7. (Ex 10) WWL: Manufacture and Supply Flashcards
How many tufting machines does WWL have?
8 tufting machines, of varying ages
What is the spec of WWL’s tufting machines?
Range of ages
Ranges from recently acquired high volume modern machine that can create complex patterns with multi-coloured yarn
to 30 year old relatively simple but still functional machine, used for single-colour carpets and rugs
Are there many manufacturers of carpet tufting and weaving machines?
No, there are only a small number of large international manufacturers that supply carpet tufting and weaving machines
But they are supported by range of smaller businesses the supply ancillary carpet making equipment & offer specialist maintenance and repair services to carpet manufacturers
What are tufting machine manufacturers supported by?
But they are supported by range of smaller businesses the supply ancillary carpet making equipment & offer specialist maintenance and repair services to carpet manufacturers
How does WWL produce a range of carpets in different colours, weights and styles?
Varies the ‘pile’ or soft surface of the carpet, created by punching the yarn through the backing material into a series of loops
Yarn can be left as loops, which is more suitable for durable hard wear carpet
or the tips of the loops can be sheared off - a cut pile style, which produces softer carpets
These are easier to clean, but are more prone to flattening and fibre loss through wear
Describe the 2 ways carpets can be made
Yarn can be left as loops, which is more suitable for durable hard wear carpet
or the tips of the loops can be sheared off - a cut pile style, which produces softer carpets
These are easier to clean, but are more prone to flattening and fibre loss through wear
Which carpets are more durable - looped yarn or cut yarn?
Looped is more durable
What are the characteristics of a cut yarn carpet?
Easier to clean
More prone to flattening and fibre loss through wear
So cut pile carpets tend to need replacing more often
So producing them can be seen as being less sustainable
Which kind of carpet is seen as less sustainable?
Cut yarn carpets
As they need replacing more often as they aren’t as durable as looped yarn carpets
How does WWL construct its backing material?
Using synthetic materials and adhesives
What is WWL’s yarn treated with?
Treated with insecticide to reduce moth infestation and limit warranty claims
How seasonal is carpet demand?
Type of carpet sold by WWL is highly seasonal - especially from retailers who make up 60% of WWL business
Why do carpet buyers often want their carpet ASAP?
As a new carpet is an expensive and significant purchase, so have committed themselves and placed an order and then want the carpet ASAP
When is the peak season for carpets and why?
Those who place their order in the second half of the calendar year invariably want the new carpet fitted before Xmas
Creates additional pressure on carpet retailers manufacturers, as have busy peak in Q4 of calendar year followed by much lower level in Q1
What impact does the peak season for carpets have on manufacturers and retailers?
Added pressure in Q4 of calendar year
Then followed by much lower levels in Q1
Why do carpet manufacturers need to anticipate demand?
Because of the long lead time associated with manufacturing carpets
So need to anticipate seasonal demand, often well in advance of actually receiving any orders
How does WWL overcome the issue of long lead times for manufacturing carpet?
Builds up inventory by manufacturing ahead of peaks in demand
How are the seasonal peaks in retail revenue mitigated?
By having revenue streams from commercial and bespoke design clients, which don’t follow such a marked seasonal pattern
How much inventory does WWL typically hold?
Needs to carry sufficiently high level of each product to cater for demand
Typically holds what appears to be in excess of 100 days of sales
(Inventory days = closing inventory/CoS * 365 days)
But this masks the fact that WWL has over 20 different carpet products and a high average order value
How many carpet products does WWL have?
Over 20
How many days worth of inventory does WWL typically hold?
Over 100 days worth
How do you calculate number of inventory days?
closing inventory / CoS * 365
Why does the production scheduling team calculate days sales of inventory per product on an ongoing basis?
To avoid stock outs of WWL’s key ranges
Describe the issues of purchasing raw wool?
Raw wool required for carpet yarn is a globally traded commodity, and demand for it can be erratic
Creates unpredictable risks over a key input cost
E.g. cost of yarn doubled from 2010 - 2018, rising to all time high, before a global oversupply in 2020 resulted in dramatic fall in price.
Price fell back to 2011 levels
Since 2020 wool prices have began to rise again as demand increases
What must be done to yarn before it becomes carpet yarn?
Raw wool passes through a variety of treatments before it becomes carpet yarn
Does WWL produce its own yarn?
No, they don’t have the scale to manufacture its own yarn
So procures its wool-based yarn from a specialist UK yarn manufacturer (Eaton Yarns Ltd)
Who does WWL source their yarn from?
Eaton Yarns Ltd (Eaton) - based just outside Kidderminster
Where is Eaton Yarns Ltd based?
Just outside Kidderminster
How have yarn prices fluctuated over the years?
From 2011 - 2018 the price of wool doubled
rose to an all-time high until global oversupply in 2020 resulted in dramatic price fall back to 2011 levels
Since 2020, wool prices have began to rise again as global demand increases
Why does WWL use Eaton Yarns Ltd in particular?
As despite there being lower-cost, larger-scale yarn manufacturers located in Europe, Kas Mukesh feels that being physically closer to a key supplier provides WWL with more protection against interruptions in supply
What are the benefits of using a local yarn supplier?
Having a physically close supplier creates more protection against interruptions in supply
Mitigates other risks associates with using OS suppliers
- Currency variations
- Transport costs
- Ability to control quality
- Clearer visibility over ethical aspects of supply (e.g. env sustainability & appropriate treatment of workers)
What are the current issues with WWL distribution/
As WWl’s business has expanded across the UK, it is becoming increasingly difficult for WWL to manage delivery efficiently
Fay Drost used the services of various smaller regional distributors but found their reliability variable
In addition trying to manage numerous deliveries using a large number of providers was administratively onerous
How high is the supplier power among distribution companies and why?
Only a small number of national transport organisations in UK can offer reliable services
So this creates supplier power, since these companies can potentially dictate transport costs that could force companies like WWL to raise prices, and thus become uncompetitive
Who is Mistral Logistics plc?
Mistral
= National transport company that WWL switched to on 1 April 2021
One of the largest distribution companies in the UK
Has good reputation for reliability
Contract with WWL provides degree of assurance for WWL in ensuring carpets are delivered on time
Describe WWL’s contract with Mistral
Switched 1 April 2021
Mistral charges fee for haulage based on distance and weight transported, adj for fuel price surcharges and annual inflationary increase
Contract is renewable every 2 years
One of the largest distribution companies in the UK w reputation for reliability, so provides WWL with degree of assurance for ensuring carpets are delivered on time
How often is the contract with minstrel renewable?
Every 2 years
How does Mistral charge?
Based on distance and weight transported, adjusted for fuel price surcharges and an annual inflationary increase
What is WWL’s policy on warranty?
Clients have come to expect carpet manufacturers such as WWL to offer warranties over longevity and damage on their wool based carpets
What are WWL’s credit terms like?
WWL takes extended credit from suppliers when required, but balances the need for liquidity with ensuring that the trading relationship isn’t jeopardised
