FastFit Case Analysis

1. 1. Mark the main flows of goods and money in the diagram (above) and employ a key or table of descriptive elements to explain your answer.

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1. HQ contacts the supplier and tells them how much of each product the company needs.
2. The supplier sends the goods to the FastFit warehouse.
3. The warehouse notifies HQ about receiving the goods and how much of each product is in storage.
4. HQ tells the warehouse, which stores to send the products to, how much product each store needs and when the store needs the products.
5. The warehouse sends the proper amount of each good to the FastFit stores.
6. Customers come into the FastFit stores and pay money to purchase the products.
7. Store sells the customer the merchandise, receives money and personal information about the customer and sends the happy customer home with their purchase.
8. Store sends money and customer information to HQ. Store also sends information about what products have been successful and which products are not selling.
9. HQ tells suppliers which goods are going to be re-ordered. Also HQ pays for the goods that the supplier has supplied.
10. HQ tells store managers how to set up and run the FastFit stores to enable the highest level of success.
11. Supplier sends information about the goods that have been shipped to the warehouse and how much money is owed for the goods.

2. a) List the specific items of information that are usually gathered at the POS (Point of Sale terminal or cash register) and recorded when a customer checks out (excluding obtaining the identity of the customer which is covered in Q3)? b) What are three important uses of this information at the store by the store manager and by management at the headquarters– a total of six uses? (use a table) (It is important that you give different responses/uses for store manager and the HQ)

Transactional Information
– POS Transaction ID
– Payment Type (credit/debit)
– Date of Sale
– Time of Sale
– Amount Paid
– Amount Due
– Store Details (Name, Location, Branch)
– Promotion/ Discount (if any)

Product Information
– Type of Product (Clothing/Accessory)
– Product ID
– Size of the Product
– Product Brand
– Price of the Product
– Quantity of Product

Staff Information
– Which employee sold the product to the customer
– Comparison on employee success

Store Information
– Sales Promotions Occurring
– How long the product has been in the store
– How many of the same products remain in store
– How popular the product has been

Use of Information by Store Managers:

Information Elements Needed

Description of the use
– Which Employee sold the product to the customer
– Quantity of items sold to the customer
– Date and Time of the transaction
– Total Amount of money the customer paid
– Managers can see which employees have been selling the most. They can identify which employees have not been selling as much. They can provide incentives to encourage employees to get more sales – Type of Product

– Product Brand
– Quantity of Product
– Size of Product
– Managers can see which products are most popular in the store. Can implement new structures to display products in a desirable manner. Can tell employees which products to heavily advertise to customers. Can keep store stocked appropriately based on which items are most popular.
– Amount Paid
– Date of Sale
– Time of Sale
– Managers can see how much money the store is making on a daily, weekly and monthly basis. If sales are slow during certain periods, management might make a decision to lay off some employees. If sales are strong, management might need to hire more employees.

Use of Information by Management at Headquarters:

Information Elements Needed

Description of Use
– Size of Product
– Product Brand
-Type of Product
– Quantity of Product sold
– Sales Management can assess the information and understand which brands are popular in which store locations. Knowing the popular brands they can contact the suppliers to replenish goods, and try implementing similar brands to certain store locations.
– Amount Paid
– Time of sale
– Date of sale
– Store details
– Payment Type
Income Management can look at financial success in each store. If some stores are more successful than others, they can move store managers around to try implement the successful tactics everywhere. Can also implement certain payment techniques if a credit card brand is popular at a specific store
– Promotions
– Type of Product
– Product Brand
– Size of Product
– Quantity of Product
Marketing Management can see which products are the most popular in each store. Can create advertisements that are catered to each individual store location. Can create new store layouts to promote the popular items in store and draw customers in.

3. a) What are some ways to obtain the identity of the customer at the POS and to associate this “identity” with more detailed information about the customer? b) What business actions could FastFit then take based upon this additional information?

Obtaining Customer Identity
Associate this Identity with more detailed information
Actions based on Information Gathered
Have the customer sign up for a FastFit customer card
Customer created personal ID that gives the store information on all the customers’ purchases. Store will know what items are desirable to the customer and when they make the most purchases. FastFit can use this information to give the customer promotions towards their favorite items in the form of coupons and promotional emails. Also the store can email customer more information about their favorite brands, and suggestions of similar products the customer might like.

Credit Card Information

The customer’s credit card gives personal information on where the customer lives and what purchases they have made in the store. The store can put up more focused advertisements in the locations where their customers live.

Ask Customers to fill out a survey

Survey will gain information about how customers feel about the store and FastFit’s products. They can see if customers feel like the store has issues, and what people feel needs to be addressed with the overall company. They can recognize certain issues and address them directly. These might include changing the overall store atmosphere or the quality of products inside. If customers like a certain aspect of the store, FastFit can emphasize this. Maybe try and have a more diversified product mix or different advertising routine.

4. Assume HQ is responsible (HQ issues orders to suppliers and determines what warehouse should deliver to stores) for replenishing inventory at the stores. a) What information (elements) are needed and how are these used to decide what (the warehouse) sends to each store? b) Where do the information elements come from? (use a table to combine the responses for a and b). c) List two reasons why we didn’t have each store decide what (replenishments) to order from the warehouse?

Headquarters Responsibilities

Information Elements Needed

Source of Information
Product Information:
– Type of Product (Clothing/Accessory)
– Product ID
– Sizes of the Product
– Product Brand
– Price of each Individual Product
– Quantity of Product needed
Computer checkout system takes all of this information, as products are being purchased and returned in the store. Transaction Information:
– Date of Sale
– Time of Sale
– Amount Paid
– Amount Due
– Types of Products being sold at the time

Computer checkout system in store takes in this information about how much was spent at the store and at which times the most spending occurs. Also managers can see tell when the busiest times of the day, month and year are just by observing customer patterns in the store. Customer Information:

– Ages of customers coming into the store
– Which gender (male/female) shops most frequently at the store – Which products the customers are purchasing the most
– Where does the customer base live
– When do the customers purchase the most merchandise
Customer database formed by customers that are part of the FastFit customer card club. The personal ID gives info about customers past purchases and their preferences toward certain products. Surveys customers filled out which explains age, gender and store and product preferences. Computer checkout system also records customer purchases to see what people like and how often they visit the store.

Store Information:

– Sales Promotions occurring
– How long the product has been in the store
– How many of the same product remain in store
– How popular products have been
Inventory tracking database in each store keeps track of which items have not been sold. Store management and employees keep track of trends and promotional deals going on within the stores. They can also visually observe which items have been around for longer, and which items have been selling out very quickly.

c. Management at HQ controls the replenishments because they can oversee all operations across all of the stores. They have the power to make calculated decision about each store that would benefit the company as a whole. If each store were to replenish the products themselves, they would only replenish what is popular at each time. HQ ensures that each store is receiving the goods that will properly sell in the location that the store is in. HQ can analyze trends on a larger scale, and implement advertising strategies and product mix based on the data trends. If replenishing were left to the individual stores, sales and profit would be lost.

5. a) Draw a system diagram that shows the key information and product flows between FastFit (HQ and Warehouse) and a supplier, including the steps for ordering and invoicing and label each flow descriptively. This diagram will have three circles. b) Compare your drawing with the diagram showing the flows that occur when a customer buys something at a (physical) store and explain why the former is more complicated.

1. HQ decides what needs to go into stores and orders the products from suppliers 2. Supplier sends HQ a confirmation of the order and also sends an invoice for how much money is owed 3. Supplier sends the merchandise to the warehouse

4. HQ pays the supplier for the products
5. HQ contacts the warehouse and confirms that the products have been shipped and accounted for in the warehouse 6. The warehouse sends an invoice slip to HQ for holding the products and sending them out as necessary 7. HQ pays the warehouse the correct amount on invoice slip

1. Customer goes into store and selects an item/items to purchase
2. Store receives money from customer for the purchased product
3. Store records information and sends the info to HQ

b. The diagram above shown in the first part of problem 5 is more sophisticated than the latter diagram because it involves many more transactions. HQ must go through a careful decision process even before ordering the products from the supplier. After ordering the correct items, HQ must ensure that the merchandise reaches the warehouse, and then the store without any issues occurring in between. This entails that HQ pays the supplier and warehouse in time. HQ has to deal with all of the physical decision making as well as financial details of each transaction. HQ pulls each element together.

6. Assume that FastFit headquarters receives and pays invoices from suppliers. a) How do they decide whether (i.e. which information elements does the HQ use) to pay and how much to pay? b) From where do they get the information to make this decision? (use a table to combine responses to a and b).

Headquarters Decision Making:

Information Elements Needed

Source of Information/ Decision
Pricing Information:
– Product ID
– Amount of Products being bought
– Price of each different product
– Amount of products being bought each season.
– Which products FastFit wants to sell and (in the future) which products the customers have shown interest in. Supplier would provide the price of each product.

Decision: HQ and supplier would agree on a set price based on how much of the product FastFit would be purchasing. FastFit would want to choose and continue doing business with the supplier based on what the customers have shown interest in Warehouse Information:

– Warehouse checks to see that complete order has arrived
– Checks for quality of products
– Checks to ensure that the correct order has arrives
– Records the information about received inventory
Warehouse would provide the information about the order.

Decision: HQ would pay the warehouse when the information gets relayed that the order was complete and correct. Warehouse and HQ would decide on a set price beforehand for each transaction that the warehouse performs. Delivery Information:

– Date and time products are needed by
– How quick the delivery takes place
– Location of stores from warehouse
– Location
Supplier would set a price for the delivery of products to the warehouse. Warehouse would set a price for the delivery of products to the stores.

Decision: HQ would potentially try and negotiate the price for deliveries with the warehouse and supplier. If the delivery services proved to be reliable HQ would feel satisfied with the price and process. Supplier Information:

– Where the supplier is located
– Reliability of supplier
– How quick the supplier can get the product to the warehouse Supplier provides information about their processes and how much they charge for the products.

Decision: HQ would pay the supplier based on how much product they are ordering and if the suppliers asking price is reasonable.

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Judicial Precedent

Grant v Australian Knitting Mills