9 [P.T.O.4 Jayne Cox Direct is a company that specialises in the production of bespoke sofas and chairs. Its products are
advertised in most quality lifestyle magazines. The company was started ten years ago. It grew out of a desire to
provide customers with the chance to specify their own bespoke furniture at a cost that compared favourably with
standard products available from high street retailers. It sells furniture directly to the end customer. Its website allows
customers to select the style of furniture, the wood it is to be made from, the type of upholstery used in cushion and
seat fillings and the textile composition and pattern of the covering. The current website has over 60 textile patterns
which can be selected by the customer. Once the customer has finished specifying the kind of furniture they want, a
price is given. If this price is acceptable to the customer, then an order is placed and an estimated delivery date is
given. Most delivery dates are ten weeks after the order has been placed. This relatively long delivery time is
unacceptable to some customers and so they cancel the order immediately, citing the quoted long delivery time as
their reason for cancellation.
Jayne Cox Direct orders wood, upholstery and textiles from long-established suppliers. About 95% of its wood is
currently supplied by three timber suppliers, all of whom supplied the company in its first year of operation. Purchase
orders with suppliers are placed by the procurement section. Until last year, they faxed purchase orders through to
suppliers. They now email these orders. Recently, an expected order was not delivered because the supplier claimed
that no email was received. This caused production delays. Although suppliers like working with Jayne Cox Direct,
they are often critical of payment processing. On a number of occasions the accounts section at Jayne Cox Direct has
been unable to match supplier invoices with purchase orders, leading to long delays in the payment of suppliers.
The sofas and chairs are built in Jayne Cox Direct’s factory. Relatively high inventory levels and a relaxed production
process means that production is rarely disrupted. Despite this, the company is unable to meet 45% of the estimated
delivery dates given when the order was placed, due to the required goods not being finished in time. Consequently,
a member of the sales team has to telephone the customer and discuss an alternative delivery date.
Telephoning the customer to change the delivery date presents a number of problems. Firstly, contacting the customer
by telephone can be difficult and costly. Secondly, many customers are disappointed that the original, promised
delivery date can no longer be met. Finally, customers often have to agree a delivery date much later than the new
delivery date suggested by Jayne Cox Direct. This is because customers often get less than one week’s notice of the
new date and so they have to defer delivery to much later. This means that the goods have to remain in the warehouse
for longer.
A separate delivery problem arises because of the bulky and high value nature of the product. Jayne Cox Direct
requires someone to be available at the delivery address to sign for its safe receipt and to put the goods somewhere
secure and dry. About 30% of intended deliveries do not take place because there is no-one at the address to accept
delivery. Consequently, furniture has to be returned and stored at the factory. A member of the sales staff will
subsequently telephone the customer and negotiate a new delivery date but, again, contacting the customer by
telephone can be difficult and costly.
Delivery of furniture is made using the company’s own vans. Each of these vans follow a defined route each day of
the week, irrespective of demand.
The company’s original growth was primarily due to the innovative business idea behind specifying competitively
priced bespoke furniture. However, established rivals are now offering a similar service. In the face of this competition
the managing director of Jayne Cox Direct has urged a thorough review of the supply chain. She feels that costs and
inventory levels are too high and that the time taken from order to delivery is too long. Furthermore, in a recent
customer satisfaction survey there was major criticism about the lack of information about the progress of the order
after it was placed. One commented that ‘as soon as Jayne Cox Direct got my order and my money they seemed to
forget about me. For ten weeks I heard nothing. Then, just three days before my estimated delivery date, I received
a phone call telling me that the order had been delayed and that the estimated delivery date was now 17 June. I had
already taken a day off work for 10 June, my original delivery date. I could not re-arrange this day off and so I had
to agree a delivery date of 24 June when my mother would be here to receive it’.
People were also critical about after-sales service. One commented ‘I accidently stained my sofa. Nobody at Jayne
Cox Direct could tell me how to clean it or how to order replacement fabrics for my sofa’. Another said ‘organising the
return of a faulty chair was very difficult’.
When the managing director of Jayne Cox Direct saw the results of the survey she understood ‘why our customer
retention rate is so low’.
10Required:
(a) Analyse the existing value chain, using it to highlight areas of weakness at Jayne Cox Direct. (12 marks)
(b) Evaluate how technology could be used in both the upstream and the downstream supply chain to address
the problems identified at Jayne Cox Direct. (13 marks)
(25 marks)
End of Question Paper
