Sales and Operations plan

For the S&OP part, the Excel Sheet was made in order to calculate the amount of inventory needed to satisfy the predicted demand (Sales Forecast).

Cost of goods

The cost of smartphones remains the same as indicated in the project description:

CleanCall Pro X = 246,02£ (283,5€)
CleanCall Plus = 191,16£ (220,5€)

Sales price

The sales prices will remain the same as indicated in the sales forecast and are as follows:

CleanCall Pro X = 581£ (670€)
CleanCall Plus = 408£ (470€)

Inventory

Since CleanCall is in the beginning stage of entering a new market, the company needs to make sure that the demand is fulfilled once entering the market, therefore, it needs to have excess inventory in case of an unpredicted increase in sales in addition to the assumptions. The excess inventory shall be weighed and stated in accordance with the high holding costs of inventory. Because of those reasons, the company tries to find the lowest number which would be used as a minimum safety stock:

CleanCall Pro X - the percentage of excess inventory (minimum safety stock) starts from 20% and gradually decreases to 15% from the sales of CleanCall Pro X. The number will decrease each year as the company will better understand the buying trends within each year.
CleanCall Plus - the percentage of excess inventory (minimum safety stock) starts from 20% and gradually decreases to 15% from the sales of CleanCall Pro X. The number will decrease each year as the company will better understand the buying trends within each year.

Purchasing plan

As the lead time takes 60 days, CleanCall Pro X and CleanCall plus are purchased for the upcoming period one quarter ahead. After each quarter, there is excess inventory left which number is added to the next quarter's predicted inventory in order to calculate the upcoming period inventory.

Pallets

Since the packaging size is the same for CleanCall Pro X and CleanCall plus phones, the number of pallets was not calculated separately. Each pallet holds 1920 phones and approximately 19 pallets are being less-than-truckload shipped.

Kralijic Matrix

The Kraljic Matrix is a method of classifying and analyzing the purchasing portfolio to help guide a company's procurement strategy. It is based on the purchase classification and is used in order to reduce costs as well as achieve maximal supply security.

Kralijic Matrix pdf

Since CleanCall is an electronics industry based on recyclable smartphones, the crucial component to have is the phones themselves.

CleanCall collaborates with the Hi-P factory located in China that assembles the phones. Because the company chooses to be an opponent of unfair-practices-based businesses, their assembly line is difficult to be replaced. Therefore, as the Hi-P factory is based in China, the long lead-time of the devices makes the supply risk high.

Another aspect to consider is conflict-free and fair-trade components. Despite the sales of devices, another income channel comes from repair and upgrading services. For those services to succeed, the company should have different components of the phones at their repair and upgrading services store, so when the customer comes, he does not need to wait till the missing part is received from the supplier. Such an aspect could bring high profits to the company since the services could be provided to all customers - even the ones that have different phone models.

Transportation is deeply connected to the Hi-P factory but is still a crucial part of manufacturing, therefore, the lead time is important to be discussed in order to have the cost-effective minimum inventory stock, and still be able to fulfill all the customers' demands.

Considering how the UK community is deeply involved in the social media industry, the company chose to use influencers as one of its marketing partners. Such an aspect was put into the "Leverage items" section because it costs less to collaborate with influencers compared to transportation or COGS, however, there is still a slight risk to pick the wrong influencers who do not have the right target audience.

The packaging is the second "Leverage items" component. There is a considerably low supply risk of packaging because either way the phone will not be sold without it, however, it has a huge impact on sales and profit as it should support sustainability and still be presentable and chic. In that way, the people will feel satisfaction while opening the device and will have the need to post on their social media account their new purchase.

Since the company chose not to open its own store yet, CleanCall has to collaborate with third-party electronic stores. The chosen stores are predicted to bring almost as much profit, as the website itself, thus the profit impact should be high too. On the other hand, the supply risk is considered to be low because even though there are commissions that need to be paid, the profit outweighs the expenses.

Lastly, the company chose to also produce its own phone cases but because their purchasing price and selling price is low, it was put into the non-critical items section.

Supply Chain Network Design

1. Company's objectives

CleanCall is entering a new market- the UK with a goal to produce fair-trade, conflict-free modular phones and to fight unfair electronics industries. Another aim within the company's internal processes is to minimize the COGS and lower the risk of procurement and reselling processes. Therefore, the company must closely collaborate with its suppliers and decide on the frequency of distribution as well as on the minimum safety stock.

2. Chosen distribution strategy; communication and selling channels

CleanCall uses different channels to reach its customers: third-party retailers' stores, webshop, e-marketing, advertising, social media.

The biggest channel from which the company will receive most of its sales from the online shop. Since the CleanCall will not have a physical store located in the UK, many third-party retailers will be used instead. The awareness will also be raised by social media advertising as well as other e-marketing campaigns.

3. Customers' profile

CleanCall focuses on the electronics industry. The company's customers will care about sustainability and be aware of the electronics industry's actions on social and environmental problems. The buyers will want to feel special and will value personalized stylish, luxury, and quality products. They will be willing to maintain long-lasting relationships with CleanCall as the company provides repair and upgrading services.

4. Volumes and pallets

The goods are transported on pallets sized 120cm x 80cm and the height of one pallet can be 200cm at maximum. This means that 1920 phones can be transported on one pallet. We will use LTL shipping as our numbers do not exceed a full truckload shipment of 24 pallets. An inventory plan is used to calculate the accumulated stock.

Since the lead time takes 60 days, the orders will be happening at the beginning of each quarter.

5. Inventory plan

For saving purposes, CleanCall tries to minimize inventory and holding costs. A sales forecast plan will help to determine an approximate demand for products while the inventory plan will help to calculate the needed inventory (sales+minimum safety stock). With the two approaches, the company tries to avoid stockouts as well as meet the demand in case it becomes higher than expected (S&OP plan).

Since the company sells fully assembled phones but provides repair and upgrading services, both- intermediate and finished products will be held in stock.

6. Manufacturing and procurement plan

Because CleanCall uses only conflict-free and fair-trade materials, the suppliers of raw materials cannot change and long-lasting relationships must be maintained (Kralijic Matrix). The shipping from suppliers to the assembly factory will be done by using marine transport because the materials will be purchased in large quantities and there is convenient sea access.

The raw materials are shipped from 3 different countries- Rwanda, DRC, and Peru. The goods are being sea transported to China- the main assembly factory and then sea transported to the main warehouse in the Netherlands. From there, the goods will be sent to the UK warehouse by using truck services as there is no need to ship the goods separately. Lastly, the phones will be road-transported to third-party sellers and sold to future customers. (Supply Chain Network design)

Chain design pdf

Risk Assessment Matrix

Risk assesment pdf