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IMPORTANT: You may not have enough information to solve some questions. Don’t worry about it, there are no wrong or right answers. What we want is to understand your analytical capacity, your creativity, and your approach to different situations.
Someone Somewhere is a lifestyle brand that produces apparel and accessories integrating artisanal textiles from 10 artisanal communities in 5 different states, into contemporary products made in external factories and workshops around Mexico City.
The brand currently has a product line focused on direct customers (D2C) through our online and retail channels, where the volumes are small, and another commercial line focused in B2B sales where the volumes are programmed according to the production capacity our suppliers have and the clients’ needs.
At SS we have the following areas: Design, Sourcing and Product Development, Supply Chain, Marketing, Ecommerce, Sales, Finance, Impact and Human Resources
The team that you will be leading consists of a Supplier Chain Manager, 2 Production Managers, Purchase Coordinator, Artisanal Production Coordinator, Inventory Coordinator, etc.
The following questions involve activities and processes that you would be facing across the operation daily.
The brand is expanding internationally thanks to a big partnership we have with Delta Airlines (check it out here), we are reaching 300,000 passengers monthly who are potential clients for our online store or as a B2B sale.
Consider the following information:
- Each D2C order has 2.3 products and the average ticket is $90USD.
- Each B2B order has 1,500 products with an average ticket of $30,000USD
- The D2C gross margins are around 70% and the B2B gross margin is 50%
- Show how would you forecast the demand increase for the next 12 months, and what topics and recommendations would you discuss with the finance and sales team?
- Show us any document you would create for your thinking process
- How would you prepare the supply chain to be ready for the increase you forecasted?
The Chief of Product has already designed the Product Line Architecture for the year. She is requesting 5 product refreshes and 4 new products to design from scratch that we have never produced. The design team will create the new proposals and the product development team should give you a final prototype and the tech pack ready to be used.
- Show us what would you do to plan this program, to show progress and to assure you will deliver complete and on time
- What team members would be involved in your planning and what will be their main responsibilities?
- What is the right mechanism to connect the respective stakeholders?
Logistics and Inventories
To start operations in the US we send a complete container of products to a 3PL provider in Texas. They will take change of the warehousing and the shipping of all the online sales of our webpage. The inventory was planned for 5 months of demand, but the real sales are much lower. So, we have an average of 450 days of inventory in the US. While in Mexico we are running out of some of the same SKUs.
- US inventory value: $2.3M mxn with 5,750 units
- Mex inventory value: $750 mxn with 1,875 units
- Mexico has a 15% of out of stocks
- What are the options we have?
- What variables do we have to consider in each scenario? Describe the approach you would take to assess the cost-benefit for each option.
Which option you would take and why?
With the current demand, we are producing small quantities per SKU depending on the restock we require for D2C channels. For the B2B sales, we produce made-to-order personalized products, so production starts once the sale is confirmed.
Last year we lost 39% of potential sales due to timings, lack of available production capacity from our manufacturers or lack of availability of the materials required.
With these considerations, you can see that our production demand to the external manufacturers is not constant, but we are required to give more options to the sales team so we can take advantage of new opportunities for the coming months.
- What strategies can we implement with our current manufacturers to assure availability whenever we need it?
- How can we increase and negotiate production capacity with new manufacturers even if we don´t have the demand at the moment?
- Show us how would you assess new possible manufacturers to assure that they cover the international compliance standards?
- What would you do to reduce the lead times from 90 days to 45 days in the complete operative process starting after receiving the final prototype from the design team?
Costs and Pricing
The Product Development team should assure that the product they are approving is meeting the optimal margins ~70% for a sweatshirt.
- The sweatshirt must be priced at $1,200 mxn in Mexico and $75 usd in US according to our market benchmark
- The average local VAT in the US is 7%
- We expect to produce 2,500 units in Q4, 35% to be sold in Mexico and 65% in US
- What should be the COGS of the sweatshirt presented by the Product Development team to you?
Show us an example of the process you would do to validate the real and final cost, compare the real vs theoretical cost, and report the costs and margins to your leaders.
We are starting to design our sustainability strategy looking forward to being net-zero by 2030. We will be focusing a lot of effort on the product design and materials to understand their life cycle.
- Which 5 variables from the supply chain perspective do you consider important to integrate in this strategy?
- How would you prioritize them, and why?
- What is your recommended approach and how to achieve the prioritized variables?
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