Post on 22-Feb-2016
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Efficient Supply Chain & Sustainable Growth
Strategy
Krannert Consulting (GR1, Room # 3097)
Raghu KokaKalyani PatriKuldeep YadavBharat Varshney
GSCMI 2013 Case Competition 2
Agenda for today (Raghuram Koka)
Problem
Recommendation
Analysis
Implementation
Risk Mitigation
Q & A
Our Company
GSCMI 2013 Case Competition 3
Opportunity to improve (Raghuram Koka)
• Urgency: • Loosing market share (Revenue)• Declining customer satisfaction
• Objectives:• Identify the key challenges in supply chain• Develop capacity utilization enhancement plan• Find the optimal restocking policy • Build a sustainable growth strategy
Demand seasonality and space constraint are limiting
the growth
The Challenge
GSCMI 2013 Case Competition 4
What are we proposing? (Raghuram Koka)
Optimize Production Processes and Resources Capabilities
Implement Scaled Stock Level Policy (W21 to W43)
Organic Growth via E-commerce, Mobile Parlor & Strategic Alliances
Recommendation Overview
GSCMI 2013 Case Competition 5
Understanding the root cause (Kalyani Patri)
Production
PlanningManufacturin
gDistributio
n Retails Customer
Raw material price fluctuationDemand
seasonality
Early stage product differentiation
Idle production capacity
Lack of infrastructure
Display space constraint
Inventory constraint (max 350/store)
Incapable cold storage
Changing preference
Substitutes
Challenges in Supply Chain
GSCMI 2013 Case Competition 6
Lets Restructure (Kalyani Patri)
• Reliance Fresh, Big Bazar etc.
• Increase market presence
• More bargaining power
• Negate the effect of macro-economic factor
• Produce in off-season
• FIFO inventory policy
• Hourly wage rate• More utilization
Flexible Labor
Just in Time
Production
Partnership with
Retailers
Contract with
Suppliers
Capacity Planning & Demand Shaping
GSCMI 2013 Case Competition 7
Understanding the root cause (Kalyani Patri)
Low cross selling of flavors
Stock-out of low margin products
Mismatch in demand & supply for high margin products
Sub-optimal restocking policy
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Aggregate Seasonal DemandTotal Sales
Planning period - Weeks
Qua
ntity
Discrepancy in Demand & Sales
GSCMI 2013 Case Competition 8
0 10 20 30 40 50 60300
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Week
Wee
kly
Profi
t (1
00
Rup
ee)
Tota
l Wee
kly
Sale
s
Weekly Profit (100 Rupee)
Total Weekly Sales
Target service level policy
ScaledStockingLevel policy
CommonServiceLevel
Top 3 MarginPolicy
Top 2MarginPolicy
Target service level policy
Current Scenario
Different restocking policies owing to space constraint Discrepancy between market demand & sales in peak
period
Understanding the root cause (Kuldeep Yadav)
GSCMI 2013 Case Competition 9
Common
Service Level
Scaled Stock Level
Top 2 Margin-90% SL
Top 3 Margin-90% SL
% of Expected P & L 3.5% 4% 8% 36%
Profit:48,45,700 INR
0 10 20 30 40 50 60300
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Week
Wee
kly
Profi
t (1
00 R
upee
)
Tota
l Wee
kly
Sale
s
Weekly Profit (100 Ru-pee)
Total Weekly Sales
Profit:50,31,460 INRProfit:52,85,240 INR
0 10 20 30 40 50 60300
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Week
Wee
kly
Profi
t (1
00 R
upee
)
Tota
l Wee
kly
Sale
s
Weekly Profit (100 Ru-pee)
Total Weekly Sales
0 10 20 30 40 50 60300
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1100
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500Scaled Stocking Level Policy
Week
Wee
kly
Profi
t (1
00 R
upee
)
Tota
l Wee
kly
Sale
s
Weekly Profit (100 Ru-pee)
Total Weekly Sales
What can we do? (Kuldeep Yadav)Restocking Policy
~ 10 % increase in expected profit
GSCMI 2013 Case Competition 10
High Revenue
Low Operation
al Cost
Larger Customer
BaseCorporate
Orders
Competitive
Advantage
What can we do? (Bharat Varshney)Go Online: E-commerce
GSCMI 2013 Case Competition 11
What can we do? (Bharat Varshney)
Cart Parlor# of Units 10 1Capital Cost (Rs)
350,000 350,000
Revenue (Rs)
400,000 230,000
Profit Margin
30% 45%
Profit (Rs) 120,000 103,500
• Higher Profit Margins
• Brand Recognition
• Continuous Inventory Flow
• More Maintenance
• Coordination Problem
Mobile Parlor - Cart
~ 16 % increase in profit
GSCMI 2013 Case Competition 12
Short Term Long Term
Available Capacity Resource
Increasing Consumer
Base
Low Competitio
n
Structured Branded Market
What can we do? (Bharat Varshney)Make it National
GSCMI 2013 Case Competition 13
Roadmap to success (Bharat Varshney)Implementation Timeline
GSCMI 2013 Case Competition 14
The potential challenge (Bharat Varshney)Risks & Mitigation Plan
Brand Dilution
Demand Forecasting
Competitor Backlash
Quality Issues
Macro Economic FactorsLikelihood of Risk
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0% 50%
Impa
ct o
f Ri
sk
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GSCMI 2013 Case Competition 15
We can say that again (Bharat Varshney)Conclusion
Now is the time to:• Optimize resource capabilities• Implement scaled stock policy• Follow organic growth
Because this will:• Optimize supply
chain • Reduce stock-out • Assure sustainable
growth
GSCMI 2013 Case Competition 16
?
GSCMI 2013 Case Competition 17
Appendix
GSCMI 2013 Case Competition 18
Where is the problem? (Name of Presenter)
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TV
BBS
LS
BT
SalesRestocking
Space Constraint