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Case: Royal Beginnings Bridal and

Formal: Buying For a Boutique


Background:

• Jack and Anna Oleson founded Royal Beginnings (RB) in the year 1990.
• RB started with bridal gown collections and the increased the category with bridesmaid
and mother’s dress, prom dress
• They also had Tuxedos and other accessories for catering to various segments.
• With few years, RB gained popularity due to its customer service with quality product,
better style and reasonable pricing
• RB was successful for last 23 years with suppliers but due to recent incidents which put the
pressure on the brand image and profitability of store, Anna is thinking how can she
continue with current suppliers who are having more of a transactional relation with RB
Royal Beginnings customer needs:

• Royal Beginnings’ customers wanted high style, affordable price and high service
• Each customer wanted to be viewed as special when they walk into the store
• Royal Beginnings’ customers wanted high fashion (Cadillac tastes) at lower (Yugo)
budget
• Customers were keen on having perfect fit and look for their dress
• They wanted in-person consultation on theme, color, style, and complete wedding
design selections
• They wanted to have knowledge of products prior to their visit to the shop
• Few brands like Maggie Sottero and Mon Cheri were highly sought after
Royal Beginnings customer demand fulfilment:
• Royal Beginnings did not compromise on style, price and service
• Royal Beginnings trained their salespersons to graciously approach each customer
• Royal Beginnings provided training to its consultants to use customer’s idea to deliver
fashionably similar dress with affordable budget
• They had excellent seamstress for year around to provide perfect alterations
• They developed a Consultation Agreement for customers with $25 fee for two hours
• Royal Beginnings’ website allowed the customers to view the shop’s selection of products
and services
• Anna partnered with most sought after suppliers
Important factors when buying merchandise:

• Most essential factor to consider is price as the shop is situated in economically


challenged town
• Other factors are material quality and style
• For designer’s gowns, considerable seam allowances are necessary for future
alterations
• Most sought after apparel lines by customers (especially brides)
• With respect to suppliers, their service quality and minimum quantity standards
should be considered
• Anna should focused more on customers need than market trends
Who has more power in the supply chain – Royal Beginnings or its
suppliers?
 As the RB was a brick and mortar store sustaining for 23 years due to its strong customer base.
 It can be seen that in around 90 miles there is no competitor store in that region.
 Increase in number of suppliers and decrease in number of marriages

Operational issues and Impact:


 Lack of collaborative effort:
o One of the suppliers, a China based, had defaulted on the delivery as he failed to inform
that the initial there was a 14-day holiday on Chinese New Year.
o He did not own the mistake, hence Anna had to pay $300 to expedite the delivery and
$325 worth of free alterations and ended up giving more discount of $60.
Operational issues and Impact…continued.
 Miscommunication:
o Alfred Angelo being one of the oldest suppliers, Anna trusted its sales’ reps verbal promise
of “grand guarantee” which was misleading
o After an order of 5 dresses when wrong due to colour issues, sales rep demanded
replacement fees.
o Anna had to return the dresses with replacement costs and shipping fees to get correct order.

Can Royal Beginnings change the current situation with its suppliers?
 As the bargaining power is with RB, the change is possible.
 The agreements and promises should be documented with conditions of reimbursement for any
breach on either side.
 Only those suppliers who are willing to provide products without MOQ or minimum fixed order
for lower priced products should be collaborated with.
 The discontinuing of particular style pattern by any supplier should not be abruptly.
So, they should not directly cut ties with supplier but instead they informed our conditions and if
the supplier doesn’t agree then a new supplier can be added or at least that particular supplier
should be released.
How could Royal Beginnings use the FMEA tool in its supplier
selection process
Failure Mode Severity Probability of Occurences Probability of Detection Risk Preference Number(RPN)
Delivery defaulted 8 6 9 432
Styling issues 6 4 8 192
Wrong order 7 3 8 168
Quality issues 9 2 7 126
Discontinuation of Style 3 3 6 54
Abrupt Price increase 6 2 4 48

Should it be considered as part of the strategic sourcing model?


 Based on the above table, RB should use FMEA tool for its supplier selection
 Suppliers providing highest value at price would increase our cost savings
 The timely delivery and better sourcing would lead higher efficiency and inventory costs would
be reduced.
 As collaborating with the suppliers who are aligned to our business practices would lead to
better business and long term and mutually beneficial relationship.
Suppliers to be retained:

• Suppliers to be retained on the basis of following criteria:


Criteria Requirements
Price (P) Low to Medium Other Factors influencing
Low to Medium
the relationship:
Minimum Order
Quantities (MOQ) • Brand Name
• Exclusive territorial rights
Service (SVC) Medium to High
• Partnership duration
Style (S) Medium to High

• Adrianna Papell and Ursula for large selection of dresses and fulfilling the criteria
for P, MOQ, SVC and S
• Maggie Sottero & Mon Cheri ( Brand Name and Exclusive territorial rights)
• Jim’s Forma and Nedrebos as Tuxedo suppliers (No inventory and satisfies P,
MOQ, SVC and S criteria )
Selecting New Suppliers:
• New Suppliers to be selected on the basis of following criteria:
Minimum Order Service Style (S)
Suppliers Price (P)
Quantities (MOQ) (SVC)
 Low to  Low -  High
Clarisse Medium
 Low to  Low -  High
DaVinci Medium
Milano  Low to  Low -  High
Formals Medium

• All three suppliers followed up with Anna four times indicating their interest
• Current Bridesmaid suppliers required MOQ of 18 dresses
• All three new suppliers offers high fashion and stylish dresses at
reasonable price
• Hence, these suppliers can be selected for Bridesmaid category (DaVinci
preferred due to relatively higher Number of Locations/Retailers)
Improving supply chain relationships:
• They should re-analyze their current supplier capabilities and should continue only who can service their
needs
• Anna and Jack should negotiate the terms in the agreement with suppliers to avoid repetition of ‘February
Incident’
• Try to negotiate Minimum Order Quantities(MOQ) for existing suppliers on the basis of their long term
relationships
• Upon disagreement from existing suppliers, they should partner with new suppliers like Clarisse, DaVinci
and Milano Formals
• They could also bring new value to their suppliers by entering new market or reducing its business risks
• Digitize the ordering and inventory tracking from manual system to avoid human errors

Recommendation:
 RB should have firm contracts and purchase orders rather than relying on verbal promises
 It should not only have those suppliers on board who are aligned with the business needs
and requirements in terms of quality, style and pricing but also those suppliers who are
focussed on building collaborative relationship than just transactional.
Thank you