Case study

Organizations large and small must source a variety of items and services in order to sustain their quotidian operations. This activity takes centerstage with retail outfits, where sourcing constitutes a primary business activity. This case illustrates the problems faced by a fledgling online start-up called Fiesta Gifts, which caters to a clientele of retail stores that are spread across the continental United States. Under pressure from its investors, the firm’s management is faced with the option of turning around the loss-making operation or shutting shop. The case begins by familiarizing the reader with the context of the US gifting and novelty sector. It then describes the complexities of Fiesta’s operations, which involves sourcing thousands of items from hundreds of suppliers and routing them to customers through distribution centers that are located across the country.

Despite fulfilling a steady stream of customer orders all year round, the company has accrued substantial losses; inefficiencies in its supply chain are largely to blame. Taking note of this, the CEO has demanded concrete action steps from senior management. The CFO and CPO have initiated a strategic sourcing exercise, with a vision to curtail spend by rationalizing item categories and suppliers and improving lead times. Working from a dataset of purchases that have been made by Fiesta’s customers since the launch of the online portal, the duo has employed analytical tools like ABC analysis to arrive at a grand list of decisions; implementing them could address the problems that the firm is facing. The CEO must deliberate the proposal points and decide on further action.

Learning Objective

The case employs a sizeable retail dataset of over 100,000 rows to illustrate supply chain complexities that procurement teams must often grapple with. The questions at the end of the case help groups of participants to achieve the following objectives:

1.) Build a mastery of spreadsheets.
2.) Troubleshoot data quality issues.
3.) Illustrate the utility of ABC analyses.
4.) Trace the outcomes of a spend analysis to actionable decisions.
5.) Perform a network optimization.
6.) Construct strategic templates to inform standard operating procedures.