Assignment Title: Garment Flow Ltd - Downstream Fashion Distributors
Learning outcomes:
1. Evaluate key cost structures, revenue generation and investment appraisal methods.
2. Critically appraise the key approaches to costing and pricing of logistics activities.
3. Apply appropriate techniques to judge financial performance of a logistics or supply chain business.
Background: Garment Flow Ltd, a UK based garment distribution business, specializing in value adding services for retail importers, mainly from China, have hired you as UK Logistics Manager based in their Coventry distribution centre. They consolidate and distribute all types of garment to a network of independent retailers and specialist brands throughout the UK.
The main purpose of your job is to profitably manage the UK distribution operation, which consists of a distribution centre and warehouse based outside of Coventry with good access to the motorway system, operating a small fleet of vehicles of various configurations and financed using bought, rented and leased assets.
Business is growing and the Managing Director is considering expanding the distribution operation through the growth of the existing vehicle fleet. The accountant has compiled some vehicle costings data to assist you with answering the following questions posed by the Managing Director.
Requirements and Deliverables -
1. Critically assess how variance analysis could be used to manage the distribution operation. Justify a budgetary methodology which would be most appropriate for Garment Flow Ltd.
2. The MD also requires you to e valuate an investment appraisal method that consider inflation and the cost of finance. Discuss how this method of investment appraisal could be used to secure an additional warehouse in Manchester assuming pallet storage can earn £10 per pallet per week in the local market.
3. Using the costing data provided to calculate the price of transport to collect a full container of garments from the Port of Felixstowe back to Coven try, which is a journey of 157 miles, using the costs given for leasing an artic tractor unit and semi-trailer only. Ensure your price includes a mark-up of 30%. Criticise the methodology, key costing and pricing assumptions you have made in your calculations.
4. Evaluate the different sources of finance available to Garment Flow Ltd. Judge which source of finance is most appropriate to purchase a reach stacker to lift containers from trailers to speed unloading.
5. Justify how you can use the costing, pricing and investment concepts you have discussed so far, and any other appropriate accounting methods to judge the financial performance of Garment Flow Ltd.
Report Format - The written report should have a clear structure, which is evident through the use of a numbering system and/or styles of headings. These indicate a hierarchy of different levels of importance or significance. It will be necessary to organize ideas and plan this structure in advance of writing the detailed content. This approach is different to an 'essay' style, which relies on the use of paragraphs and link sentences to indicate changes of topic.
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