PHYSICAL NETWORK DESIGNASSIGNMENTAssessment Set By: Nicky YatesDate Set: Wednesday 17th February 2021Hand-in Date: Friday 12th March 2021© Nicky Yates (2020), Cranfield University 2 of 6Bronte PLC – A Case StudyCase BackgroundBronte PLC is a UK based retailer of personalised chocolates and gifts. They have a network of 80 stores locatedthroughout England with a smaller presence in Scotland. The company has a long heritage; originally foundedas a high quality chocolate manufacturer in 1910 with their roots in West Yorkshire. The fortunes of the businesswaned in the late 20th Century with the company going into receivership on more than one occasion. Followinga management buyout in the late 1990s the company has reinvented itself as a supplier of customisedchocolates and gift products marketed for special occasions, such as, weddings, birthdays, anniversaries, etc.The customisation includes; special messages or names piped (for chocolate products), printed, inscribed orembroidered on the product itself.The reinvented business went from strength to strength with its success founded on a simple business modelof design of personalised products that “can’t be found anywhere else”. The marketing has been focussedtowards the young (18 – 30) middle class who have a high level of disposable income. Because the valueproposition is based on serving “special occasions” the lead times expected by customers are relatively short.As the margins are good but customer lead times short, standard products are sourced by the Procurementdepartment from low cost countries (namely; China for gifts and India for clothing) and sea freighted to the UK.They are then customised to the customer order requirements at the company’s factory in Skelmersdale inLancashire (UK) and then distributed to customers nearest store. Customers can either go into their local storeto view samples and order their products, or they can order them through the company’s website for collectionfrom their local store. The supply chain for chocolate based products is different as the base products aremanufactured in Bronte’s chocolate manufacturing plant now located in Grays, Essex (UK). The chocolates arethen shipped to the stores via one of the company’s dedicated Chocolates warehouses located in Grays and inStretford, Greater Manchester. The chocolates are then personalised while the customer waits.The ProblemBronte is currently under significant pressure from their shareholders. Although growth was good in the earlypart of the 21st century, recent uncertainty over Brexit, compounded by the global repercussions of COVID19has made consumers more cautious and less willing and able to spend their money on Bronte’s luxury goods.The balance sheet is not looking good and the accountants are repeatedly highlighting the cost of carrying asignificant production, warehouse and distribution network.The board has recently met to discuss the situation and following a lengthy and heated debate agreed that theyneeded to take a fresh look at their business. Their production and distribution network requires a completerevaluation. Since they made their key supply chain analyst redundant a year ago, due to mounting costpressures, they have only a vague idea what the costs of running their network are and whether it is fit forpurpose in the current market is unknown. The board needs a plan….© Nicky Yates (2020), Cranfield University 3 of 6Your TaskBronte clearly do not have the expertise in house to tackle this issue and have employed a firm of consultantsknown for their work in designing responsible supply chains (you). Their report is expected in approximatelytwo and a half month’s time and should not exceed 2000 words.The report should be made up of two parts.1. The Base CaseCalculate the base case cost, vehicle km travelled and CO2 emitted for the current operation. Your answershould include a summary of your calculations, a map of the current network and an analysis of the currentsituation.In order to do this you are provided with current data for the operation.Appendix A includes a map of the current operation within the UKAppendix B customer details including locations and demand for Gift and Chocolate productsAppendix C gives details of the depot locations and costs and delivery costs within the UKAppendix D provides information on production costs in the UK, India and China and details of costs ofshipping products from India and China to the UK.(50 Marks)2. A Solution for the FutureHow could the company improve on their current poor financial situation whilst remaining a responsiblecompany? Investigate a number of options (quantitative and qualitative) for improving the network. Youshould:a. Demonstrate how your scenarios can improve the efficiency of the Bronte network operationsparticularly focussing on cost reduction. For example how could the network be restructured to improveefficiency (e.g. centre of gravity)?b. Justify the reasons for ALL your chosen scenarios and quantify the impact of changing the network forat least 2 scenarios in terms of cost, km and CO2 emissions.c. Discuss the implications of the changes proposed in your scenarios on the current business operationsand environmental sustainability of the firm.(50 Marks) Assessment CriteriaBase CaseA Solution for the FutureBase case Model – 25 marks– Description of the model setup– Calculation of the base case cost,vehicle km and CO2 emissions– Summary of the calculated costsSolutions for the Future – Quantitative Analysis – 20 marks– Identification of appropriate scenarios.– Summary of costs and CO2 emissions for each proposedsolution and savings compared to the base case.– Maps and graphsBase Case Analysis – 25 marks– Analysis of the base case costsincluding identification of thedominating costs, analysis anddiscussion of the root causes of thesecosts backed up by appropriate charts– Map of base caseSolutions for the Future – Qualitative Analysis – 30marks– Discussion and justification of the rationale for allscenarios.– Discussion of quantitative results.– Discussion of the implications of all of the scenarios for theoperation of the company.– Discussion of the sustainability impact and implications forthe company’s operations of the scenarios.– References © Nicky Yates (2020), Cranfield University 4 of 6Appendix AAppendix BCustomer location and demand data and number of deliveries are provided in the worksheet: Bronte – InputData 2020.xls which can be found on Canvas.49.8050.8051.8052.8053.8054.8055.8056.8057.80-7.40 -5.40 -3.40 -1.40 0.60Customers Depots Factories BrontePLC’sDistribuNetwortionk Current UK © Nicky Yates (2020), Cranfield University 5 of 6Appendix CLocations of the Depots and UK Factories DepotLocationLongitudeLatitude1 Gift factory &warehouseSkelmersdale, Lancs-2.760353.52342 Chocolate warehouseStretford,Manchester-2.319753.46693 Chocolate factory &warehouseGrays, Essex0.296651.4753 Depot costsDepot costs can be calculated approximately as: Fixed Costs:Variable Costs:£75,000 per month£ 50 per pallet throughput The depots are located in rural areas and can be expanded if required.To maintain the high service levels expected of the brand, stock in the depots should be maintained atapproximately two weeks for the confectionary operation and one month for the gifts operation relying ondelivery from India and China. You can assume that the average value of a pallet is £1000 and the annual costof holding stock is 20% of the value of the product.Transport CostsBronte’s transport cost is made up of two elements, trunking costs and local delivery costs.Trunking CostsTrunking is currently carried out between the factories and the depots in full truckloads of 44 tonne Lorries. Thetrunking transit time depends on location but is generally 2 – 3 days.Trunking costs can be calculated approximately as: Fixed Costs –Variable Costs –Local Delivery Costs£11 per pallet£0.07 per pallet per kmNegotiations with local contractors have resulted in a local delivery rate of:Fixed Costs –Variable Costs –£25 per pallet£0.7 per pallet per km Estimating CO2 Emissions and Associated CostsBronte would like to know what the CO2 emissions are for their different network options. They are onlyinterested in the transport operations and will not attempt to estimate CO2 associated with production.Consultations with an expert in the area have resulted in the following emissions data:Emissions for European Vehicles = 1.1 kg of CO2 per km travelledShipping Emissions = 13 g per tonne kmRail Emissions = 30 g per tonne kmOne pallet of Bronte goods weighs approximately 500kg.© Nicky Yates (2020), Cranfield University 6 of 6Appendix DProduction CostsChocolatesThe company estimates that the cost of producing 1 pallet of chocolates is £200.GiftsBronte pays £ 110 for a pallet of T-shirts sourced from India and £80 for a pallet of toys sourced from China.This price is for full pallets delivered to the port of origin. Approximately 60% of the gifts are T-shirts and 40%Toys. The customisation process in Skelmersdale is estimated to cost £100 per pallet.Shipping CostsBronte has negotiated a TEU rate with a well-known shipping company to ship product from Mumbai in Indiaand Shantou in China to the port of Liverpool in the UK. Shipping takes approximately 2 weeks from India and3 weeks from China. They estimate the costs to be approximately: Cost from China1780£/TEUCost from India1200£/TEU The shipping distance from Mumbai to Liverpool is estimated to be 11550 km and the shipping distance fromShantou to Liverpool is estimated to be 18100km. The latitude and longitude of the port in Liverpool is 53.4N,2.99 W. The gifts are then trunked to the factory in Skelmersdale for customisation.Appendix E – Other Useful InformationDriving distance is approximately 20% more than straight line distance.Alternative forms of transport you could consider (alternatives to trunking).1. Rail – there are two forms of rail transporta. Full Trains: A full train takes 2000 tonnes of product and must be delivered to a singlelocation. Transit time depends on location but is generally 5 – 6 days. Onward lorry trunkingto a depot takes a further 2 days. The cost of this form of transport is £100,000 per train and£0.01 per tonne per km travelled and includes loading facilities (for onward travel) at thedestination station. These costs assume the train is fully loaded, per tonne costs will be higherfor partially loaded trains.b. Individual Wagons: A wagon can carry 50 tonnes. Wagons are loaded at the factory and thenmoved to one or more central locations where they wait until sufficient wagons (from avariety of companies) for the destination are available to make a decent sized train. Thisprocess is not well controlled and there are no guarantees of when your wagon will arrive.You have heard stories of wagons that have occasionally been “lost” for several weeks. Thetotal transit time is generally between 2 and 4 weeks. The costs of this form of transport(including delivery to the local depot from the nearest station) are £300 per wagon and £2 perkm travelled per wagon.Cross Docking Depots are available. They are essentially secure compounds with minimal staff, no storageand low over-head costs – they can also be used as consolidation centres. They DO NOT replace depots, butcan be useful especially in outlying areas. With a capacity of 5000 m3 per month the costs are: Fixed Transhipment CostsVariable Transhipment Costs==£17,000 per month£7 per pallet throughput


Leave a Reply

Your email address will not be published.