You will be assigned a case and asked to write an individual report by analysing the logistics and supply chain related problems/issues discussed in the case. Analysis of the case will usually require you to consider not just the obvious problems, but what were the likely causes of these problems and what could be the solutions.
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XYZ Company Jersey Supply Chain
The National Football league (NFL) is the premier professional league for American football,
consisting of 32 teams. Teams are organised in two conferences, the American Football
Conference (AFC) and the National Football Conference (NFC), and in four divisions within
each conference. The history of American football traces back to 1869. The Arizona Cardinals
are the oldest continuing operation in pro football, dating back to 1899. In 2003, the Super
Bowl between the Tampa Bay Buccaneers and the Oakland Raiders received over 139 M
viewers, making it the most watched television program in history. From its humble beginnings,
the NFL has grown into a very successful league.
John Fireman is responsible for the inventory of NFL (National Football league) replica jerseys
that XYZ brand maintains in their central distribution center (DC). It is early October the NFL
season is well underway. “No wonder we call this the chase; I feel like I have been running for
months; I’m exhausted. I wish there was some way to plan inventory that would allow me to
react faster to hot-demand players and teams. But with player demand changing so much
from year to year, I really can’t increase inventory; in fact, I like to minimise inventory at yearend.”
XYZ Company Background
XYZ Ltd. is headquartered in Massachusetts. The company employs approximately about
10,000 people and is widely known for its sports apparel and footwear brands. XYZ Ltd. was
a small British shoe company. Then, later the company became International and went public.
John Fireman continues to be the chairman and CEO. In December 2020, XYZ Ltd. signed a
10-year contract with the National Football League (NFL) that granted an exclusive license to
XYZ to manufacture, market, and sell NFL-licensed merchandise including on-field uniforms,
sideline apparel, practice apparel, footwear, and an NFL-branded apparel line.
LICENSED APPAREL BUSINESS
The Licensed Apparel Business is a high margin and lucrative business. In granting an
exclusive license to XYZ Ltd., the NFL expects XYZ Ltd. to provide a very high level of service
to its customers, the sports retailers who ultimately sell to the public. However, demand is
influenced by many uncontrollable factors and is extremely hard to predict; forecasting which
items will sell is akin to forecasting who will be the Most Valuable Player in next year’s Super
Bowl.
XYZ Ltd. has a history of delivering quality products. One retailer states, “The XYZ line is
great. We’re excited and anxious at the same time. [In the past] the fear was that one team
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jersey could be found from five different manufacturers at five different stores in the mall. Now
the [question] is, will the consumer have to pay an extra $20 for a team jersey because it is
from XYZ?”
Yet other retailers worry about having a sole source for these products. “As a top-tier retailer
in apparel, we’ll only have access to that one brand,” says another retailer. “I think that XYZ
company makes great product. We just hope they can deliver because we won’t have options
B, C, or D to go to.”
Of particular importance is XYZ’s ability to deliver hot-market items, a concern for retailers
in all areas of the licensed business. “I think with one major partner in XYZ we are in a better
position for hot-market items. . . . XYZ will be able to take a larger position in blanks on jerseys
and fleece and feel more confident that they can meet the demands of retailers.”
A hot-market item, in the context of the NFL replica jersey business, is an item that was
either not expected to sell well before the season or an unknown item that had no prior sales
expectations. Early reviews of XYZ show that their performance has been satisfactory. “To be
fair, in hot-markets delivery is always going to be an issue. Whether you have 12 companies
or one, it will always be an issue. And I have to say, this year, XYZ Ltd. has been pretty much
on-time with their deliveries.”
XYZ developed its expertise in Licensed Apparel through acquisition and expansion. In
2021, XYZ purchased a relatively small licensed apparel business, AthleticFit, located in
Indianapolis. AthleticFit, had extensive experience and expertise in sports apparel, as well as
past relationships with the NFL. As a consequence, XYZ decided to locate its Licensed
Apparel management at the former AthleticFit, facilities in Indianapolis.
DEMAND FOR NFL REPLICA JERSEYS
The NFL replica jersey consists of a 140-gm nylon diamond-back mesh body, a nylon dazzle
sleeves/yoke in the team colour and white, and a 245-gm polyester flat knit rib collar, and
stripe knit inserts for select teams. Each team’s jersey is a distinct combination of style, cuts,
and colours (team colour, white, and alternate) along with the team logo (see Figure 1 for
examples).
FIGURE 1: Examples of NFL replica jerseys.
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Although the consumer demand for jerseys is year-round, the NFL season drives much of
the demand. Sales are highest in August and September in anticipation of the season. As the
season starts, certain teams and players get a sales bump due to their performances. For
example, in 2003, the Kansas City Chiefs started the season with a series of wins, and their
jerseys became hot-market items, creating shortages. Previously, unknown players sold
unexpectedly well: Dante Hall made several outstanding plays in the first four games, creating
a hot-market for his jersey.
Later in the season, consumer demand is driven by holiday presents and the anticipation of
the playoffs. During the playoffs, the demand is strongly correlated to weekly performance. A
team that loses sees its sales disappear, whereas teams that win and continue to play
experience strong sales. The two Super Bowl teams sell much higher than normal up to the
game. The Super Bowl winner continues to sell for one to two weeks following the
championship, but then sales decline rapidly until the start of the next season.
Most player trades and free-agent signings occur during the off season of February to April.
Consumers react to these player movements by demanding the newest superstar jersey for
their favourite team. For instance, when Warren Sapp signed with the Oakland Raiders,
retailers expected XYZ to start shipping his jersey immediately.
SALES CYCLE
The annual sales cycle starts in January/February. XYZ company offers retailers a discount
to place early orders that result in retailers placing approximately 20 percent of annual orders
for planned delivery in May. XYZ company uses the advance-order information to plan
purchases from their suppliers for the upcoming season.
There is limited ordering by the retailers between February and April except for some order
adjustments; for instance, retailers place orders for short lead-time delivery to meet
unexpected demand due to player movements.
Retail orders placed between May and August are primarily to position inventory in the retail
DCs to meet the in-season replenishment requirements from the retail outlets; the lead-time
expectations at this point are 3 to 4 weeks. By the end of August, XYZ ltd. has shipped 50
percent of anticipated sales to retailers.
The in-season replenishment period between September and January is known as “The
Chase.” For the jerseys that are selling according to the preseason forecasts, retailers use
their DC inventory to replenish the stock at their stores. But the retailers need to place
replenishment orders with XYZ Ltd. for strong sellers to restock their DC inventories. This is
the time when consumers react to player and team performance and create hot markets.
Retailers need to adjust their inventories to “chase” the hot-market items, and they expect XYZ
to supply product to chase the hot markets. Unknown players become superstars, and former
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superstars become nonfactor players. There is an opportunity for retailers to sell through high
volumes of product if they can stock the correct players to match the consumer demand.
A senior purchasing manager at a large sports retailer explains, “We really need to
anticipate what teams and which players will be popular this season and ensure that they have
inventory on hand. We replenish in-store inventory as required on a weekly basis from the
DC.”
SUPPLY CHAIN
XYZ Ltd. delivers their finished goods (FG) from its Indianapolis DC directly to the DCs of its
major retailers. Retailers expect lead times between 3 and 12 weeks for replenishment of
normal demand but expect much shorter lead times of 1-2 weeks when faced with hot-market
demand.
Figures 2 and 3 provide a high-level depiction of XYZ’s supply chain. XYZ sources all
jerseys from offshore contract manufacturers (CM) with a manufacturing lead time of 30 days.
XYZ procures the fabric and raw materials that are held in inventory by each CM. Internal
contracts are in place to ensure sufficient levels of raw material inventory to provide capability
to produce any team on demand, if required. Shipping takes 2 months for ocean shipping or
1 week via air.
Raw material
suppliers
Contract
manufatcurer
(CM)
XYZ Company
Warehouse
Retail DCs
FIGURE 2 XYZ’s supply chain.
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Retail outlets
Consumers
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CM
XYZ. Ltd. Indianapolis
FIGURE 3- XYZ’s supply chain—detail
The contract manufacturers cut, sew, and assemble a finished team jersey with team
colours and markings, but without a player name or number. This is called a “team finished”
or “blank” jersey. The jersey then has two possible paths to reach finished goods inventory.
For some orders, the CM screen-prints the player name and number on the jersey to produce
a “dressed” jersey, which is then shipped to the XYZ DC as a finished good (FG inventory).
For blank jerseys, John stated, “Blank jerseys are shipped directly to the (XYZ) DC with no
player name or number. We keep these jerseys in inventory until we start to see demand, then
we will burn blanks (screen printing) to meet customer orders on time.”
Within its DC, XYZ Ltd. has its own screen-printing facility, which it uses for finishing the
blank jerseys. It has a capacity to print about 10,000 jerseys per day during the peak season.
The finishing facilities in Indianapolis consist of many sewing and screen-printing machines,
capable of embroidering and printing to the highest commercial standards. (This capacity is
shared with other apparel items such as NBA jerseys, T-shirts, and sweatshirts. If the
immediate requirements exceed the finishing capacity in Indianapolis, XYZ has identified good
local outsourcing options with more than enough capacity, but at some additional cost. The
cost to outsource is approximately 10 percent higher than the internal decorating cost.)
The inventory of blank jerseys in Indianapolis has two primary purposes: to fill demand for
players that are ordered in small quantities and to respond quickly to higher-than-expected
demand for popular players. The CM and XYZ Ltd. have an agreed minimum order level of
1,728 units for the dressed jersey for any player. A player with demand less than this level will
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be supplied using blank jerseys that are printed in Indianapolis. A typical NFL team has only
a handful of players with demand sufficient to warrant production by the CM.
XYZ Ltd. also uses blank jerseys during the off-season to meet immediate demand for
players that unexpectedly change teams. Monty, production manager, cites a recent example,
“When Warren Sapp signed with the Oakland Raiders in March (2004), retailers expected us
to start shipping his jersey immediately. We can’t wait three months to get jerseys from our
suppliers; we had to start printing immediately. It is a good thing we had extra Raiders jerseys
in stock.”
PURCHASE PLANNING
XYZ’s purchasing cycle starts much before the sales cycle, namely in July, 14 months before
the beginning of the target NFL season. For example, the purchasing cycle for the September
2024 season started in July 2023. XYZ Ltd. places purchase orders on its CMs twice per
month from July to October, with delivery planned for April. All jerseys ordered during this time
are typically for blank jerseys due to the uncertainty about the roster for the following season.
XYZ Ltd. expects the CM to manufacture the jerseys immediately and hold the blank jerseys
in inventory. If XYZ requires the jerseys in the current year, then a request can be made to the
CM to expedite those jerseys for immediate delivery.
During January and February, XYZ places orders against known demand, namely the
advanced orders from the retailers. XYZ makes purchases during March and April based on
a combination of known orders and forecasts. XYZ continues to place orders in May and June
to position inventory at its DC in Indianapolis in anticipation of retailer orders for the coming
season. From March to June is the most difficult time of year for XYZ’s planners: the advance
orders have been filled, but XYZ must decide its inventory based on its forecast of the demand
for the upcoming season.
PLANNING PROBLEM
As noted above, the March to June time window is the most critical time in the purchase cycle.
XYZ has already placed its orders to cover the preseason orders from the retailers, and now
must place the majority of its orders based on its forecast for the upcoming season. In this
section, we present an illustrative example, namely the planning problem for the New England
Patriots for the 2023 season.
XYZ brand sells jerseys to retailers at a wholesale price of $24.00 per jersey. The retail
price is in excess of $50. XYZ’s costs depend on the CM; the average costs for a blank jersey
and for a dressed jersey, delivered to Indianapolis, are $9.50 and $10.90, respectively. The
cost to decorate a blank jersey in Indianapolis is about $2.40.
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XYZ has several options for jerseys that it cannot sell to retailers and that are leftover at the
end of the season. XYZ can sell to discounters but needs to do so carefully to protect its retail
channels. XYZ also can hold unsold jerseys in its DC and hope to sell them during the next
season. There is significant risk with this option, especially for dressed jerseys, due to freeagent signings, trades, and retirements. Also, teams often change the style or colour of their
uniforms. In either case, XYZ can be stuck with outdated jerseys with very little value.
XYZ’s general practice is to sell leftover dressed jerseys at a discount but hold blank jerseys
for the next season, for teams that are not expected to make any changes to their jerseys.
The average price that XYZ gets from a discounter for a dressed jersey is $7.00. XYZ
estimates its annual holding cost for a blank jersey to be 11 percent, which reflects both the
capital cost for the inventory and the costs for storage and handling; thus, the cost to hold any
unsold blank Patriots jerseys until next season is $1.045 per jersey. The New England Patriots
redesigned their uniforms a few years ago, and there is no indication that any changes are
coming in the near future.
Forecasting demand is a challenge. XYZ develops forecasts based on a combination of
factors: past sales, team and player performances, market intelligence, advanced orders, and
informed guesses. Furthermore, the forecast is continually revised as the sales cycle unfolds,
and as XYZ gets more information on the current season.
SUSTAINABILITY
The company is struggling to maintain it’s cost and sustainability. They use Cotton, lyocell,
modal, acetate, viscose, polyester, nylon, spandex, acrylic, polystyrene, polyurethane, rubber,
leather, wool, down. Our cotton products are entirely sourced through sustainable cotton
farming and are made with at least 50% Better Cotton.
XYZ’s parent company has also been criticised for the use of forced labour in its supply
chain. They produce these products from countries such as: Argentina, Bangladesh, Bosnia
And Herzegovina, Brazil, Cambodia, China, Colombia, Costa Rica, Czech Republic, El
Salvador, Georgia, Germany, Greece, Honduras, Hungary, India, Indonesia, Jordan, Korea,
Lesotho, Lithuania, Madagascar, Malaysia, Mauritius, Mexico, Myanmar, Nicaragua, Pakistan,
Philippines, Poland, Portugal, Romania, Russia, Slovenia, South Africa, Spain, Taiwan,
Thailand, Tunisia, Turkey, Ukraine, United Kingdom, United States, Vietnam. XYZ Ltd. plans
to ensure that every single one of their products are sustainable by 2030.
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CASE STUDY QUESTION TO COMPLETE
The case of ‘XYZ Ltd’ is very typical of real supply chains with a lack of demand visibility. In
your report, you analyse the key supply chain issues and suggest approaches to improve
overall effectiveness.
A. Executive summary (brief): Summarise the objectives/aims, overview of the supply chain
issues/problems, and your main recommendations.
(2.5 marks)
B. Introduction (brief): Introduce the XYZ company and state the importance of investigating
its supply chain. Clearly state the purpose of the report, linking the key issues of the case
study you are going to discuss with theories/concepts from the course. Explain the overall
report structure.
(2.5 marks)
C. Case discussion: Identify issues relevant to the following areas and discuss the
issues/situations using relevant knowledge from the course. Provide appropriate
references as required.
Task 1. Supply chain overview: Critically analyse the product or commodity supply chain
structure you have studied in Assessment-2 (include your assessment 2 product
supply chain diagram) and compare it with the “XYZ replica jerseys” supply chain.
Analyse -how the supply chain structure is impacting total landed cost, leanness,
agility, and customer service levels.
(5 marks)
Task 2. Supply chain and logistics practices: Draw a simple diagram of how customer
demand information flows from market to the upstream supply chain of XYZ Ltd.
Discuss how the visibility of actual demand information affects the supply chain
activities of XYZ Ltd. Then discuss how XYZ can manage the increase in demand
variability.
(5 marks)
Task 3. Supply chain relationships: For “XYZ replica jerseys”, critically examine the
apparent relationships along the supply chain actors (supplier and contract
manufacturer- CM)? Discuss the risks and benefits associated with the outsourcing
(to CM) of “XYZ replica jerseys”. Compare it with the outsourcing strategy of the
‘Alligator’ case study (from the Session 3 tutorial module of Canvas).
(5 marks)
Task 4. Digitising supply chain: Identify two key software and two hardware technologies
that can help ‘XYZ’ to increase visibility, match supply and demand, improve
forecasting, and reduce operating costs. Justify your choice by explaining how the
selected technology(s) will address the case company’s issues.
(5 marks)
Task 5. Lead time: Discuss ways that the lead times within the XYZ Jersey supply chain
can be reduced.
(2.5 marks)
Task 6. Sustainability: Evaluate the sustainability of the current supply chain structure,
and in what way this could be improved.
(2.5 marks)
D. Conclusion: The conclusion ‘wraps up’ your report. Briefly summarise the key
points/issues/lessons from the case study.
(2.5 marks)
E. Recommendations (2.5 marks): List recommendations for approval or endorsement to
improve the existing supply chain practices.
(2. 5 marks)
F. Others: Overall presentation (all topics are clearly explained, easy to follow/clarity of
language, coverage and completeness, page numbers, table of contents), use of
references and citation, conciseness.
(5 marks)
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