Business Case - Final Document

7/30/2019 Business Case - Final Document

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APPLIED MANAGEMENT (BUSM3163) ASSIGNMENT 01

Stitched Up

Business Case

RMIT University Brandix College of Clothing Technology

Bachelor of Applied Science (Textile Technology)


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ContentsTopics Page Number

Customer Observation ...........................................................................

Idea Generation .....................................................................................

Business case .........................................................................................

Executive Summary................................................................................

The Need ...........................................................................

Solution .............................................................................

Dimensions of Check Fast ..............................

Why it is Innovative ..........................................................

Customer Research ...........................................................

Customers Who Said Yes ...............................

Customers Who Said No ................................

Overall Customer Feedback ...........................

Design and Development ..................................................

Investment Requirements.................................................

Expected Benefits..............................................................

The Ask ..............................................................................


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Customer Observation

We went to Stich Up outlet on 2nd

of March to examine out the unmet need of customers.

Members are separated in to three groups and done the observation roughly about five

hours and list down the below point as unmet need of customers while shopping at Stitched

Up. There were nearly 800 people on that time at outlet and most are a hurry to select out

garments.

Our main concern goes to several main criterias such as what people are buying and why,management point of view, how customers browsing for clothes (colors, sizes and etc.), how

customers trying on them, what about how customers pay, how do they get their purchases

to home, do they need to make any changes in garment (adjusting hem and etc.)And what

customer interest and so on.

The observations are listed down below under three leading points.

Concerns of the layout

Theres no proper layout and didnt visibly a categorized the flow. So customers havespent more time to find out their requirements.

Due to unavailability of dressing rooms customers are constrained to fit on on top of theclothes that they are already wearing.

Because of that the garments cant fit properly, consumers have to come again to theshop if they need to change the brought stuffs.

In Kelly Felder, they dont have any security at fit on rooms; just any one can open itfrom outside though one consumer is in inside of the room.

At Kelly Felder, the space is not enough for a large crowd during seasonal time durations. Displayed clothes are tightly packed and difficult to select without dropping down the

garments.

Some garments are displayed in bins and customers couldnt reach to the bottom levelof the bin to select garments.so what are in bottom of the bin will never goes tocustomers.


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Theres no proper ventilation to the shop. Theres only one lift to link all flows and it is not quite enough since consumers have to

wait in lifts for long time go to the specific floor that they required.

Heat of the atmosphere inside the shop is high and customers feel uncomfortable whenshopping due to sweating.

No proper vehicle parking facilities for customers. No play area for children, so consumers are struggling with children while shopping.

Inventory matters

Most designs dont have a size range which customer required The counts of mirrors are less and consumers need to search out for mirrors once

necessity.

Some styles dont have stocks. No attracted fashions at dummies. No new innovations for Sri-Lankan market and most clothes are quality rejections of

export marketers.

Difficulties due to poor customer service

Customers felt uncomfortable by hearing sorry these items are non -exchangeableby sells persons, after they arrive to exchange the goods.

Sells persons doesnt have better familiarity in clothing brands. Some garments dont have the price tags. Most of the sells persons dont have an exact idea of fabric composition of the

garment. (from which fabric the garment is finished off)

Because of not removing security tags at cashier by vendors, Customers get troublingat the exit points.

Customers have to wait at the queue of the cashier point, for long time to settle bills.So the billing process needs to be rapidity.


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Though selected garments some people get off from the shops without buying themsince the queue is too long.

Sometimes dont have sales a person when customers are having inquires.After analyzing the data of the behavioral patterns of the customers, the most commoncustomer unmet needs are displayed through a pie chart below. It shows the areas that

have to be improved in order to satisfy the customers.

The main areas can be listed as,

1. The saturation at the point of sale especially during peak hours.2. Poor service given by the outlet.3. Scarcity of the size variations of the outlet.

Selected unmet customer need:

Saturation of customers at the point of sale

Since majority of the customers had to undergo this problem it seemed like a burning

problem at Stitched Up. There is a higher risk of losing customers unless they find a solution

which is implementable.

Since the customer base was very strong for Stitched Up they always had this queue

problem and day by day they were strengthening their base. In this competitive field

Stitched Up cannot afford to lose customers because of a queue problem. It is high time to

find a solution.

Customer Behaviour

Were not happy because

of the queue

Were not happy babout

the service

Were not satisfied with

the sizes available

Were not happy happy

with the stock


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Idea Generation

I think fit on room was a must to any garment shop in the past, because everybody likes to

wear it and get the feel of the garment to the body before purchasing it. So with the idea of

satisfying it, the owners of the most garment shops have provided fit on rooms to their

outlets. Although there are more garment shops with fit on rooms, we could identified that

there are prevailing problems, such as we heard that some fit on rooms are consisting of

mini-cameras. Owing to that some customers have a lukewarm attitude towards fit-on

rooms. On the other hand some there are no more space in some outlets for fit on rooms. In

our business case management has decided to run the outlets without fit rooms ,but we had

to find a better solution for the issue and tried to come out with a new idea as a solution for

the fit on room problem, At last we won all these challenges by dawning a new era to fit on

room history.

We were able to innovated a new methodology and management decided to use this for

our all garment outlets, because before introducing this innovation we used to do a

research to ask the comments of the customers, through that we were able to prove that

this is the most appropriate method. By using this methodology anybody can purchase the

best suited garment for him/her body Measurements.


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A brainstorming session was conducted aiming to find solutions for the unmet need. All the

ideas that were given by the members are listed below.

1. Have to increase the point of sale units.2. Plant units for each section to do the payments separately.3. Introduce a credit system where the customer does not have to pay on the same day

itself.

4. Implement a system unit where the point of sale process happens automatically.5. Use robots to make work quicker instead of manual labor.6. Separate the payment units according to number of items the customers are buying.7. Make standing in the queue interesting using televisions, entertainment activities.8. Arrange a waiting area for the customers so that they can rest until being called for

billing.

9. Do not add security tags to the garments to reduce the time taken to remove them.10.Train the cashiers weekly and maintain a performance chart so that they get

motivated and work with speed.

The idea of installing an automated system by removing the manual labor was taken for

granted by the team members.

Customer has to insert the selected items to a cubical scanner where the RFID system is being used,

sequentially the summation of the items is performed while the security microchip gets deactivated,

and also the inventory system gets updated.

This can be unique as all the other suggestions have issues and some are not practical and

productive. Even though the initial cost is high to implement this system the payback time is

low since the revenue can advance due to this system and the remaining customer base can

be doubled.

For the customers to do the payment we can introduce a system where they do not have to

use cash. But for the conventional customers we have a manual operating system as well.


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Business Case

Executive summary

According to our knowledge, just by replacing the traditional Fit-on rooms with the E- Fit on

will not help us to recover the cost of the new system. As far as I am concerned the project

can be made viable by customizing this existing system and therefore evaluation of actual

financial cost from the implementation to execution of the project will provide a clear

picture for us to prepare a strategic plan to recover the initial investment within a specific

time frame.

An analysis ofe-fit on system in the financial perspective

Total cost of acquisition

Purchasing costs xxxx

Research xxx Accounting xxx Commissions xxx Legal fees xxx xxxx

Transportation xxxx

Preparation and Installation costs xxxx

Cost of acquisition xxxx

Add

Preventive Maintenance cost xxxx

Operational cost xxxx

Total Cost xxxx

Note: We have to incorporate certain cost such as preventive maintenance and the

operational cost in order to discover the actual implementation cost of new system.


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Investment Appraisal:

The ROI calculation is an attempt to determine how much each dollar invested will return. If

a business has limited resources only the highest ROI projects would be financed. The

obvious shortcoming of the model is needed to make some assumptions as to how much we

will save. So we should consider how long it will take to recover the initial investment in

other words have to determine the payback period of the project in order to make

precautionary measures to sustain the business.

Evaluate the traditional business operation

Benchmark traditional business process with modern business process

Evaluation Methodology

E.g. how much it will cost for 1 fit-on, Square feet required per fit on and etc andshould be multiplied by number of fit on rooms so as to compute the cost of

traditional business process.

How to recover the investment

Warehousing

Cost of Maintenance, and the distance between stores and business premises

Direct cost and indirect costDirect costs are directly attributable to the cost object such as (DM, DL and D O/H)

Indirect costs are not directly attributable to a cost object. Indirect costs are typically

allocated to a cost object on some basis.

Have stores inside mall Cost of store minimizes

E-fit on system will assist to minimize Defective products (cloths)

Labor cost will be minimizing


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Time is all what you have. Master your time and you master your life. Time management is

one of those wonderful, timeless topics with so many lessons and so many great mentors.

Time saving is a huge investment for any of the parties in this competitive world. Saving

single second can worth more than a couple of dollars to anyone. Standing in a queue is

utterly a waste; it does not add value to the any process. Minimization of the timecustomers spend on standing in queues at the point of sale can be decreased by 70% by

implementing the innovation we are proposing to the Stitched Up retail fashion store. This is

an automated system where the point of sale process happens automatically without any

involvement of manual labor.

Customer has to insert the selected items to a cubical scanner (Check Fast) where the RFID

system is being used and sequentially the summation of the items is performed while the

security microchip gets deactivated, simultaneously the inventory system gets updated.

When Check Fast grasps all the information (Price, size, Color, Style number) from the

microchip, it displays the total on its monitor. Once the payment is done, all the items are

carried on the conveyer belt to the other end of the scanner. It does not take even a minute

to clear a customer through this system. As calculated, it is a 50% reduction of the initial

time taken using manual labor.

To install this process a capital of 1.2 million USD needed per unit. The payback period is

two years. Well experienced software expertise and a group of technicians are needed to

develop and setup the system. Requirement is about 5 units and a manual cashiering unit

for conventional customers who does not use credit cards.

95% of the customers are positive about this idea and they want to start up this system as

soon as possible. Since every person values time a lot they will use their maximum to reduce

the time wasting. Therefore many will visit the stitched up retail store in order to get things

done easily. Customer base will be strong and the revenues will increase within a very short

period of time due to the vast number of projected customers.

The Need

*people do not have the facility of fit on rooms.

*People get troubled regarding the case.(without fit on a garmentthey cannot whether the garment suit or not)


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*Although some outlets have fit on rooms, customers do not like to use it due to severalconcerns.(eg: mini-cams)

*We tried to come out with a new generation.

*Our methodology should be practical and applicable in the same way should receivebetter comments.

Solution

The solution we came up with is Check Fast, which is a scanning machine. It is composed of

a RFID scanner. The customer has to enter all the items at point A. As soon as the item(s)

are fed to Check Fast it will emit a beam of electromagnetic waves which would identify all

the electronically stored information in the RFID chip(s) which are embedded inside the

items. Simultaneously the security alarm triggering code in the RFID chip(s) will be over

written. As soon as this process is completed the monitor will display information like

quantity of items and the net price. The customer will be asked to insert the credit card also.

The interface is very user friendly. All the navigation can be done with the aid of a mouse. A

customer need not possess very advanced IT skills for this. When the transaction is

completed the customer can collect the credit card, and the item(s) will come out frompoint B. The inventory system will also get updated. Eventually the customer can fill up a

poly-bag with the item(s) there itself and walk out of stitched up without triggering the

security alarm.


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Monitor Conveyer Belt

Card Reader

Mouse

Scanner

AB

Poly-bag Holder


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Dimensions of Check Fast

Width 0.6m

Roughly volume of Check Fast = 0.6*1.25*1 = 0.75

When the rough volume of Check Fast is considered it is not much apparently. Therefore,

five Check Fast units can easily fit in the floor.

Why its innovative

During the customer observation we observed more customers, about 70% settling the bill

via credit cards. Even though there were five point of sale systems with five cashiers long

queues were seen. We were able to observe customers during the off-peak and peak hours

and even during the off-peak hours there were fairly long queues.

2m

1m

0.6m

0.2m

0.55m

1.25m


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The reason for me to mention all this is to set a platform to pile up the reasons to justify

why Check Fast is so innovative. We got the chance to time the transaction speeds of some

cashiers and the mean transaction speed was surprisingly 2.45 minutes. If Check Fast

handled a transaction it would not even take one minute, so Check Fast is about 275%

efficient than a conventional point of sale system.

There is another key factor which makes Check Fast innovative. If Stitched Up installed four

units of Check Fast and left one conventional point of sale system for non credit card

holders, stitched up would only need to pay wages for the cashier at the non conventional

point of sale system since four of the cashiers are substituted by four Check Fast units. This

is actually a cost cutting method.

When the customers were interviewed, they themselves said that this is innovative and that

they are eagerly waiting to use it. So we are sure that the customer base would increase

with the usage of Check Fast. The payback period for Check Fast units would be less than

two years because Stitched Up can increase their profits with a denser customer base while

capital could be saved due to the elimination of cashiers.

When all these factors are taken into consideration we believe it is very unique since this

innovation covers a lot of aspects. RFID system may be broadly used in the world today but

after doing a research on this we found out that this unique system is not to be found in

Fashion Retail outlets.

Customer Research

The solution we have brought out is very clear now. But it is better to know how the

customer or the consumer thinks about this newly invented system.

Our customer is the one who faces difficulty due to having no fit on rooms in the shopping

floor. So we decided to go back to the shopping floor and get the feedback of thosecustomers about the system which is going to be implemented on the shopping floor of the

stitched up outlet.

To get the feedback of the customers, we did a questionnaire survey at the stitched up

outlets. We randomly selected twenty customers and got their feedback. Below mentioned

is the questionnaire we used.

1. Do you like this new system?Yes No

2. Are you satisfied with it?Yes No


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3. Do you think that this system is convenient?Yes No

4. Do you think that still the fit on rooms are needed?Yes No

5. Is this system advantages?Yes No

6. Do you think that there should be other improvements in this system?Yes No

7.8.9.10.

Comments:

Customer 1: We face so much of difficulties due to the absence of fit on rooms here. So we

think that this alternative will be really useful for the customers.

Customer 2: some people dont like to fit on the garments without washing as if they have

already fit on by someone else. So the system is more convenient because we can select a

garment without any difficulty.

Customer 3: better if you can have a trial session

Customer 4: normally people are reluctant to change. They might still look for the fit on

rooms.

Customer 5: not mentioned

Customer 6: if you have the measurements of all the members of your family one can go to

the shop and shop for all the members.

Customer 7: customers will really like this change.

Customer 8: use full application of the developing technology.



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Customer 11: we can save our time as exchanges will be less.

Customer 12: the garments will be clean than before as the customers dont wear them.

Customer 13: will be really good.

Customer 14: waiting to experience the new system.

Customer 15: should be good.

Customer 16: will be a new experience.

Customer 17: very useful

Customer18: like it.

Customer 19: really good.

Customer 20: a new experience.

Procedure

Selected a customer. Each of the group members went to the customer and made an introduction about

our newly invented system.

Gave them the questionnaire. Got their feedback. Analyzed the answers that they have given. ( positive and negative)

Analysis

Collected all the given sheets to the customers and count the no: of yes. Took it as a

percentage of the entire yes and no count. Accordingly 85% of the customers had a

positive feedback about the new system.

We analyzed the comments of the customers. Then the count of the positive commentswas taken as a percentage. Accordingly 75% of the customers had a positive feedback


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Design & Development

Being the managers of innovation and business growth of stitched Up Company we

designed a self billing system called Check Fast where the customers can do the billing

without a cashier & it takes only about 1/3

rd

the manual billing time.

This is a purely a conceptual development. Why we say like that is because so far no other

company has developed such a system.

Stitched Up will have to remove most of their manual cashiers since this is a fully automated

system, there will be one manual cashiers for people those who do not use credit cards .This

is because our system is fully automated and it requires a credit card to purchase goods

.Though the initial cost is high profits can be gained in the long run.

Stitched Up will have to train some off their staff members apart from the technical team.

And we need a separate IT department trained for this system.

Once we implement this system to our company we need to have a team to instruct our

customers on how to use it because it is a totally new thing for our customers.

A maintenance team is required to take care of the machines.


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Investment Requirements

INVESTMENT REQUIREMENTS

Item

Cost per unit

($) Quantity Total

Hardware

Barcode readers 250 15 3750

Computers 675 10 6750

LED Screens 195 11 2145

Cards for customers (with the barcode printed) 10 100010000

Server machine 1600 11600

Networking 1000 1000

Software applications

Inventory control+ billing system 1500 1 1500

Accounting system (optional) 1000 1 1000

Customized software for the business solution (to

be used by the customers) 15000 1 15000

Human Resources

Operators 300 6 1800

System Administrator 750 2 1500

Consultant 1000 1 1000

New system Implementations expences

Layout design leaflets 0.2 10000 2000

location name boards 3 100 300

Promotions (Team) 350 1 350

Advertising (TV) 20000 1 20000

Launching expences

DJ music & Announcing 150 1 150

Decorations and Banners 180 1 180

Small Gifts 2000 1 2000

Total 72025

$72,025.00


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Expected Benefits

Detain interpretation of financial and social benefits ofcustomized E-Fit on system

FINANCIAL BENEFITS:

By having direct contact with suppliers we dont need a purchasing department. Let me

explain this concept with examples. When Reorder level of angry bird t-shirt is 50, according

to the sales department policy their keeping 30 of the angry bird t-shirts in display, if 20

product is being bought by costumers from the display, we have to fill up the display by

adding 20 angry bird t-shirt from the warehouse. And the remaining on the warehouse will

be 30 and if the purchase department place the order on time normally it will take 2 weeks

time receive the product, and the company is maintaining ten as the buffer stock and if the

management has not make the order on time due to number of circumstances (holidays),

and when the customer purchases the rest 30 angry bird t-shirt on that time, the store will

run out of stocks and will cause the customers to reach other stores.

If we look into the traditional business process there are number of employees engaged in

order to ensure smooth flow of this particular operation. This traditional business operation

is handled by the human being so the possibility of the humans error is comparativ ely

more. So our team has come up with a new solution so as to minimize the cost plus the

humans errors by customizing the existing system.

our new customize system will have a direct contact with the suppliers, all the availability of

stock will be displayed to the supplier through this computerize system and when the

customers buys out the product and when it reaches the limit of 50 product available, thesuppliers will ensure to transport the products on time without any interruptions and

therefore the availability of products will remain stable. The system will recognize the

demand for the specific brands by the number times the data is being entered within the

specific time duration and automatically adjust certain amount of percentage more or less

depending on the demands of the brand and the system will be sending an automated

purchasing order when the product reaches the ROL.


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By introducing this system, purchasing department does not require consequently those

who are working for purchasing department can be trained to operate the new systems

hence new employees no needed to be hired.

The customer satisfaction will be increased since they can buy any brand in any quantity at

any time. As a result there should be a core relationship between financial and social

benefits. The customer satisfaction will lead to retain the existing customers as well as

increase new customers.

The other new system that I have come up with is the barcode system. The use of this

system would give an advantage to the store, where it helpful to the customers to select the

product relating to its brand. Example: when a customer want to chooses an angry bird t-

shirt and is not satisfied with the color and requires another size, with the barcode system

the customer can scan it using the E-Fit-On system to check the availability of the stock in

store and choose his/her favorite color and required size as displayed. As a result customer

consumes less time in selection of product and system will ensure the accuracy in terms of

availability of the stock.

SOCIAL BENEFITS:

Most of the customers are reluctant to wear the same dress that other wears and when a

dress is wearied over and over again will cause the dress to be damaged and to prevent this,

the E-Fit-On system will ensure for the product to be hygienic and undamaged due to the

use of dummies and its size stabilizing system.

Enables the customer to have an outer look of the dress bought and helps them to match up

with the top and bottom bought at the same time. Although the direct contact withsupplier through the computerize system, will reduce the workload of the employees and

this will create a positive impact in stress management. The recording of stock available and

required newly is automatically calculated by the system itself, so the staff has no

requirement to do several checkups before ordering and after ordering.

The store room will be fully updated and there wont be many of the stocks in the store

room, which might lead the store room to run as a loss leader when demands of the stock


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decrease. With stabilize product in hand the company has no worry about extra space

consumption.

The supplier has no need to do paper works dealing with exporting stock to the store rooms.

In addition to that suppliers also can be vigilant about the demand of certain brands and

their own products in order to take precautionary measures. We believe that spirit of the

business is customer satisfaction. Our expectation is to intensify the profit by reducing the

cost and through diversification.

The Ask

To implement this system, we need about 1.2 million US dollars, a software development

team & maintenance team. According to our calculations, the play back period will be

around one and half years.


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