UNIVERSITY OF TRANSPORT AND COMMUNICATIONS

FACULTY OF INTERNATIONAL EDUCATION

----------------------------------------

ASSIGNMENT 2

CASE STUDY REPORT & INFOGRAPHIC

Canh Phuc NGUYEN

Vu Phuong-Thao PHAM
Mai Phuong NGUYEN
Trong Huy DO
Dang Quang NGUYEN
Quoc Trung NGUYEN

Supply Chain Management

Dr. T. Van Ha NGUYEN
Business Administration & Logistics

Hanoi, March 2023

 TABLE OF CONTENTS
1. BACKGROUND ............................................................................................................................ 2
1.1 Background of Avitus ........................................................................................................... 2
1.2 About the product ................................................................................................................ 2
1.3 Rebel Sport............................................................................................................................ 4
1.4 The category and customer segment .................................................................................. 5
2. ESTIMATING DEMAND ............................................................................................................... 6
2.1 Methodology ........................................................................................................................ 6
2.2 Element impacts ................................................................................................................... 7
2.3 Calculation ............................................................................................................................ 8
2.4 Inventory turnover plan ..................................................................................................... 12
3. SOURCING SUPPLIERS .............................................................................................................. 13
4. SUPPLY CHAIN AND LOGISTICS PLAN ...................................................................................... 14
4.1 Information necessary to ensure Place, Time and Quantity Utility related to Avitus
cycling shoes. ............................................................................................................................ 14
4.2 Supply chain performance measurement ......................................................................... 16
4.3 The distribution of Avitus product from manufacturing site to REBEL store shelf .......... 16
5. CONCLUSION & OVERALL INFOGRAPHIC ................................................................................ 18

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1. BACKGROUND
1.1 Background of Avitus
Avitus is a brand name and a subsidiary specializing in sports footwear created by Lucky Star
Trade Development LTD. The company was established in 2003 as a manufacturer and trader of
sports footwear. With more than 18 years of experience in footwear manufacturing, Lucky Star
company has always been committed to providing our customers with a wide range of
footwear of high quality and competitive price to meet the needs of our customers. In the past
6 years, the Company has focused on the development and production of cycling shoes.
Starting from design to material selection, sample making, testing and mass production of
shoes, close packaging, delivery, etc. All processes are closely monitored to provide customers
with high quality cycling shoes. We aim to be the leading manufacturer of cycling shoes in
China. Avitus is a professional manufacturer and brand owner of cycling shoes for mountain
bikes. It has been engaged in the cycling shoe industry for more than 6 years and has rich
experience in quality control and product development.
1.2 About the product

MTB Avitus shoes model

Cycling shoes are specialized shoes for cycling. With special designs that always make cycling
easier, do not cause ankle fatigue and provide a better riding experience.
To know if our Avitus shoe products can be developed in a new market, it is necessary to
carefully consider the competitive advantages of Avitus and the major shoe manufacturer
operating in Australia. ProBikeKit. At the same time, we also need to compare the advantages
of a pair of cycling shoes with a normal pair of shoes.

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 Direct competition: competitive advantages of Avitus compared to ProBikeKit

Avitus ProBikeKit
- Because Avitus is a Chinese factory - ProBikeKit is one of the largest players of
company, the labor cost is cheap, so the Australia’s cycling shoes and accessories
product price will also be in the relativelymarket. By comparing Avitus with
cheap segment, ranging from $50 to $100 ProBikeKit, we can partly foresee the
for a pair of cycling shoes. feasibility of this project within the
border of Australia.
- With products from ProBikeKit, the price
is much higher than Avitus, ranging from
$ 70 to $ 200 or even more for limited
and exclusive models.
 Indirect competition: competitive advantages of Avitus cycling shoes vs Regular sport
shoes brands

Avitus cycling shoes Regular sport shoes brands

- A very important part of the locking - More convenient because not everyone
system is the sole, because locking shoes can buy a specialized shoe for cycling
usually do not flex, which can prevent - But besides that, wearing a normal pair of
pedal force from being consumed in cycling shoes can cause unwanted injuries
bending the arch material, and from to the ankles and knees.
being transmitted to the table. pedal with - When cycling at high speed, a pair of
a larger ratio. Invisibly, each step of the specialized cycling shoes will help the
pedal will promote the best effect. driver control the speed when the pedal
- Saving energy for physical strength is a can be fixed, but when wearing normal
very good use. In general, wearing shoes, it will cause loss of control and
buckled, buckled shoes can save 25% of easily cause an accident.
effort. This means that when you step
into the car with a buckle shoe, you're
more likely to ride on steep slopes you're
used to struggling with. Especially, when
riding a mountain bike for a long time,
cycling will feel lighter. This is because:
wearing a locking shoe on the bike, while
one foot is stepping down, the other foot
can also provide traction on the tooth
plate, so that cycling saves more effort.
- In addition, wearing cycling shoes helps
to avoid injuries related to knees and
ankles.

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 1.3 Rebel Sport
 Introduction
Rebel Sport was established in 1985 with its first store in Bankstown. After being listed on the
Australian Securities Exchange in 1993, it was purchased by Harvey Norman in July 2001.
Rebel stocks several well-known international brands, including Nike, Asics, Adidas, PUMA. As a
group, Rebel Sport has more than 150 stores across Australia, and employ over 4500
employees. In 2012, Rebel Sport dropped the word “sport “from its name and adopted a new
logo and black and yellow branding.
 Network design
As a result of globalization, Rebel Sport must locate a less expensive location for suppliers and
manufacturers, and China is the most ideal location because labor and material costs are lower.
When the items are made, they will be sent to the Super Retail Group distribution center at
441-443 Grieve Parade in Altona North, VIC, before being transferred to the Rebel Sport
warehouses near Docklands. Finally, things would be trucked to wholesalers and retailers
before being sold to customers.

 Online presence
Rebel Sport runs two websites, one for Australia and one for New Zealand. Consumers may
browse for essential things as well as visit brick-and-mortar establishments in these two
nations, as well as order and send them through websites. Rebel Sport also engages with
potential customers via social media sites. Facebook and Instagram are the two most popular
social media platforms, with the most likes and followers from purchasers.
Rebel Sport runs two websites, one for Australia and one for New Zealand. Consumers may
browse for essential things as well as visit brick-and-mortar establishments in these two
nations, as well as order and send them through websites. Rebel Sport also engages with
potential customers via social media sites. Facebook and Instagram are the two most popular
social media platforms, with the most likes and followers from purchasers.

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 Retail stores in Australia

There are 155 Rebel Sport Limited stores in Australia as of

February 17, 2023. The state with the greatest number of
Rebel Sport Limited locations in Australia is New South
Wales, with 47 stores, which is about 30% of all Rebel
Sport Limited stores in Australia.

1.4 The category and customer segment

Rebel is Australia's leading sports offering a wide range of sporting goods, compare the prices
of products range from affordable
items at around $65 for a pair of shoes
to high-end retailer with a value of
more than $200. As can be seen in the
photo above, the price for a pair of
Avitus shoes when compared to Rebel
Sport items is relatively low at only $75
- this is the price we got after directly
contacting one of Avitus’ wholesalers.

World GDP per capita in 2022 (thousand USD)

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Above is a table of statistics about Australia's per capita income in 1 year (GDP), as we can see
Australia's GDP ranks first with more than $60,000. So, we completely believe that the price of
$75 for a pair of cycling shoeSs is completely affordable for Australians and the audience that
this product is aimed at is people with a fairly or even low average living standard.

2. ESTIMATING DEMAND
2.1 Methodology
Demand forecasting is known as the process of making future estimations in relation to
customer demand over a specific period. Generally, demand forecasting will consider historical
data and other analytical information to produce the most accurate predictions. In detail, the
methods of demand forecasting entails using predictive analytics of historical data to
understand and predict customer demand to understand key economic conditions and assist in
making crucial supply decisions to optimize business profitability. Demand forecasting methods
are divided into two major categories, qualitative and quantitative methods. Qualitative
methods are based on expert opinion and information gathered from the field. It is mostly used
in situations when there is minimal data available to analyze. Quantitative methods, however,
use data, and analytical tools to create predictions. Demand forecasting may be used in
production planning, inventory management, and at times in assessing future capacity
requirements, or in making decisions on whether to enter a new market.

The methods that will be used are linear equation and weighted mean method and weighted
mean average. The linear equation will be used to predict the demand of the year. Therefore,
the trend of the product could be shown, and then the suppliers could prepare for the
upcoming demand of the whole company. Linear regression shows the relationship between
two or more criteria that fit a certain line equation. The linear equation is:

To find out the value of a and b, we must solve the systems of equation:
x is the cause criterion, y is the effect criterion, yx is
the theoretical values of the effect criteria calculated
by the regression equation, and a and b are the
parameters of the regression equation that
determined by the sum of least squares method.
This method will be used to predict the amount of
Australian cyclist in 2023 by using the data about the
number of Australian cyclists in the previous years.

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The weighted mean equation is:

The weight mean will be used

to calculate the average price
of the bicycle accessories. We
will assume that every new
cyclist will have to buy 1
helmet, 1 lock, 1 water bottle, 1 pair of gloves and 1 pair of shoes. The average price of each
product will be calculated using weighted means. We add the products of the multiplication of
price of each category and product to the total selling amount. Then, we divide it into the total
selling amount of all products. We have known the money that is consumed for bicycle
accessories and the percentages of customers that prefer to buy bicycle accessories. Therefore,
we could find out the amount of money that is spent for cycling shoes by take multiply the total
money that is spent for bicycle accessories to the shoes price proportion among all products.

2.2 Element impacts

Figure: The amount of cyclists from 2011 - 2021

From 2011 to 2019, the proportion of Australian who take up cycling as a habit is decrease
sharply. From about 18,2% in 2011, it fluctuated over 4 years and dropped to 13.8% of the
overall population in 2019. However, the COVID 19 seems to have a great impact on the cycling
trend since it peaked at 18,2% of the population in 2021. The Australian, and people from all
around the world in general, started to care more about their health. Cycling is one of the

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simplest sports to improve their health. Therefore, they tend to take up cycling more, and keep
it as a hobby from there on. This is unpredictable to the cycling industry, since no one could
know about the pandemic and people's care about their health after the pandemic.

Australia average weather 2021

As we can observe on the graph, in the summer, there are more holidays and free time as well
as cooler climate, therefore people have tendency to go out for cycling and increase the
quantity of cyclists. However, the amount of rain also increases, leading to the fact that the
demand for this product does not have significant effect on the seasonal patterns to pose a
notable change the domestic customer demand. In our opinion, since the seasonal pattern does
not change compared to another season, we do not recognize these domestic customer
demands.

2.3 Calculation
 Calculate the amount of cyclist in 2023

Figure: The amount of cyclist from 2011 - 2021

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Having the proportion of cyclist among Australian from 2011 to 2021, we will let x = year, which
is the cause criterion and y = proportion of cyclist among Australian. We have the following
table:

yi xi xiyi y2 x2
1 18.3 2011 36801.3 334.89 4044121
2 16.5 2013 33214.5 272.25 4052169
3 17.4 2015 35061 302.76 4060225
4 15.5 2017 31263.5 240.25 4068289
5 13.8 2019 27862.2 190.44 4076361
6 18.2 2021 36782.2 331.24 4084441
Total 99.7 12096 200984.7 24385606
Therefore, we have the system of equations:

So, the linear equation is:

So, in 2023, the amount of cyclist in Australia = 15.57% x 25,981,000 = 4,045,242 (people)

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 Calculate the demand for cycling shoes

29% of Australian adults spent money on cycling. In 2020, NSW and VIC containing the highest
number of cycling consumers. Most consumers spent about $50k to $99k to buy cycling
products. 53% of those who spend on cycling identified as male and 47% identified as female.

Firgure: Expenditure categories of Australian

Table: Estimated average annual spend category and incidence for thóe that spent money in the
category

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According to Rebel’s data, we have the following table:

Product line Product price Selling amount

Helmet 24.99 6
29.99 5
59.99 2
39.99 2
Bottle 29.99 20
19.99 13
9.99 11
24.99 15
39.99 7
34.99 9
59.99 9
22.99 1
49.99 3
27.99 11
37.99 1
14.99 10
32.99 1
79.99 4
69.99 1
89.99 1
20 1
17.5 2
Lock 20.99 8
75.99 3
35.99 1
39.99 3
Gloves 19.99 1
29.99 1

Helmet average price =

Water bottle average price =

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Lock average price =

Gloves average price =

Total money that spent for accessories/person = 33.32 + 30.96 + 24.99 + 38.86 +75 = 203.13

Total money spent for shoes =

Demand for shoes =

2.4 Inventory turnover plan

Typically, goods will be shipped as 40-foot containers measuring length x width x height of 12 x
2.34 x 2.38 (m)
A standard shoe box will measure 33 x 20 x 12.5 (cm) equal to 0.33 x 0.2 x 0.125 (m)
In this section, to find out how many shoe boxes a container holds, we will use the volume to
calculate
The formula for calculating the volume of the box mass is: length x width x height
 The 40-foot container volume is 66.83 m3
 The volume of the shoe box is: 0.00825 m3
The number of shoe boxes that a 40-foot container can hold is: 8,100 shoe boxes
With a demand of 790,000 pairs in a year. A shipment from China to Brisbane will cost $1350
per 1 40-foot container (Price List of FCL by Sea Freight from China to Australia, 2020).

Case 1: Avitus will supply products every quarter so there will be four deliveries in January, 4, 7,
10. Each delivery of 197,500 pairs of flavors will require 24 40-foot containers per delivery.
 The price for 1 train is $32,400
 1 year of shipping will be $129,600

Case 2: Avitus Company will supply products twice / 1 year, i.e., January and July. Each delivery
of 395,000 pairs of shoes will require 48 40-foot containers.

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  The price for 1 train is 64,800 USD
 1-year shipping price is 129,600 USD
With the feature of Full Container Load, with the quantity of shoes and the amount of labor
work needed to meet 790,000 pairs of shoes for 1 year, the cost for containers remains
unchanged, so the factors affecting how to choose to go will be forwarder costs, customs, for
warehouse operations expenses.
 In the case of 1 month of shipping goods once, it will increase the costs of forwarder,
customs and bonded storage activities, so this option will increase the cost of sea export. In
case of shipping goods 2 times over 1 year, storage costs will take place for 6 months, the
number of products stored in the warehouse is too large, so meeting the number of
products too high will be not optimal and at the same time storage costs will increase
sharply when having to store too many goods.
 In the case of quarterly, at this time, the inventory in the warehouse will be about 3 months
and the export volume of goods by sea will be about 4 times, this will be a suitable option
because the storage time is low, so the cost is not too high and the amount of goods in the
warehouse is moderate and exported by sea not too many times, so the cost for forwarder
and Customs is within the realm of possibility.
 Consequently, quarterly shipping is the most efficient option for this project at the given
time.

3. SOURCING SUPPLIERS
 Avitus MTB shoes bill of materials:

Supplier Address Description Quantity Units Unit cost Cost

Fuzhou Songyuan
Fuzhou, Fujian Lining fabric 1 kg 3,4$US 3,4$US
Knitting Co Ltd
Dongguan Yubiao Dongguan, Carbon steel
2 piece 0,05$US 0.1$US
Hardware Co., Ltd Guangdong (cleats)
Gogo Foam
Shenzhen, Foam shoes square
Products Company 2 0,7$US 1,4$US
Guangdong soles metre
Limited
Xiamen Yuncoo
Putian, Fujian Footbed 1 pair 4,9$US 4,9$US
Investment Co.,ltd
Dongguan Wing Dongguan,
Unite Metal Shoelace eyelet 6 pair 0,08$US 0,48$US
Guangdong
Products Factory

Total cost 9,13$US 10,28$US

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4. SUPPLY CHAIN AND LOGISTICS PLAN
4.1 Information necessary to ensure Place, Time and Quantity Utility related to Avitus
cycling shoes.
 Place Utility
Place utility in logistics management is the ability to optimize locations and locations to meet
customer needs in the most efficient and timely manner. This includes getting the product from
the factory to the warehouse, from the warehouse to the store, and from the store to the end
customer. It ensures that products are delivered to the right place and at the right time,
increasing sales and optimizing transportation and storage costs.
Information needed to ensure Place Utility related to our chosen product are:
- Transportation infrastructure: The condition of roads of China (from Fujian to Shekou port)
and Australia (from each region’s train station to its respective warehouse), railroads (from
Brisbane to Sydney, Melbourne, Adelaide, Perth and Darwin), ports (Shekou and Brisbane).

- Distance: Fujian (city: Fuzhou) == > Shekou port: 850 kilometers (530 miles), Shekou port =>
Brisbane (3,024 nautical miles, 5,600km), Brisbane => Sydney (930 kilometers (578 miles),
Melbourne (1,600 kilometers (994 miles), Adelaide (2,200 kilometers (1,367 miles), Perth
(4,200 kilometers (2,610 miles) and Darwin (4,000 kilometers (2,485 miles).

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- Mode of transportation: Fujian to Shekou by road, Shekou to Brisbane by sea, Brisbane to
Sydney, Melbourne, Adelaide, Perth and Darwin by train then to local warehouse and REBEL
outlets by road.

 Time utility:
To achieve time utility in logistics management, businesses need to optimize the production,
transportation and storage processes of goods to minimize time and costs. New technology
Place utility in logistics management is the ability to optimize locations and locations to meet
customer needs in the most efficient and timely manner. This includes getting the product from
the factory to the warehouse, from the warehouse to the store, and from the store to the end
customer. It ensures that products are delivered to the right place and at the right time,
increasing sales and optimizing transportation and storage costs.
Information needed to ensure Time Utility related to our chosen product are:
- Lead time: Lead time in logistics refers to the amount of time it takes for a product or
service to be delivered from the time it is ordered. Approximately 3-4 weeks from the date
of order to the date of receipt.

- Order processing time: With FCL 16- 18 days. The time it takes to process an order,
including order entry (12hs), picking, packing (about 3 days) and shipping (about 15 days),
can affect time utility. Streamlining order processing can help improve time utility.

 Quantity utility:
In logistics management, businesses need to ensure that their products or services are
produced and supplied in the right quantities according to customer needs. Inventory
management and customer demand forecasting are critical to achieving better quantity utility.

Information needed to ensure Quantity Utility related to our chosen product are:
- Forecasting accuracy: The accuracy of demand forecasting can greatly impact quantity
utility. Accurate forecasting helps ensure that the right quantity of products is available
when needed. Weighted average is more accurate than the simple mean. By calculating the
average through its frequency, the average preference of customer will be closer to the real
situation. However, the weight average method could not represent the choices of major
groups of customers and the distributivity of the method is quite high. With the linear
equation, it will help the producer to predict the trend of that product and has a very clear
view from many years before, maintain the effective of the previous data. However, this
method is not a sensitive method, since it will take a lot of time to catch up with the trend
and give the prediction for the situation contain sudden changes.

- Transportation capacity: The capacity of transportation, including the number and size of
vehicles, can affect quantity utility. Sufficient transportation capacity helps ensure that the

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 right quantity of products. 3PLs transport: China truck brands: Futon, Dongfeng – vessel -
Australia railway: Pacific National - Australia truck brands: Kenworth, Volvo

- Availability of inventory: The availability of inventory in the warehouse will ensure the
proper quantity of products will be delivered to the customer and avoid the risk of
insufficient goods. Effective inventory management can help ensure that products are
available when needed. 3PLs: WMS software provided by companies: Amazon fulfillment,
UPS Supply Chain Solutions, DHL Supply Chain.

4.2 Supply chain performance measurement

Every organization that wants to organize and manage their supply chain metrics must deploy
some key performance measurement systems; this is because the average metrics needed for
managing and measuring the success of an organization’s supply chain system varies by
industry, company, and scale of business.

According to Agrawal and Shankar (2002), there are 5 main indicators in calculating supply
chain performance, but it will take a lot of inside information to calculate and according to the
requirements of the problem, our team will focus on supply chain cycle time calculation and in
this supply chain there will be 5 period. First, according to the location of the factories we
found in the source suppliers' section, the time it takes for the materials to arrive at the factory
in Fujian will range from 1 to 2 days. Next, the transit time from Fujian to Shekou port,
Guangdong ranges from 8 hours to 9 hours. In the 3rd segment, transit time by sea to the port
of Brisbane will be approximately 9.5 days and from port to outlets will take approximately 3
days. So, the total time for products to reach outlets will take about 15 to 16 days (about 2 and
a half weeks). In my opinion, if there are no problems during transportation, this is a very
reasonable time for the goods to be shipped.

4.3 The distribution of Avitus product from manufacturing site to REBEL store shelf
CHINA  AUSTRALIA AUSTRALIA  REBEL OUTLETS

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 Estimated time for delivery
- Fujian -> Shekou, Guangdong: 8 hours 34 mins
- Shekou -> Brisbane: 9 days 14 hours
- Brisbane -> REBEL outlets: 1-4 days
 Approximately 15 – 16 days (about 2 and a half weeks)

 Making use of Australia railway system

Pacific National is one of the largest rail freight operators in Australia. Pacific National
transports an average of more than 700,000 tons of coal, iron ore and bulk freight each day.
Pacific National’s services span the length and breadth of the country, connecting terminals,
paddocks and pits to ports efficiently moving freight.

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 Choice of public warehouse services and fleet usages
When making the
decision to choose a
private warehouse or a
contract warehouse, we
need to rely on the factors
that the products are
stored in, and which affect
the operation of the
warehouse.
With the product of sport
shoes combined with the
cycling element, having
the characteristics of an easy-to-carry and easy-to-store product in normal environmental
conditions will help the warehouse and transport work to be carried out smoothly. Excluding
too many difficulties in warehouse operation, manipulation in the process of distribution as
well as preservation of “cycling shoes” that did not require too many conditions in terms of
staff qualifications, specialized equipment for storage and optimize storage costs, for example
fruit or electronic components need to be stored in a low temperature environment while shoe
products are not dependent.
Warehouses with the basic requirements of warehouse facilities will be able to meet well in the
supply chain and using Contract 3PLs will help optimize both costs and transportation processes
time, so Contract Warehouse and Contract 3PLs will be an affordable option to meet the
storage requirements for Cycling Shoes.
After deciding to use the contract warehouse, a request was made to learn the cost of renting
the space, but the warehouse owner declined to provide it since each customer's needs would
determine the pricing on a case-by-case basis.

5. CONCLUSION & OVERALL INFOGRAPHIC

As a final note, in this report, our team members have reached the decision of supplying
AVITUS cycling shoes to REBEL sports outlets throughout Australia. We also included analysis of
patterns, trends, and several other elements which have impacts on our chosen product and
the current project. Specific calculators on demand forecast were made, and a specific
distribution routing plan was proposed. Overall core information can be found in our project
infographic as below:

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