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Building Tomorrows Enterprise

Abhishek Kumar Singh Mandar Darade

Dhawal Pratap Singh Siddharth Verma

Kantilal Rathore Sumit Kumar

CASE OVERVIEW
Procurement
Pushing for more bottled milk Forecasting issues Seasonal variations

Production
Resource Allocation problem in cases of excess supply Milk has a low shelf life and butter needs refrigeration

Milk transport
Brought over by individual farmers on a daily basis

Distribution
Increasing cost per delivery due to fall in demand No synergy with marketing department as forecast in not accurate

Demand side

Supply side

Milk Production
Variations in daily procurement as quantity is not fixed in the pre-decided contract

Retail
Inventory pile up due to excess production demand Changing customer purchasing trends

Production of feed for cows


Higher quality feed leading to increased milk production

Consumer
Inclination towards convenience stores for lower prices and on-demand consumption

CORE ISSUES
Lower efficiency of manufacturing lines Cheaper alternatives in the market Piling up of perishable inventory Decreasing number of milkmen and residential customers Declining revenues and profits Unlikely to meet profit guidance for the current year

High logistics costs esp. in delivery a cost which cant be passed on to the consumer
Generational shift in consumer buying behavior Unplanned allocation of excess milk supply Inefficient forecasting Inability to plan marketing activities Excess production without planning Lack of synergy between functions

100

1 9 5

3 8 3 86

4 6

6 4

Web Convenience store Local Mom and Pop Superstore

95
90 85 80 75

1
90

85

89

1995

2000

2005

2010

METRIC SELECTION AND ANALYTICS


Predictive Analytics Model

Outcome KPIs: lagging indicators measure the output of past activity. Eg revenues, margins, customer satisfaction Driver KPIs: leading indicators measure activitiy in its current state or a future state eg number of sales meetings today, tomorrow Strategic KPIs designed to enable senior executives execute strategy, manage performance Tactical KPIs designed to help mid-level managers optimize the performance of people & processes under supervision Operational KPIs enable front-line managers to monitor and control core processes on an intraday basis

KPI Benchmarking
Consistent achievement of targets by product groups, periods and territories Achievement of market shares Achievement of profitability Zero complaints from the customers No stock returns Ability to handle emergencies and sudden spurts in demand Balanced sales achievements rather than period/month-end sales skews

DELIVERY COST OPTIMIZATION


Milk Business Optimizing resources and maximizing revenues

Area - 1

Area - 2

Area 1 and Area 2 having more residential customers, unlike Area 3

Pulling out of Non-performing routes


Customer inclination towards convenience stores De-growth in market with lowering profitability

Categorize routes based on revenue and customer base

Area - 3 Divert milk production to Tetra packs

Bundling to reinforce habits


Offer home delivery of cheese and cheese spreads Sale of cheese to boost margins

Essential to not lose on existing loyal customer base

Dual synergy with both upstream & downstream functions

Capitalize on customers through convenience stores channel

GROWTH AVENUES
Bottled milk requirement & profits going down in residential areas Consumers - not a sustainable TG for business in long term

Need to shift Business Model


Industrial clients Expand industrial reach & client base Industrial Clients prefer bulk bottled milk supply (convenient) Diverting Excess Production Divert excess production to cheese Highest profitability Longer shelf life Avoid diversion of excess supply to milk powder division Increasing revenues and profits Manufacture other seasonal products Yoghurt, tea & coffee whitener, ice-cream, etc

Dairy product Milk Cheese Spreads


High Potential

Profit/Revenue 0.1969 2.57 2.53


Low logistics costs due to fixed transportation route High volume demand per client Approach new clients and leverage expertise in the industry Marketing dept can take charge and revive business

Strategy

IT IMPLEMENTATION
Cloud Based ERP

Field Management System


Integrates & streamlines transportation planning, execution, freight payment, and business process automation on a single application. Major services availed Inventory storage service , pick and pack service , product shipping , return processing, additional services. Benefits: 24/7 access , real time relay of information , inventory forecast, inventory alerts , order status update, shipment tracking.

Product Catalogue Management System RDBMS


Most prevalent database used for financial records, manufacturing & logistical information, business data It will be linked to inventory control to provide real time status to business and help in analytics Used for introducing new and seasonal products for offline & online stores.

Online store
Selling through web

Order Management System


Automates the capture, processing, and fulfilment of orders across different channels for consumer and business orders. Major functions - Receiving orders, billing, shipping, shipment pickup scheduling, accounting, inventory control

Enterprise Customers
Module dedicated to industrial customer managed by Customer management software. Keeps track of individual client demand and order patterns

NEW AVENUES & FORECASTING


Internet as a sales channel
Internet as a sales channel Efficiently handle B2B sales Convenient Information to consumers about new products Sales of seasonal products Presence necessary to align business as per shift in consumer buying pattern Web Users %

1995

2000

2005

2010

Forecasting
Efficient forecasting XYZ corporation to provide training to our personnel to properly use the forecasting tools Providing PDAs to farmer interface employees to ensure input of exact supplies and help analyse demand trends Helps increase efficiency thereby enabling marketing department to Adapt to supply and plan promotions Collaborate with XYZ corporation to develop the forecasting tool to take seasonal demand and smoothening into consideration

Milk procured (Mn litres)


165 160 155

150
145 140 135

THANK YOU!