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Assignment 2 LASA 1 Interrelation between substance abuse and child abuse

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Centervale Apparel
Assignment 2 Lasa 1 You Work For Centervale Apparel a
Large Clothing Manufacturing Firm
Centervale Apparel’s need to streamline the Company’s
technology, reduce redundant activity, increase profit, and
improve customer satisfaction have caused the Technology
Department to evaluate its present systems and consider
alternatives. To meet these goals, the chosen system must
exploit the time spent on data entry while at the same time
bring the technology expenses down to or below budgeted
amounts.
The projected technology costs for the coming year, staying
with the status quo, is $15 million, $5.3 million more than
budgeted for the year. In addition to the direct costs of the
systems, information entered into the system has to be entered
more than once to satisfy all departmental needs, which leads
to additional staffing to repeat tasks already performed. These
additional entries are causing miscalculations which
negatively affect inventory control and distribution. The lack
of real control over inventory and distribution is causing
disgruntled customers when orders are either over or under
filled. Two primary questions are: What system or systems
can be purchased to coordinate as many systems as possible
together to reduce as much data entry as possible? And what
system or systems would produce the most cost efficiency?

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A new supply chain management (SCM) system would
optimize single entries of data to populate other areas of the
company to reduce redundancy and possibly the number of
FTEs. Also the new system is projected to cost less overall
and annualized over the 10 year expected life span of the
system, will cost less than the present data entry and inventory
expenses. If Centervale stays with the Legacy system, which
will cost $15 million with $100,000 annual maintenance fee,
and present data and inventory costs (represented by X), the
annual cost for 10 years would be X + $1.6 million. The
variable for this illustration is the data entry and inventory
costs. In addition to the cost benefit, order to delivery time
should be reduced by 10-20% with customer satisfaction and
retention improvement. The Process Method will be a great
model to use as the SCM system will span the supply chain,
order fulfillment, customer service, and unintended benefits of
communication (Dutta & Roy, 2004).
Cost Drivers New SCM Legacy
Purchase $1.2 million $15 million
Annual Maintenance $250,000 $100,000
Life cycle 10 years Assumed 10 years
Data annual entry savings -2 FTE X - $100,000 X
Annual Inventory Costs Savings X - $300,000 X
Annual average costs $120K (purchase over 10 years) +
$250K (maintenance) + X (Present Data & Inventory Costs) -
$400K (savings in data & Inventory costs) X (data and
inventory costs) + $1.6 million (purchase spread over 10 years
+ annual maintenance)

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