_Operations Management
Pepe Jeans_Operations Management
 
Business plan investor_pitch
Business plan investor_pitchBusiness plan investor_pitch
Business plan investor_pitch
 
Tradoc 123255
Tradoc 123255Tradoc 123255
Tradoc 123255
 
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptx
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptxRevisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptx
Revisionstation: Edexcel GCSE Business 2.1.1 Business growth V2.pptx
 
5k 100k presentation
5k 100k presentation5k 100k presentation
5k 100k presentation
 
Hugo Reitzel (Marketing & Sales and Distribution)
Hugo Reitzel (Marketing & Sales and Distribution)Hugo Reitzel (Marketing & Sales and Distribution)
Hugo Reitzel (Marketing & Sales and Distribution)
 
Business Plan PPT
Business Plan PPT Business Plan PPT
Business Plan PPT
 
Global country report
Global country report Global country report
Global country report
 
Canadian Meat Council Presentation - Improving Supply And Retailing of Meat ...
Canadian Meat Council Presentation -  Improving Supply And Retailing of Meat ...Canadian Meat Council Presentation -  Improving Supply And Retailing of Meat ...
Canadian Meat Council Presentation - Improving Supply And Retailing of Meat ...
 
Natureview farm case study by simran tapia
Natureview farm case study by simran tapiaNatureview farm case study by simran tapia
Natureview farm case study by simran tapia
 
BIFM North Wales Branch Event 11 November 2014
BIFM North Wales Branch Event 11 November 2014BIFM North Wales Branch Event 11 November 2014
BIFM North Wales Branch Event 11 November 2014
 
New Material_H&M sustainability introduction
New Material_H&M sustainability introductionNew Material_H&M sustainability introduction
New Material_H&M sustainability introduction
 
Introduction to crowdfunding for startups and sm es 9.11.17
Introduction to crowdfunding for startups and sm es 9.11.17Introduction to crowdfunding for startups and sm es 9.11.17
Introduction to crowdfunding for startups and sm es 9.11.17
 
Zara
ZaraZara
Zara
 
CMI Portfolio of Work Assignment One + Mood-board Version One
CMI Portfolio of Work Assignment One + Mood-board Version OneCMI Portfolio of Work Assignment One + Mood-board Version One
CMI Portfolio of Work Assignment One + Mood-board Version One
 
Misconceived Startup
Misconceived StartupMisconceived Startup
Misconceived Startup
 
The sticky sales promotion strategy
The sticky sales promotion strategyThe sticky sales promotion strategy
The sticky sales promotion strategy
 
Natureview
NatureviewNatureview
Natureview
 
Resturant Background-Linkedin-3-16
Resturant Background-Linkedin-3-16Resturant Background-Linkedin-3-16
Resturant Background-Linkedin-3-16
 

Mais de Evelyne Otto

Pay for perfomance (Pros&Cons) presentation
Pay for perfomance (Pros&Cons) presentationPay for perfomance (Pros&Cons) presentation
Pay for perfomance (Pros&Cons) presentationEvelyne Otto
 
Employees benefits (Pros&Cons)
Employees benefits (Pros&Cons)Employees benefits (Pros&Cons)
Employees benefits (Pros&Cons)Evelyne Otto
 
Netflix marketing plan
Netflix marketing plan Netflix marketing plan
Netflix marketing plan Evelyne Otto
 
Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Evelyne Otto
 
CRM soft wares comparisons and recommendation
CRM soft wares comparisons and recommendationCRM soft wares comparisons and recommendation
CRM soft wares comparisons and recommendationEvelyne Otto
 
Netflix marketing plan presentation
Netflix marketing plan presentationNetflix marketing plan presentation
Netflix marketing plan presentationEvelyne Otto
 

Mais de Evelyne Otto (7)

Pay for perfomance (Pros&Cons) presentation
Pay for perfomance (Pros&Cons) presentationPay for perfomance (Pros&Cons) presentation
Pay for perfomance (Pros&Cons) presentation
 
Employees benefits (Pros&Cons)
Employees benefits (Pros&Cons)Employees benefits (Pros&Cons)
Employees benefits (Pros&Cons)
 
Netflix marketing plan
Netflix marketing plan Netflix marketing plan
Netflix marketing plan
 
Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)
 
Monetary policy
Monetary policy  Monetary policy
Monetary policy
 
CRM soft wares comparisons and recommendation
CRM soft wares comparisons and recommendationCRM soft wares comparisons and recommendation
CRM soft wares comparisons and recommendation
 
Netflix marketing plan presentation
Netflix marketing plan presentationNetflix marketing plan presentation
Netflix marketing plan presentation
 

Último

John Halpern sued for sexual assault.pdf
John Halpern sued for sexual assault.pdfJohn Halpern sued for sexual assault.pdf
John Halpern sued for sexual assault.pdfAmzadHosen3
 
Phases of negotiation .pptx
 Phases of negotiation .pptx Phases of negotiation .pptx
Phases of negotiation .pptxnandhinijagan9867
 
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRL
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRLBAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRL
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRLkapoorjyoti4444
 
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...allensay1
 
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesMysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesDipal Arora
 
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...rajveerescorts2022
 
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756dollysharma2066
 
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...Aggregage
 
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...amitlee9823
 
Insurers' journeys to build a mastery in the IoT usage
Insurers' journeys to build a mastery in the IoT usageInsurers' journeys to build a mastery in the IoT usage
Insurers' journeys to build a mastery in the IoT usageMatteo Carbone
 
It will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayIt will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayNZSG
 
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...amitlee9823
 
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...lizamodels9
 
0183760ssssssssssssssssssssssssssss00101011 (27).pdf
0183760ssssssssssssssssssssssssssss00101011 (27).pdf0183760ssssssssssssssssssssssssssss00101011 (27).pdf
0183760ssssssssssssssssssssssssssss00101011 (27).pdfRenandantas16
 
Famous Olympic Siblings from the 21st Century
Famous Olympic Siblings from the 21st CenturyFamous Olympic Siblings from the 21st Century
Famous Olympic Siblings from the 21st Centuryrwgiffor
 
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service Available
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service AvailableCall Girls Pune Just Call 9907093804 Top Class Call Girl Service Available
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service AvailableDipal Arora
 
Organizational Transformation Lead with Culture
Organizational Transformation Lead with CultureOrganizational Transformation Lead with Culture
Organizational Transformation Lead with CultureSeta Wicaksana
 
Ensure the security of your HCL environment by applying the Zero Trust princi...
Ensure the security of your HCL environment by applying the Zero Trust princi...Ensure the security of your HCL environment by applying the Zero Trust princi...
Ensure the security of your HCL environment by applying the Zero Trust princi...Roland Driesen
 

Último (20)

John Halpern sued for sexual assault.pdf
John Halpern sued for sexual assault.pdfJohn Halpern sued for sexual assault.pdf
John Halpern sued for sexual assault.pdf
 
Phases of negotiation .pptx
 Phases of negotiation .pptx Phases of negotiation .pptx
Phases of negotiation .pptx
 
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRL
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRLBAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRL
BAGALUR CALL GIRL IN 98274*61493 ❤CALL GIRLS IN ESCORT SERVICE❤CALL GIRL
 
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
 
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesMysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
 
Forklift Operations: Safety through Cartoons
Forklift Operations: Safety through CartoonsForklift Operations: Safety through Cartoons
Forklift Operations: Safety through Cartoons
 
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...
👉Chandigarh Call Girls 👉9878799926👉Just Call👉Chandigarh Call Girl In Chandiga...
 
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
 
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
 
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...
Call Girls Kengeri Satellite Town Just Call 👗 7737669865 👗 Top Class Call Gir...
 
Insurers' journeys to build a mastery in the IoT usage
Insurers' journeys to build a mastery in the IoT usageInsurers' journeys to build a mastery in the IoT usage
Insurers' journeys to build a mastery in the IoT usage
 
VVVIP Call Girls In Greater Kailash ➡️ Delhi ➡️ 9999965857 🚀 No Advance 24HRS...
VVVIP Call Girls In Greater Kailash ➡️ Delhi ➡️ 9999965857 🚀 No Advance 24HRS...VVVIP Call Girls In Greater Kailash ➡️ Delhi ➡️ 9999965857 🚀 No Advance 24HRS...
VVVIP Call Girls In Greater Kailash ➡️ Delhi ➡️ 9999965857 🚀 No Advance 24HRS...
 
It will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayIt will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 May
 
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...
Call Girls Jp Nagar Just Call 👗 7737669865 👗 Top Class Call Girl Service Bang...
 
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...
Call Girls In DLf Gurgaon ➥99902@11544 ( Best price)100% Genuine Escort In 24...
 
0183760ssssssssssssssssssssssssssss00101011 (27).pdf
0183760ssssssssssssssssssssssssssss00101011 (27).pdf0183760ssssssssssssssssssssssssssss00101011 (27).pdf
0183760ssssssssssssssssssssssssssss00101011 (27).pdf
 
Famous Olympic Siblings from the 21st Century
Famous Olympic Siblings from the 21st CenturyFamous Olympic Siblings from the 21st Century
Famous Olympic Siblings from the 21st Century
 
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service Available
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service AvailableCall Girls Pune Just Call 9907093804 Top Class Call Girl Service Available
Call Girls Pune Just Call 9907093804 Top Class Call Girl Service Available
 
Organizational Transformation Lead with Culture
Organizational Transformation Lead with CultureOrganizational Transformation Lead with Culture
Organizational Transformation Lead with Culture
 
Ensure the security of your HCL environment by applying the Zero Trust princi...
Ensure the security of your HCL environment by applying the Zero Trust princi...Ensure the security of your HCL environment by applying the Zero Trust princi...
Ensure the security of your HCL environment by applying the Zero Trust princi...
 

Pepe jeans case study presentation

  • 2. Case-Study Overview • Background • Statement of a problem • Alternative Solutions • Recommendations • Conclusion
  • 3.  1988 The song How Soon is Now? by The Smiths was used to advertise the brand.  1998 Tommy Hilfiger Canada Inc. acquired a portion of Pepe Jeans USA for $1.15 billion  2006 Pepe Jeans London has announced Sienna Miller, British actress and Hollywood superstar as new face of the brand.  2008 Pepe Jeans is now one of the most successful jean companies in history with sales in over 60 markets and locations all over the world.  Currently Pepe Jeans is present over 100 countries and employs more than 5000 employees all over the world. Pepe jeans has created a global brand awareness  1973 Pepe Jeans was established as a road side stall by three brothers Nitin Shah, Arun Shah and Milan Shah from Kenya at Portobello Road Market in West London’s trendy Notting Hill district.  1975 Pepe Jeans started becoming well known brand name in Europe. Due to this fact that Pepe was growing bigger it was necessary to open the boutiques and later warehouse, and offices in London.  In the 80s the brand grew even more and it became one of Europe's best clothing brands
  • 4. Technology • The main technological development in the Apparel Wholesaling has been the electronic management of the supply chain. Wholesalers do this through a number of technologies, including electronic data interchange (EDI), extensible markup language (XML) and radio frequency identification (RFID). Revenue Volatility • According to IBIS World report, during the five-year period to 2014, it is estimated that revenue for Global Manufacturing this industry has fallen at an annualized rate of 4.0% per year, to $4.6 billion. Regulation and Policy • Wholesalers must abide by UK Patent and Trademark laws, which relate to the protection of intellectual property rights. Penalties are imposed on the infringement of patents, such as patents for clothing designs. Demand Determinant • Demand for products within the Women's and Children's Apparel Wholesaling industry is influenced by per capita disposable income and consumers' feelings about their financial futures. When consumers' have high levels of disposable income and believe that they will have steady or higher levels of disposable income in the future, then they are more inclined to buy apparel. Key buying • Women’s clothing stores, department stores, family clothing stores, warehouse clubs and super centers etc. Key Selling • Cut and Sew manufacturers, General Apparel manufacturers Denim Industry Overview.
  • 5. Pepe jeans has been enjoying considerable financial success in its current business model. Last year the company made profit before taxes nearly 32% of sales as per the financial analysis below. (Million ₤) Sales 200 Cost of sales (80) Gross Profit 120 Operating expenses (56) Profit before taxes 64 Current Status.
  • 6. • Majority of Pepe’s sales are through about 1500 independent outlets throughout UK. They maintain contact with its independent retailers via a group of approximately 10 agents who are self employed and work exclusively for Pepe and each of them is responsible for retailers in the particular area of the country • Agents meet with each retailer 3 to 4 times a year to present new collections and take order Contact is done by holding presentation in a hotel for several retailers. Orders are taken for 6 months delivery. • • After Pepe receives an order a retailer has 1 week to cancel or make changes • Pepe has long standing policy to not hold inventory • After orders are placed status can be seen online How Pepe manages its distributers
  • 7. Pepe’s current supply chain Retailers have to place orders 6 months before they arrive •1 weeks to amend Pepe takes the orders to the agent in china The agent conduct a bidding to about 1000 potential supplier’s •Every 2 weeks weeks The winner works with Pepe Jeans designers for specifications and quality assurance Production starts Manufacturers transport Jeans from China to Retailers •Total Lead Time is 6 months
  • 8. • A recent survey of independent retailers indicated some growing problems. Complaints from Independent retailers • Pepe has become less of a trend setter than in the early days • Retailers are unhappy with Pepe’s requirements to place orders 6 months in advance with no possibility of amendments, cancellation, or repeat ordering. • The inflexible order system forced retailers to order less resulting to stock outs of particular sizes and styles and they estimated that Pepe’s sales would increase by 10% in sales with a more flexible ordering system (Current sales - £200 Mil. therefore 10% of would be £ 20 Mil. Profit before taxes (PBT) at the rate of 32 % would mean an increase in the PBT of £ 6.4 Mil. ) Why is Pepe Concerned?
  • 9. How were the retailers affected by Pepe’s ordering system? • The six months ordering time made it difficult for retailers to accurately forecast and order. • The fashion market is very impulsive and therefore the current favorites are not in Vogue 6 months in the future • When demand exceeded expectations it took a long time to fill the gap Why is Pepe Concerned? What retailers wanted:- • Some limited returns, exchange, or re-ordering to overcome the problems. • Pepe felt some pressure to respond because some of smaller competitors offered delivery in only a few days.
  • 10. • The desired Outcomes • Reduced Lead Time • Possibility of amendments, cancellation, or repeat ordering for the Retailers • Have more robust designs that set trends like it used to be What Can Pepe Jeans Do to address complaints?
  • 11. • Shorten the lead time to as little as six weeks with the current agent Pros • The advantage in this alternative is that the company does not have to make any initial investment but has to incur this additional cost every year. Since no investment is made , no payback period is calculated Cons • Significant increase in costs to as much as 30%. Currently the yearly cost of sales is 40% of sales of £ 200 M that is £ 80 000 000 ( 40%x £ 200 000 000) If the cost goes up by 30% it would mean 30% of £ 80 000 000M that is £ 24 000 000 In return for this increase in cost the company could make an approximate increase in the PBT of £ 6 400 000 but it will cost extra £ 24 000 000 therefore the cost outweigh the profit by £ 17 600 000. How can Pepe Jeans achieve the desired Goals Solution 1:
  • 12. • Building a finishing operations in the United Kingdom. According to the agent a retail chain moved to this type of structure and it was very successful • Feasibility: Solution 2: Initial fixed cost for equipment £ 1,000,000 Renovations £ 300,000 Total Initial cost £ 1,300,000 Operations costs £ 500,000 Current COS (200M*40%) £ 800,000 Lead = 6 weeks (6/52 X £ 80,000,000) £ 9,230,000 Inventory carrying cost is (30%x £ 9,230,000) £ 2,769,000 Total recurring cost inventory carrying cost+ operations costs ( £ 2 769 000 + £ 500 000) £ 3,269,000
  • 13. Pros • A US firm found that it could give a 2 day response time to retail stores. • The costs for basic jeans reduced by 10 due to utilization of economies of scale • Lead time reduced from 6 to 3 months • It will increase inventory carrying cost by £3 269 000 and increase PBT by £ 6 400 000 .The benefit outweigh the cost by £ 6 400 000 – £3 269 000 = £ 3 130 000 • Now, the fixed investment made by the company is £ 1 300 000 so the payback period is (1.3/3.13) x 52 = 21.6 weeks. Cons • It require a significant initial investment. Solution 2: . . . continued
  • 14. Sourcing from new suppliers overseas • From the research conducted, there are other suppliers who are able to make and supply jeans to Pepe’s customers. • There are suppliers using manufacturing facilities in China, Vietnam, Hong Kong, Thailand, Sri Lanka and Bangladesh. These countries have apparel manufacturers who are known for making cheap and quality clothing. Pros • For Pepe Jeans to have this many choices, will automatically have more bargaining power and ultimately demand fast delivery of products to the retailers. • If Pepe Jeans take this option, they might be able to reduce the lead time to six weeks. This option might even lead to decrease in cost of sales and increase Pepe Jeans’ profit. Cons • Quality control with new manufactures may be difficult • Will have to establish new supply chains and new business relationships which might prove to be costly. Solution 3:
  • 15. Use manufactures locally • There are still cloth manufacturers who are operating in United Kingdom that Pepe Jeans could start using. There are still cloth manufacturers in United Kingdom of the like of Cooper & Stollbrand, Johnstons of Elgin and Michael Edward Ltd Pros • Reduce Lead time. • Easier to monitor quality Cons • More expensive than the current option • Easier logistics Solution 4:
  • 16. Establish own manufacturing facility • Pepe Jeans can start doing their own manufacturing. Pepe currently is in a very strong financial position and has no debt. This position affords them a financial possibility of starting their own manufacturing facilities. • Pepe Jeans could locate their facilities in countries which have low labor cost and low taxes like China, Hong Kong, Vietnam and others. Pros • No Middle Man, Pepe will have full control on all of the supply chain • There will be optimum flexibility with their retailers • It will be easier to expand their operations and take advantage of export business • Guarantee sustainability and quality Cons • It will require a huge initial investment Solution 5: Example: According to Forbes magazine, Inditex, owner of fast-fashion emporium Zara, manufactures almost all of its goods in La Coruña, Spain. “The clothes reach the sales floor more quickly and efficiently, thus serving more consumers. (Zara’s clothes hit the floor so quickly that for the first few hours they are kept on cheap plastic hangers to indicate that the items arrived that morning.)” (Forbes)
  • 17. The use of Enterprise Resource Planning system (ERP) • Pepe Jeans should start the use of ERP system. The system will be integrated with the retailers, the suppliers and all the departments in Pepe Jeans which deals with inventory movements. This integration will enable the retailers to place their orders in the ERP system and make sure the person who is responsible with that order receives it instantly without any delays. That person can also send request to another person in the supply chain instantly without any delays as well. The system also sends requests automatically to the next person in the supply chain so as to eliminate delays. The system will act as a reminder of the process to all the people who are involved in the supply chain. Pros • Reduce Lead time. • Give Retailers more controls over their merchandize Cons • The system, deploying it and training can be expensive given the big number of retailers Solution 6:
  • 18. • Study: • There is an Empirical study performed on the lead time improvement from the implementation of ERP system done by Cotteleer and Bendoly. The study was based on a company called Tristen Inc. information was collected from this company before the company installed the system and after the company installed the system. The result obtained showed that lead time was reduced by at least 28%. The study further reveal that there is a strong correlation between reduction of lead time and increase in revenue. Solution 6: . . . continued • The use of ERP system will come with a certain financial cost as well as time investment in training. However, from the empirical study, it has been proven that the use of ERP comes with a financial return which is worth the investment.
  • 19. • Solutions 1: Shorten the Lead time with current suppliers • Solution 2: Building a finishing operations in the United Kingdom Financial comparisons between solution 1, 2 and the current situation Old Model Solution 1 Solution 2 Sales 200,000,000 220,000,000 220,000,000 Cost of sales 80,000,000 104,000,000 72,000,000 Gross Profit 120,000,000 116,000,000 148,000,000 Operating expenses 56,000,000 56,000,000 56,000,000 Inventory holding costs 2,769,231 Facility operating costs 500,000 Profit before taxes 64,000,000 60,000,000 88,730,769
  • 20. Recommendations From the 6 solutions we came up with there are some that can be used as a temporary measure and others for long term considerations Temporary Solution 1: Shorten the Lead time with current suppliers Solution 3: Sourcing from new suppliers overseas Solution 4: Use local manufacturers (can be used t fill the demand gaps) Medium term Solution 2: Building a finishing operations in the United Kingdom Long term Solution 5: Establishing own manufacturing facility (smooth transition from the finishing operation that they will already have up and running) Solution 6: ERP system
  • 22. References • Robert, J & R, B Chase Operations and supply chain management book • Pepe Jeans official website retrieved from http://www.pepejeans.com/en_gb/ • IBISI World report on the global Apparel industry retrieved from http://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?e ntid=349 • Top 10 destination for clothing manufacturers retrieved from http://www.thesourcingplace.com/top-sourcing-destinations-for-clothing- manufacturers/ • Who Makes The Clothes On Your Back? retrieved from http://www.forbes.com/2008/05/25/style-clothes-foreign-forbeslife- cx_ls_outsourcing08_0529offshore.html • Cotteleer M and Bendoly E, (2005) Order Lead-time Improvement Following Enterprise-IT Implementation: An Empirical Study.