A Pain in the supply chain – Case Study

A Pain in the supply chain – Case Study. Group 6 Amit Ranjan (EDPDGCXO-3101) Jitendra Tanwar (EDPDGCXO-3090) Niraj Sharan (EDPDGCXO-3094) Rama Krishna Vuppala (EDPDGCXO-3013) Subramania Rajendran (EDPDGCXO-3054).

[Audio] Speaker Notes In this presentation, we will explore the case of Exceso Corporation, a company facing significant challenges in its supply chain. We will analyze the root causes of their problems, and discuss potential solutions to achieve a more efficient and customer-centric operation..

[Audio] Speaker Notes Exceso appears to be stuck in a vicious cycle. Aggressive sales targets lead to increased production, but a lack of visibility into actual customer demand creates a mismatch. This mismatch results in empty shelves at retailers and excess inventory in warehouses..

Current Challenges. Demand Forecasting Inaccuracy : Limited visibility and communication along the supply chain hindered Exceso's ability to share real-time demand information with suppliers. Without accurate and timely data exchange, suppliers relied on outdated or incomplete information, exacerbating the bullwhip effect. Focusing on Wall Street, Not Customers: Exceso seems more focused on managing short-term financial results to impress Wall Street. Aggressive sales targets and discounts prioritize meeting financial goals over understanding actual customer needs. Increased Costs: Fluctuating demand and inventory imbalances led to higher inventory holding costs, as Exceso had to carry excess stock to buffer against variability in supply and demand. Lost Sales Opportunities: Poorly stocked shelves at retail outlets resulted in lost sales opportunities for ClickZip Plus. When customers encountered insufficient product availability, they may have opted for alternative products or brands, causing demand volatility and distorting demand signals further up the supply chain. Critical Component Shortages: The production of flagship product ClickZip Plus is affected by shortages of key piece due to malfunction of injection molder.

Mitigation Strategies. Demand Chain Management: A shift from "supply chain management" to "demand chain management" is crucial. Exceso needs to gather real-time data on actual customer demand through point-of-sale systems and collaborate with retailers. Improved Forecasting: Investing in advanced demand forecasting techniques and data analytics and AI to enhance the accuracy of demand forecasts, predict shifts in consumer behavior and reduce uncertainty in supply chain planning. Agile Inventory Management: Implement agile inventory management practices to quickly adjust production and distribution plans in response to changes in demand signals. Leverage real-time sales data and point-of-sale analytics to fine-tune inventory levels and prevent stockouts or excess inventory buildup. Demand Smoothing: Implementing strategies such as pricing incentives, promotions, and flexible order policies to encourage more consistent purchasing patterns among customers, thereby reducing demand variability. Enhanced Collaboration with Retailers: Foster closer partnerships with retailers through joint business planning and category management initiatives. Collaborate on demand forecasting, inventory replenishment, and promotional planning to synchronize supply chain activities and minimize the bullwhip effect. Dynamic Pricing Strategies: Augment the EDLP strategy with dynamic pricing mechanisms to introduce flexibility into pricing decisions and stimulate demand during promotional periods. Utilize data-driven pricing algorithms to adjust prices dynamically based on market conditions, competitor pricing, and demand fluctuations. Diversification of Supply Sources: Exceso need to began sourcing critical components from a broader range of suppliers across different regions to reduce dependency..

Detailed Restructuring Plan. Top management responsibility Setting up overall direction and strategy Approving Annual Operation Plan(AOP) Overseeing Trade & Business discount approvals Monitoring warehousing and supply chain operations Departmental restructuring Finalization of hierarchy in Sales, Marketing, Finance, Operation and HR Clear discretion of roles and responsibilities Alignment of different departments with Organization Goals & Objectives AOP Preparation Process Initiation of collection of market analysis and sales forecasts Meeting with sales head for setting Sales targets and Budgets Review Fund availability with Finance on regular basis Presentation of AOP with leadership team CEO approval of AOP.

Detailed Restructuring Plan – Cont... Trade and Business discount approval structure Proposal of discount by sales executive Review of discount structure and promotion schemes by Managers Approval by CEO Supply chain procedure Demand forecasting based on Sales update Sourcing Procedure Vendor management Warehousing availability.

Conclusion. These strategic initiatives would help Exceso to significantly reduce its supply chain vulnerabilities. The company will see improvements in its ability to meet customer demand, a reduction in costs associated with disruptions, and an overall enhancement in supply chain resilience. By addressing the challenges posed by a poor marketing plan, poorly stocked shelves, limited retailer visibility, and an EDLP strategy, Exceso can mitigate the bullwhip effect and improve the efficiency and responsiveness of its supply chain. Through enhanced communication, agile inventory management, dynamic pricing strategies, and collaborative partnerships with retailers, Exceso can better align its production and distribution activities with actual demand, reducing inventory variability and enhancing customer satisfaction..