Assignment 2: Required Assignment 1—Business Case And Propos

Assignment 2: Required Assignment 1—Business Case and Proposal for Project Selection

You work for Centervale Apparel, a large clothing manufacturing firm. Centervale Apparel has budgeted $9.7 million for new technology initiatives in the coming year but the project requests currently in the queue for next year total about $15 million. Your boss, the executive director of operations, has asked you to put together a proposal for this project to replace legacy order fulfillment technologies by implementing a supply chain management (SCM) system. Your boss wants to ensure this project will be prioritized over other projects on the list and will be implemented in the coming year. Use the following data to prepare a proposal using a balanced scorecard approach to demonstrate the project’s value to Centervale Apparel.

Paper For Above instruction

Introduction

In the highly competitive apparel manufacturing industry, efficiency and customer satisfaction are paramount to maintaining a competitive advantage. Centervale Apparel’s current order fulfillment system, comprised of disparate legacy technologies, hampers operational efficiency, data accuracy, and customer satisfaction. This proposal employs a balanced scorecard approach to demonstrate that implementing a supply chain management (SCM) system is crucial for aligning technological upgrades with strategic business objectives, offering substantial tangible and intangible benefits, and justifying investment amidst other competing projects.

Business Problem

The existing legacy systems managing inventory and distribution are disconnected, leading to redundant data entry, inaccuracies, and delays. These inefficiencies cause overages or shortages, resulting in dissatisfied customers and increased inventory costs. The need to synchronize data across platforms is urgent to optimize order fulfillment processes, improve customer satisfaction, and reduce costs. Addressing these issues with an integrated SCM solution aligns with the strategic goal of operational excellence.

Project Description

The project entails replacing the outdated systems with an integrated Supply Chain Management (SCM) system. The total project cost is estimated at $1.2 million, covering infrastructure setup and implementation resources. Support and maintenance costs are projected at $250,000 annually over a ten-year lifecycle. This system aims to streamline order processing, reduce inventory costs, and retire legacy systems, thus underpinning long-term operational improvements.

Cost-Benefit Analysis and Measurable Value

Financial analysis indicates a compelling return on investment. The project’s tangible benefits include a reduction in inventory carrying costs by approximately $300,000 annually, decreasing data entry staff from 10 FTEs to 8 FTEs, saving about $100,000 per year. Additionally, improved order fulfillment speed—estimated at a 10–20% decrease in order-to-delivery time—will enhance customer satisfaction and retention, indirectly influencing revenue. The total initial investment of $1.2 million with ongoing annual costs of $250,000 results in a payback period of approximately 4 years, with significant ROI over the ten-year system lifecycle.

Alternatives Evaluation

Alternative options include maintaining the current legacy systems or incremental upgrades to existing systems. However, these options do not address integration issues or long-term cost savings effectively. The status quo risks continued inefficiencies, customer dissatisfaction, and higher ongoing maintenance costs. A full-scale SCM implementation, despite higher upfront investment, offers the best strategic fit and long-term benefits, leading to increased operational agility and better customer service.

Risk Assessment Using an Enterprise Risk Management (ERM) Model

Implementing a new SCM system involves risks such as technological integration challenges, vendor reliability issues, staff training requirements, and potential data security concerns. Applying an ERM framework involves identifying these risks, assessing their likelihood and impact, and devising mitigation strategies. For instance, vendor vetting and phased implementation reduce operational risks, while staff training plans mitigate user adoption issues. Additionally, contingency planning addresses potential delays or technical failures, ensuring risks are managed proactively and aligned with organizational risk appetite.

Total Cost of Ownership and Maintenance

The total cost includes initial capital expenditure ($1.2 million), ongoing annual maintenance and support costs ($250,000), and potential future upgrades. Implementation costs encompass hardware, software, consultation, and training expenses. Ongoing costs cover system support, security updates, and continuous improvement initiatives. The ten-year lifecycle ensures long-term benefits outweigh initial investments, with regular reviews and upgrades maintaining system relevance and performance.

Benefits (Tangible and Intangible)

Tangible benefits include cost reductions, process efficiencies, and improved data accuracy, directly contributing to financial savings. Intangible benefits encompass enhanced customer satisfaction, improved brand reputation, and increased organizational agility. These benefits align with Centervale's strategic goals, such as operational excellence, innovation, and customer-centricity, providing a compelling case for investment.

Justification and Recommendation

Based on the analysis, implementing the SCM system is justified due to its high strategic alignment, significant cost savings, and capacity to improve operational performance. The project position aligns with the business goal of becoming a more responsive, efficient, and customer-focused organization. The clear ROI, manageable risks, and long-term benefits outweigh the costs and risks associated with the project. Therefore, it is recommended that Centervale Apparel prioritize this project within the upcoming fiscal year.

References

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  • Olson, D. L., & Wu, D. (2017). Supply chain management. Journal of Business Logistics, 38(2), 151–158.
  • Kaplan, R. S., & Norton, D. P. (2004). Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review, 82(7/8), 72-79.
  • Melnyk, S. A., et al. (2014). The impact of supply chain integration on operational performance. Journal of Supply Chain Management, 50(2), 56-75.
  • Lee, H. L., & Billington, C. (1992). Managing supply chain inventory: Pitfalls and opportunities. Sloan Management Review, 33(3), 65-73.
  • Christopher, M. (2016). Logistics & supply chain management (5th ed.). Pearson.
  • Main, J. (2020). Enterprise risk management frameworks for supply chain projects. International Journal of Production Economics, 226, 107610.
  • Gonzalez, R., et al. (2019). Cost-benefit analysis of supply chain systems: Methods and applications. Journal of Business Research, 104, 354-365.
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