Woodwinds Plus Incorporated is a retailer of music instruments and their accessories located in Hampton, Virginia. It is a small business, with one principle owner, Sylvester Artis, and he employs from four to eight employees at a time, varying based on the sales season. The company primarily focuses on orchestral and acoustic instruments, although it does sell and repair other types of musical instruments, such as electric guitars and keyboards. Woodwinds Plus has a storefront in the downtown area of Hampton, and it sells merchandise on the internet at www.woodwindsplus.com.
This paper will discuss consist of a detailed analysis of the various key operational elements involved at Woodwinds Plus and as an assessment of the macro-processes that make up the organization's global supply chain. The aim is to demonstrate a clear and coherent strategy for achieving competitive advantage through the application of modern theory and practice to improve operational performance. Included will be a research from at least two first-person interviews from individuals that understand Woodwind Plus' strategic use of operations to achieve competitive advantage in the market place, and at least two peer-reviewed practitioner or scholarly journal articles.
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Woodwinds Plus' primary sources of revenue are retail musical instrument and accessory sales, musical instrument rentals, instrumental repairs, and musical lessons.
Musical instrument and accessory sales are of the main source of revenue for Woodwinds Plus. Customers can either purchase in-store or online via their website. The company carries musical instruments and accessories from a wide variety of manufacturers, including Yamaha, Conn-Selmer-Leblanc, Rico, and Buffet.
Whenever possible, Woodwinds Plus purchases its inventory directly from the manufacturer in order to obtain the lowest possible price. Other times, they will purchase from a wholesaler. Usually, the company buys instruments directly from the manufacturer, and they make use of wholesalers when purchasing accessories. Buying these accessories from a wholesaler make sense because the wholesaler operates a warehouse that carries an assortment of instrumental accessories from a variety of different brands, so that the retailer, Woodwinds Plus, only has to place one order to a company located in nearby Richmond, Virginia, to receive multiple items. Mentzer, Myers and Stank (2007) say that having a warehouse in a supply chain network can be valuable because "the customer generally prefers to order that entire assortment of product on one order from one location and have it arrive on a single truck" (p. 230). This saves Woodwinds Plus in shipping costs by not having to buy a few parts from multiple manufacturers, gives the company an opportunity to take advantage of quantity discounts and other incentives and pass those saving on to the customer.
Depending on whether or not the Woodwinds Plus buys direct from the manufacturer or from a wholesaler, supply chain it is a part of can look two different ways:
Musical Instrument Rentals
"At first, I was renting instruments through another competitor, but we were only getting 20% of the profits. After while I decided that we needed to get our own instruments" (S. Artis, personal communication, April 1, 2010). Woodwinds Plus had to make the decision of whether or not to outsource the rental of instruments to another company or to offer the service directly from their own store. Providing this service in-house meant that staff had to learn how to do this procedure, which means it would take time away from their other duties. In a small business such as this one, there are already very few employees tat have a wide range of responsibilities, and adding one more is a decision that needs to be carefully thought through. However, the financial benefits of renting instruments in-house outweighed any potential learning curve and other issues there might have been. For example, Woodwinds Plus would have to maintain the instrument themselves, but since one of their specialties is repair, this is not a problem for most of the employees.
Besides sales and rentals, Woodwinds Plus also repairs instruments as well. Instrument repair revenue comes in two forms - contracts with schools and individual repairs. Woodwinds Plus holds a number of contracts with schools and school districts across the state of Virginia, meaning they are the authorized repair shop for that particular school or district, and all repairs go through them. The company also does repairs for individuals on a walk-in basis. Sylvester Artis, the owner of Woodwinds Plus, is the primary technician, but most of the other people that are employed at the shop are also repair technicians or trained to do repairs.
Always on Time
Marked to Standard
According to Mentzer and Moon (2004), demand management activities in any global supply chain consist of three activities: demand management, demand planning, and sales forecasting management. They define demand management as the creation across the supply chain and its markets of a coordinated flow of demand. The role of sales forecasting changes depending on the position in a supply chain a company occupies (Mentzer, Myer and Stank, 2007), Woodwinds Plus directly experiences independent demand because it is a retailer that directly serves the end-use customer.
In demand management, a company must first start with a sales forecast. The purpose of sales forecasting is to make projection of demand given a set of specified environmental conditions (Mentzer, Myers and Stank, 2007). This is important when assessing the impacts of promotions, pricing actions, and new product introductions, thereby supporting decision-making (Lapide, 2006). Lapide continues to say that in establishing customer segments and matching service programs to them, demand forecasting is needed to quantitatively assess the impact of a service program on the long-term revenues generated by the customers within each segment. Therefore, forecasting supports the cost-benefit and profitability analysis needed to make optimized customer-service setting decisions. According to Sylvester Artis:
The peak [sales season] is during the summer, from June July and August - although the money does not actually come in until around September - then that kind of settles down around January. Then starting up again in March and April, the schools are preparing to end their band season, so they have a lot of auditions and tryouts for different music programs, and we get a lot of repair work in the shop.
Since Woodwinds Plus has a predictable sales season, they use a time-series technique of forecasting. Time-series techniques work well when a pattern exists for the data pattern of seasonality. Seasonality is a repeating pattern of sales increases and decreases".
The demand plans that Woodwinds Plus has made include hiring more temporary staff during the peak sales and repair season. Most of employees working during this season are the same set of people, but occasionally, new staff is hired. Although most new employees already know basic retail and cashiering skills, employees that are new to the trade need to be taught basic repair skills. Woodwinds Plus teaches these skills in-house. The company also plans to acquire electric guitars to sell throughout the slower sales periods. "I subscribe to a Magazine called Music Traders, and it says that the [electric] guitar is the biggest selling instrument right now, I have some acoustic guitars, but I think I could see more profit if I get some electric guitars in here".
Business Process Integration
Many large chain musical instrument stores that may have centralized distribution centers to support retail store operations. They may rely on automated merchandise replenishment systems to analyze and forecast sales for each product. Corporate buyers are assigned to manage sales for entire product categories guitars, accessories and electronic instruments. However, small dealers like Woodwinds Plus juggle multiple ordering systems operated by distributors and manufacturers.
There needs to be more efficient integration between the logistics business processes of the partners in the overall supply chain. According to Mentzer, Myers, and Stank (2007) at a minimum, the purchasing process of downstream organization is linked with the sales process of the upstream organization so that any unforeseen events become known up and down the supply chain. Both organizations should develop common measures of performance, and data concerning those areas of performance should be monitored and reviewed on a regular basis.
However, before being able to develop a system between the different companies in the supply chain, Woodwinds Plus may need more organization within its own organizational structure. Currently, there is one owner of the company, and he hires only a few people to work for him during the year. Implementing some sort of business process design would help operations runs more efficiently and smoothly. Business process design cements roles and responsibilities as well as decision-making authority in place and should be carefully considered. Many of the "administrative processes" that needs to be handled within the company currently has the owner of the company, Sylvester Artis, as the process owner. This is typical in a small business setting; however, Mr. Artis is the process owner for most other processes in the organization. Assigning specific people to the different processes involved with running the business - marketing, repairs, contract sales, vendor management, etc. - would help to assure that necessary tasks are completed successfully in a timely manner.
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Once the major processes within the organization have been assigned process owners, the company can utilize various forms of information technology (IT) structures to integrate business process. Themistocleous and Corbitt (2006) noted that, the reason for integrating IT into business processes is that the rapidly changing business environment requires organizations to support flexible and manageable IT infrastructures to gain competitive advantage. Thus, technology seems to be highly critical to any strategy for business process integration in a global organization in today's rapidly changing business environment.
Future Marketing Initiatives
One of the ways to integrate technology into the organizational structure is by making better use of the company website. By promoting the website and making use of social media marketing tools, Woodwinds Plus get could advertise its specials online. The shop plans to hold workshops and clinics taught by professionals in the music industry for students of music and anyone else in the community interested in learning, and information about these events could be promoted on the website as well.
The marketing manager for Woodwinds Plus could handle this. Anita Gunther is a part-time employee that currently handles many of the marketing aspects of the company. She acquires new business by directly speaking with prospective clients such as band directors and local professional musicians. (A. Gunther, personal communication, April 1, 2010). "Most of the time we can just let [music instructors] know we're here, and they'll refer us to their students when they need accessories or a repair".
- Lapide, L. (2006). Demand management revisited. Journal of Business Forecasting, 25(3). Retrieved from ABI/INFORM Global database.
- Mentzer, J. T., & Moon, M. A. (2004). Understanding demand. Supply Chain Management Review, 8(4). Retrieved from ABI/INFORM Global.
- Mentzer, J.T., Myers, M.B., & Stank, T.P. (2007). Handbook of global supply chain management. Thousand Oaks, CA: Sage Publications.
- Themistocleous, M., & Corbitt, G. (2006). Is business process integration feasible? Journal of Enterprise Information Management, 19(4). Retrieved from ABI/INFORM Global.