CHAPTER 4 DATA ANALYSIS

4.1 Company profile The company data was received from results of the interview and direct observation, which covered: the history of the company, the company's vision and mission, and the working methodology in this company 4.1.1. Company History PT EDWARD FORRER was one of the limited companies in Indonesia that moved in the retail shoes and bag business. Preceded during 1989, EDWARD FORRER as the founder and the owner from PT EDWARD FORRER began to sell shoes and the bag in a door to door method. In August in 1992 EDWARD FORRER has had one small store in the Gang Saad Bandung with the number of employees reached 18 people. The marketing method was no longer done in a door to door manner, but has been change into “wait for customer coming to our store” to choose product in display, tried it & bought it. However for the loyal customer & to special event, EDWARD FORRER still received job order in limited number. At that time EDWARD FORRER was concentrating on the sandals product, shoes for young mother & the girls‟ teenager with special design. Several years afterwards with the concept “words of mouth” EDWARD FORRER could have entered the shoe retailing business and been known as a local brand from Bandung. In 1994 almost could be assure that the fashion destination tour in Bandung was shopping in Cihampelas and EDWARD FORRER. In the year 1995-1997, because the increasing of the customer number and the total sales, EDWARD FORRER have open new retail outlet. At that time EDWARD FORRER retail outlet became four locations that are: the Veteran, Premier Cihampelas, and Kings‟ Shopping Centre-Kapatihan. During 2003 EDWARD FORRER has change from the

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individual's company into a limited company. In the first semester in 2003 the number outlet has reached 16, those are: Bandung (7 outlet)

Surabaya (1 outlet)

Bali (2 outlet)

Makassar (1 outlet)

Jakarta (1 outlet)

Semarang (1 outlet)

Yogyakarta (1 outlet)

Malang (1 outlet)

Medan (1 outlet) On August 17, 2003, EDWARD FORRER officially opened their first international outlet in Australia, to be precise in 333 of George Street, Sydney-Australia. On January 1 2005 EDWARD FORRER began to develop the business partnership through the franchising system. Currently in the first quarter 2007, EDWARD FORRER has already had 8 outlet nationally that was managed personally and 1 outlet in Australia, then 39 outlet that was managed by local franchising and 1 franchise in Malaysia. 4.1.2. Vision, Mission & Company Value PT EDWARD FORRER vision is “Being footwear stores who main goal is dedicating the best shopping experience in Indonesia & worldwide” The mission from PT EDWARD FORRER was as follows: To provide innovative & good quality products Involve all the team for gathering the service spirit which is oriented to customer satisfaction Give the employees value of life as a second family in the work To grow spiritual blessing in the team To build our team with all gift, skills, abilities & all good characters we have To build leaders become the right “agent of change” (people who able to motivate, become mentor, responsible, transfer good character & behavior to the team)

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Empower the stakeholders to be proud of Indonesia & earn the name go international in footwear area with its best service

Value from PT.EDWARD FORRER was as follows: Do the best we can

Excellent & friendly service

Rigid adherence

Continuous improvement

Put the right men in the right job

Passionate to work

Integrity & honesty Company Structure:

DIREKTUR UTAMA

PRODUCTION

SS

DESIGN ADVERTISING

UMUM

MARKETING FRANCHISE

MARKETING ADVERTISING

STORE MARKETING

PR

MARKETING SUPPORT

KAA

AKUNTANSI

KEUANGAN

AUDIT

STAFF Ass SSM

SSM

PERSONALIA

OUTLET

Figure 4.1 EDWARD FORRER company structure

In running their business process, EDWARD FORRER was led by a managing director who was helped by 5 divisions that were assigned in accordance with their function. The first division was the production division. This division is responsible in the production area. In this division all of the production activity start from the preparation for raw material until the delivering of the product, become this division responsibilities. The second division was store marketing division. This division was responsible for all the sale activities. Store marketing takes form of retail outlet of EDWARD FORRER and was led directly by a Store Manager. Store Manager was responsible towards the activity of an outlet, from the ordering decision making, operational, supplies and inventory policy and the sale achievement of their store. 27

The third division was marketing advertising division. This division was responsible with all marketing means for the EDWARD FORRER products. This marketing activity included the marketing of a design and the marketing for EDWARD FORRER brand. Moreover this division was responsible in establishing relations with the EDWARD FORRER networks both from the supplier side and the EDWARD FORRER customer itself. The fourth division was marketing franchise division. This division was responsible to establish relations with every potential investor who was interested in the development of the EDWARD FORRER business. This division was assigned to help the franchising requirement of EDWARD FORRER. The fifth division was KAA division (Finance, Accounting and Audit). This division was responsible for recording all the financial activities. All the recording for the company financial activities become this division responsibility. This division determined the financing policy for this company. 4.1.3 The product of EDWARD FORRER EDWARD FORRER products were classified to 5 kinds. They are: First was classification for male models product. For male model products there are 7 types of products. Table 4.1 Male model products

MALE

CLASSIFICATION 1

CODE M1

DESCRIPTION FORMAL SHOES

2 3

M2 M3

CASUAL SHOES CASUAL SHOES WITH THICK SOLE

4

M4

BOOTS

5 6

M5 M6

BUSTONG SANDAL

7

M7

DRESS SHOES

Second was classification for female model products. For female model product, there are 9 types of product. 28

Table 4.2 Female model products

FEMALE

CLASSIFICATION

CODE

DESCRIPTION

1

F1

FORMAL MODEL

2

F2

CASUAL MODEL

3 4

F3 F4

CASUAL MODEL WITH THICK SOLE BOOTS

5 6

F5 F6

BUSTONG SANDAL

7 8

F7 F8

DRESS SHOES MID HEEELS

9

F9

HIGH HEELS

Third was classification for kids model product. For kids model product, there are 7 types of product. Table 4.3 Kids model products

KIDS

CLASSIFICATION

CODE

DESCRIPTION

1

K1

FORMAL SHOES

2 3

K2 K3

CASUAL SHOES CASUAL SHOES WITH THICK SOLE

4

K4

BOOTS

5

K5

BUSTONG

6

K6

SANDAL

7

K7

DRESS SHOES

Fourth was classification for unisex model products. For unisex product, there are 2 types of product. Table 4.4 Unisex model product CLASSIFICATION UNISEX

1 2

CODE

DESCRIPTION

U1 U2

SCHOOL KEDS KEDS CASUAL (SPORTY)

Last but not least, the fifth classification for toddler model product. For toddler product there is only 1 type of product. 29

Table 4.5 Toddler model product CLASSIFICATION TODDLER

2

CODE

DESCRIPTION

T2

CASUAL BAYI

From 5 available classifications of product in EDWARD FORRER had 5 kinds of product that always became most selling product of the year and each year it‟s having an increase in selling level. 4.1.4 EDWARD FORRER market EDWARD FORRER shoes had great amount of loyal customer. Their customer are not only a local customer but they also a local tourist and international tourist that always spent their time to come to the EDWARD FORRER retail outlet to just take a look to the latest model or even buy EDWARD FORRER product. Their customer comes from every range of ages; there were kids, teenager, and even the elder people. Each year selling level of EDWARD FORRER always has a progress. Table 4.6 Sales period 2005-2006 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

SALES IN 2006

12,050

11,564

12,613

11,812

12,820

13,215

13,532

12,768

12,936

21,521

22,019

16,232

SALES IN 2005

11,434

11,397

10,618

11,454

12,815

12,610

13,523

12,485

11,714

20,263

17,258

12,668

From the table above it could be seen that during 2005, the total sale EDWARD FORRER is 158.239 pairs of product, and then during 2006 the total sales increase into 178.082 pairs of product. From the total sales below, it shows how high the intentions of the market towards EDWARD FORRERs product. From the graphic below can be analyzed that, for the last 2 years the top 5 products was grow.

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Figure 4.2 Graphic of sales comparison for year 2005 and 2004

From the total sales for two years period, there were 5 type of model that always been the highest sales. These models contribute more than 50% of the total sales for EDWARD FORRER. Table 4.7 Top 5 sales product for 2006 KODE

JAN

FEB

MAR

APR

MEI

JUN

JUL

AUG

SEP

OKT

NOV

DES

TOTAL

M1

1,425

1,322

1,959

1,538

1,554

1,566

1,496

1,802

1,811

2,150

2,002

1,295

19,920

M2

894

769

799

588

807

835

755

925

1,002

2,013

2,115

1,995

13,497

M6

2,690

2,529

2,405

2,480

2,545

2,533

2,998

2,785

2,478

3,232

3,456

2,629

32,760

F1

1,106

1,226

1,530

1,642

1,057

1,455

1,660

1,020

1,452

2,008

2,341

1,841

18,338

F6

2,597

2,491

2,575

2,198

2,770

2,566

2,801

2,660

2,546

3,605

4,289

3,012

34,110

Table 4.8 Top 5 sales product for 2005 KODE

JAN

FEB

MAR

APR

MEI

JUN

JUL

AUG

SEP

OKT

NOV

DES

TOTAL

M1

1,245

1,432

1,099

1,395

1,554

1,492

1,590

1,388

1,205

2,011

1,605

1,305

17,321

M2

807

786

795

856

807

753

901

1,002

1,013

1,459

1,220

995

11,394

M6

2,653

2,502

1,909

2,048

2,654

2,503

2,808

2,678

2,458

3,023

2,909

2,520

30,665

F1

1,077

1,211

1,253

1,432

1,607

1,455

1,560

996

1,054

1,809

1,784

1,344

16,582

F6

2,560

2,409

2,497

2,098

2,677

2,573

2,778

2,505

2,446

3,403

4,201

3,002

33,149

4.2 Company business process 4.2.1 Design Decision and Order1ing Process The designing product process was done by the EDWARD FORRER design team, with using the creative idea that they got from the internet, feedback from retail outlet and ideas 31

from customer. The design team use internet to get the idea about the latest model and get feedback from the customer through their website. They combine all the resource available to design lineup product for EDWARD FORRER. The final design that has been made will be shown to the store manager through the internal website of EDWARD FORRER. Store manager have the authority to choose and order the new product model without any determined number of product by the head office. Because of that system, there were differences products in every EDWARD FORRER retail outlet. The products that have been ordered will be processed in 2 weeks until 1 month period with condition that the ordered product match with the factory capacity and all the required material is available. For the design that was not chose and ordered will be store into the head office database. So if there is an ordering in the following day, that product will be produced at that certain period without waiting for re-design period. Design Decision & Ordering Process Design DesignDivision Division

IT ITDivision Division

Production ProductionDivision Division

Designing Product

No

Upload Sample Picture

Choose Product For Ordering

Planning

Sample Product

Retail RetailOutlet Outlet

Ordering Decision

Yes Receive PO From Retail Outlet

Purchasing Order

Reconfirm Order to Retail Outlet

Confirm Order

Execution

Make Production Order To Production Division

Processing Order

Figure 4.3 Design decision and Ordering Process

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4.2.2 Production Process The production process can be begun when this division have receive production order from retail outlet through IT division. This process begun with making the material resource planning by the production division and will be processed by the purchasing division. Usually it took 2 weeks until 1 month to process this order until it becomes finished product. With the note that all production requirement material has been available when these materials were needed. EDWARD FORRER production division did not produce all products that sold in the retail outlet. This division only set their production in sandal product, both for man and woman (M6 and F6). Whereas all other product like shoes were produced by the EDWARD FORRER associate. Their associate is a shoe maker in small medium enterprise scale. The decision to only produced sandal product is because this product is the most favorite product. Since this product always become top sales for the recent years, the head office make a regulation that since the beginning of 2006, the sandal product is produced by EDWARD FORRER production division. This regulation was made in order to maintain the quality of sandal product and to ensure the replenishment process for this product went well. The sales level for sandals products can be seen from these figures below.

Figure 4.4 Graphic of sales comparison for top 5 products in 2006

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Above are total sales of top 5 products in 2006. It shown the sandals product outnumbers the other product in the 2006 sales period. And below is figure of total sales of top 5 products in 2005. This figure also shown that, the total sandal sales outnumber the other products.

Figure 4.5 Graphic of sales comparison for top 5 product in 2005

From the figure 4.4 and 4.5 it shown that there were significant difference between the sales of sandal product and shoe product sales. Because of this condition the EDWARD FORRER board decided to start the production of sandal product by their own production division, while the other product will be produced by the EDWARD FORRER associate. Figure 4.6 it shown the production process of sandal product that was made by EDWARD FORRER production division.

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Production Process Purchasing PurchasingDivision Division

Production ProductionDivision Division

Quality QualityControl Control

Retail RetailOutlet Outlet

Receiving Production Order

Menerima Order Pembelian Material

Preparing MRP

Order Raw Material To Supplier

Receiving Material From Purchasing Dept

Receive Raw Material From Supplier

Pull Preparation

Preparing Outsole & Insole

Cutting & Sewingt

Making Insole

Sewing

Making Outsole

Assembling

No

Quality Control

Execution

Finishing

Yes

Warehouse

Receiving Product

Figure 4.6 Production Process

For the fulfillment of the shoe production requirement was carried out by EDWARD FORRER associate. These associate usually a small medium enterprise that produce shoe product. These associate was given full authority to produce the EDWARD FORRER orders according to the design that have been made by the design division with amount of quantity and level of quality that have been determined in define period of time.

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Outsource Production Head HeadOffice OfficeEF EF

Outsource OutsourceProduction Production

QC QCEF EF

Warehouse WarehouseEF EF

Retail RetailOutlet OutletEF EF

Receiving Order From Retaii Outlet

Preparing Production Order & Purchasing Order For Outsource Production

Receiving Production Order & Purchasing Order from EF

Execution

Productioni & QC

Warehouse

Defect Product

QC in EF

Warehouse & DC EDWARD FORRER

Retail Outlet

Figure 4.7 Outsource Production Process

Every finished products, own production or product from outsource production have to passed the EDWARD FORRER quality control. If those products have passed the quality screening then that product will go directly to the warehouse and can be distributed directly to the outlet. But if those products did not meet the quality requirement, then that product will went back to the production phase to have some adjustment and after that it should repeat the quality screening purpose. In carrying out the product distribution to the retail outlet, EDWARD FORRER use land transport facilities such a medium sized truck. For West Java and Jabodetabek territory, the product delivery was carried out once a week. For product delivery to outside West Java and jabodetabek needs 1 to 2 month, depend on the those retail outlet area. Meanwhile for delivering product to outside Indonesia, it will take 1 to 2.5 month to deliver. For special order that need faster delivery, usually used air freight facilities.

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4.2.3 Flow of information and product

Supplier Information Flow

Supplier Product Flow

Retail Outlet

Head Office

Gudang

Production & QC

Outsource Production

Figure 4.7 information & product flow

The information and product flow that were shown above, determine the company response to replenishment. Using information technology such as internet really helps the company to communicate and to control both the information and the product flow. These information technologies also help company to keep connected and maintain their control to their associate. Moreover EDWARD FORRER also used a system called Retail Point of Sales System or that usually called ROSY. This program records all important data to this company. This program helps EDWARD FORRER this following stage: Planning: Planning was done by the store manager with using data from historical data recording. This planning will be informed to the head office through ROSY. Store manager have full authority to make an order without any determined number and type of product. After store manager decided to make an order for replenishment, then the production order can be made to start the production process.

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Execution At the time of the ordering data of the product has been received by the head office. Then the head office will make production order to the internal production division and outsource production. The finished products both from internal production or outsource production must pass the EDWARD FORRER quality control. For the products that have passed the quality control will be placed to the warehouse and wait to be distributed to the retail outlet. For the repeat order products can be produce again by the production division as long as the required material was available. Meanwhile for the special order like custom design product, usually suited with the material inventory available at the production division, but if the customer still insist on some certain material then they will need to wait for certain time and they have to pay the additional production cost. For every product that was ordered and made both from EDWARD FORRER internal production and outsource production, will be recorded by the head office. Before the distribution took place, the distribution officer will check the inventory and distribution data. The officer will input this data to head offices ROSY (ROSY-HO) and it connect directly to the branch ROSY (ROSY-B). The products that have arrived in the retail outlet will be matched with the data in ROSY. Controlling Product that was going to be distributed will be matched with the current data in ROSY. So if there were a mistake in delivering process whether it was a shortage or surplus product delivery, it would be easier to look over it and fixed it. If there were a surplus or shortage the head office can immediately do cross delivery to the other retail outlet. The products that have entered the retail outlet will become the outlet inventory. Some of these products will be kept in the warehouse and some others will be displayed in the display area. The registration towards the change of inventory was recorded every day according to the sales activity. The daily data will be entered to the ROSY-B and it directly connected to the ROSY-HO. The replenishment policy was determined by the store

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manager based on the available historical data. The replenishment activity can took form of reorder for existing product or ordering for new product. ROSY program have been used in all retail outlet in Indonesia. So the recording activity for local purpose will be easier.

HO Mainframe ROSY-B ROSY-B RoSY-HO ROSY-B MYOB

ROSY-B ROSY-B ROSY-B

Figure 4.8 ROSY working processes

ROSY working system starts from the entry data by the retail outlet through ROSY-B. Retail outlet input historical data such as daily sales data, daily inventory data and replenishment order data. Data entry was done once a day usually at the end of the days. ROSY program have been use by all EDWARD FORRER retail outlet in Indonesia, meanwhile for the recording program in Australia retail outlet, EDWARD FORRER use MYOB (Mind Your Own Business) program. The data that has been entered to ROSY-B by the retail outlet directly connected to the ROSY-HO, means that the head office will be able to access the information right away. The data that been received by head office are becoming the company data. If there were a replenishment order from retail outlet, the head office can process its order right away. But if the requirement for those products is only in small numbers and there were an outlet still have those products usually head office will make an arrangement for cross inventory replenishment.

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4.2.3 Managing under Stock and Overstock 4.2.3.1 Managing Under stock The under stock problem often happen during the holiday season like school holiday and another public holiday such as Lebaran, Christmas and new year. When entering the holiday season usually retail outlet kept more inventory or make order for new product in large number of product. The number of ordering and the inventory keeping adjusted with the historical data from last year sales during the holiday season. To maintain the product that was in the peak phase or very popular phase, EDWARD FORRER conduct an extra monitoring so the availability level of those product can be assure in the retail outlet. This was very important to avoid the lost sales. For the ordering against the shoes product usually took up long spare time because the production division of EDWARD FORRER only carried out the production against the sandals product. There were several method that always been done by EDWARD FORRER when they are facing the under stock situation. First was did the product replenishment by making order to reproduce old product or make production order to produce new product. This method usually used when the order was in a large number of products. When ordering old products to be reproduced, it has to consider to the availability of the material and usually took more time because the EDWARD FORRER production division only produce sandal product. So if there were an order for products other than sandal it have to be checked first with the outsource production.

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Retail Outlet

Retail Outlet

Inventory Data

Inventory Data

RoSY-C

RoSY-C

Outsource Production RoSY-P

RoSY-P Production Division

Information Flow

Product Flow

Figure 4.9 Reproducing replenishment

Figure above shown the product and information flow when they done the replenishment, with ordering for reproducing for a certain product. Retail outlet input information to head office through ROSY. For sandal product can processed directly to the production division. If the required material is available then the production process can be start right away. But if the required material was not available, the production division will report to head office and after that the head office will pass that information to the retail outlet about the situation. And asked the retail whether they still want to wait for it or not. Other than using the reproduce replenishment, there were other method that usually used by EDWARD FORRER. This method is cheaper and use shorter time to response the replenishment requirement. This method was called cross inventory replenishment. Using this method is to transfer product from an outlet to others. So the under stock problem can be fixed and avoid by receiving overstock product from other retail.

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Retail Outlet

Retail Outlet

Retail Outlet

Inventory Data

Inventory Data

Inventory Data

ROSY-B

ROSY-B

ROSY-B

ROSY-HO

Information Flow

Product Flow

Head Office

Figure 4.10 Cross Inventory Replenishment

The picture above had shown the flow of information and the product when doing cross inventory replenishment between retail outlets. This method was often used by EDWARD FORRER to reduce the production cost. The method that was to move some product from one retail outlet to other retail outlet, usually this method use the land transport facilities to move the products, but it depend with how long that the customer are willing to wait for this product, if customer this needed this product in a period of that was fast then usually EDWARD FORRER uses quick delivery using air transport facilities. But if these situations happen in West Java or Jabodetabek area, the mode of transport will use land transport facilities. The method became the first choice for EDWARD FORRER because by using this method the company could save the cost and reduced the waiting time. 4.2.3.2 Managing overstock EDWARD FORRER products like any other fashion products also have a lifecycle. There were some products that have long term cycle and some is just seasonal or short term cycle. For long cycle product the sales period time is longer than the seasonal product. Usually

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this long term product is a basic model that have classic model, so every customer can manage to used it without afraid to be called old-fashioned. For product that have entered the declining phase. There was a regulation to do more promo by giving them a discount or buy 1 get 1 promo. This regulation was made to reduce and avoid overstock for product that was going to enter the declining phase. Other than that EDWARD FORRER often does the cross inventory inter outlet. With this method, EDWARD FORRER can manage the overstock by relocate the overstock product from the overstock outlet to the other outlet that suffers under stock because there were run out of product. This method can only be done if there were an agreement between both outlets. 4.3 Data Analysis Root Cause Analysis Head Office

Retail Outlet

Customer

Production

Design Decision

Design

Information system

Design Product

Designer from edward forrerer not following demand pattern from customer means that the designer does not know what customer really want

Approved Product

Design Decision

Received Order

Production

Shipping Product

Inventory To many inventory for product that have similar design Buying products from edward forrerer

Display

Replenishment

Product Demand patterns Low product cycle level because the product design did not match with what customer want. This situation was shown from the level of sales that only 90 pairs of shoes / month

Figure 4.11 Problem analysis

From the data that was obtain from EDWARD FORRER there were 3 things that become the company main problem in response to the demand. There are: 43

Table 4.9 Company problem and root cause No Problem

1

Root Cause

Difference product There were no product type and inventory typer and inventory level in every outlet level standardization based on the store manager decision

Reason Store manager have the highest authority to decide what type of product that they want to have on their display and how much product that they want to keep as their inventory, using decentralized strategy

2

Overstock

Design that was made did not follow the The design product did demand patter that based on the sales not match with what activity. The design was made by browse customer needs the current trend from the internet and combine it with their creative idea

3

Lack inventory information for other outlet

Updating inventory information only done In every end of daily sales period.

Not maximizing the IT function, the inventory level update is done at the end of daily sales period

Responsiveness as one of the aim of a supply chain system in satisfying the customer needs, must be supported with exacts and accurate information. The advantage in information will help supply chain to achieve the responsive destined level. With exact and accurate information, the supply chain system could make exact decision and could perform that decision well. With good response from the company the waiting time could be reduced and customer could receive this product faster. There were two kinds of responsiveness that need to be consider by the company when they having a replenishment. First was the responsiveness towards the existence of new product and process it from the designing process up to the production process and finally reach the customer. Second was responsiveness towards the requirement of old existing product. Responsiveness here was the level of company response when there was new order for producing existing product. To define the measurement of responsiveness level was in form of sum of time that needed to process a replenishment order. The sum of time that was needed to process an order definitely influences the performance of EDWARD FORRER.

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To achieve the supply chain responsiveness, there were several things that need to be considering in EDWARD FORRER case. First to be considered was about the standardization. There are no product type and inventory level standardization for outlet In EDWARD FORRER, store manager have the highest authority to decide which product they want to have in their outlet. Store manager can choose whether they want to order for new products that have been offered by the design division or not to order. With this policy, the product in an outlet will have difference with other outlet. There is no standardization about product type in outlet Since store manager have the authority to decide which product that they want to have in their outlet, then they also have the authority to decide how much product that they want to keep as their inventory. EDWARD FORRER current retailing strategy is using decentralized strategies for their outlet. Outlet have the authority to decide which product that they want to order and how many to order. Decentralization is when authority for retail decisions assigned to lower level of organization (Weitz & Levy, 2004, p.290). With having large variations of product type make the company harder to replenish its product. Because with large variety of product makes company need to focus on wider lineup of product with higher uncertainty. Second problem is about overstock. Overstock because design product did not match with what customer needs There were 3 things that help the product performance: quality, cost, design. The quality and cost of EDWARD FORRER shoe is relatively similar, but in product design, EDWARD FORRER product has many variances and the entire product is relatively similar to each other based on their classification. And usually their design is no better or even worse than the footwear product that they sold in factory outlet. There is a lot of footwear product in EDWARD FORRER. From 26 type of product, not all products 45

considered as an active product. The design that was made by the design division did not follow the sales pattern for certain product based on sales activity of certain product. This problem was caused because the design division did not have complete data about the sales pattern about certain model, so the designer only design he product based on the designer creativity itself. Third problem is about the inventory situation. The outlet did not know the level of inventory in other outlet Every EDWARD FORRER outlet input their inventory data once a day in every end of daily sales period. So outlets know their inventory level in the end of the day. This became problem when outlet want to do the cross replenishment. The outlet that wants to have the cross replenish product must wait for other outlet to update their data to the head office first then if there is available product and agreement between the outlets then the cross replenish could be done. Table 4.10 Proposed strategies based on problem No

Problem

Solution Use hybrid strategy, head office decides the type of product that the outlet will have on their display. The outlet have the authority to decide how much inventory that they want to keep

1

There were no product type and inventory level standardization

2

Overstock

Design division has to combine the sales pattern of product based on the sales activity, the designer creativity itself and the latest trend

3

Lack inventory information for other outlet

Update inventory level by automate the counting system.

From the table above, there were some solutions for the current problem. These solutions were suited with its needs. For the standardization problem the solutions are Use hybrid strategy, combine the exiting decentralize strategy where outlet have full authority to decide the type of product and the amount of inventory that they want to have in their outlet, with the centralized strategy to make control and response easier for the head office.

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In hybrid strategy, head office decides the type of product that the outlet will have on their display. Foe the stock policy is up to the outlets that have the authority to decide how much inventory that they want to keep. With this combination the company can make controlling become easier because they can focusing only limited similar product type. For the design problem, the solution is. To make better design that match with what customer needs, the design division has to combine the sales pattern of product based on the sales activity, the designer creativity itself and the latest trend. With these combinations, the design division could make better product that match with what customer need. This will be different with the current condition where EDWARD FORRER have lot of product that only have little difference from one to another, and not all of those product are matched with what customer want. For the inventory situation problem, the solution is. The current situation where if an outlet want to do the cross replenish, they have to contact the head office first to find outlet with sufficient inventory to fulfill the cross replenish. The new strategy is to make an update regarding in inventory level. The inventory level must be update for every change in inventory to make cross replenish faster and easier. The outlets have to update their inventory data for every change in the inventory level. The outlet that need cross replenish will know which outlet still have the sufficient inventory level to provide the other outlet shortage. Table 4.11 Strategy comparison Current Strategy

Proposed Strategy

Use decentralized strategy. Outlet have full authority to decide what type of product in their display and how much inventory that they want to keep

Use hybrid strategy, head office decide the type of product that the outlet will have on their display. The outlet have the authority to decide how much inventory that they want to keep

The design product did not match with what customer needs. Only produce based on the latest trend and creativity

Design division has to combine the sales pattern of certain product based on the sales activity, the designer creativity itself and the latest trend

The outlet did not know the level of inventory in other outlet

Updated inventory data when there is change in inventory level

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The use of current strategies have problem in controlling their inventory level. The difference in type of product and level of inventory in every outlet makes controlling activity become harder. The company has difficulties to response to the difficulties to maintain their service level because of the difference in every outlet both difference in type of product and inventory level. Having similar products in every outlet makes controlling become easier. The design available is not matched with what customer want because the design division did not make product based on the sales pattern of product that based from the sales activity. The current design strategies only made based on the latest trend and the creative idea of the designer itself. The new strategy proposed a strategy that makes the design division produce design that the customer really needs. The situation where inventory data update was done in every end of daily sales period make the company did not know the situation of certain product in certain period. The outlet who need to do the cross replenishment must wait if they need to know about the availability of certain product. The retail who needs replenishment must ask for availability for certain product to the head office. The head office will look for the available product. Using the proposed strategies make replenishment take shorter time to be done, because every outlet can identify how much inventory that the other outlet have. The larger outlet can support the smaller outlet.

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