Supply Chain Innovation at Geddy’s
Deccan Consulting (R 3098A)
Tarun SharmaMonica RaviVinod Varma PenmetsaDeepika Mokkarala
Problem Recommendation Analysis Implementation Risks Q&A
Agenda(Tarun)
Problem at Hand
Recommendation
Analysis
Implementation
Risks
Q & A
Problem Recommendation Analysis Implementation Risks Q&A
Why We Are Here (Tarun)
To manage the seasonality of the market demand in order to increase profitability and reduce stock outs
Problem Statement
• Capacity utilization • Service level policy • Seasonality of the demand
Key Issues
Problem Recommendation Analysis Implementation Risks Q&A
Our Recommendations (Tarun)
Eliminate target level for top margin policy
Replenishment of flavor based on demand
Market expansion through In-store freezer
Use target service level policy for higher profits
Current system based on margins on decreases profits
Helps to utilize excess capacity and increase brand equity
Problem Recommendation Analysis Implementation Risks Q&A
Supply chain challenges (Tarun)
Market
Product
• Seasonality of demand • Underdeveloped cold chain• Introduction of FD into
retail • Lack of distribution through
retail• Growing market
• Too many flavors • Storage • Requires fresh supplies • Special refrigeration
required • Longer Lead times because
of longer production
Problem Recommendation Analysis Implementation Risks Q&A
Where to focus? (Monica)
Cost-Efficiency
Improved Profit margin
Optimization of supply chain
Quality deterioration
Continued under utilization of excess capacity
Improved utilization Penetrate new
markets Enhances brand
equity Ability to mitigate
risk Ability to reach
untapped customers
Additional capital expenditure
Additional Infrastructure
Market Expansion
Problem Recommendation Analysis Implementation Risks Q&A
How to expand? (Monica)
Investment ReturnNeed
External Support
Long Term
ViabilityEase of
Implementation Total
Vending Cart - + + - + +1Instore Freezer/
kisosk - ++ - ++ +/- +2
Standalone Parlor -- + +/- + - -1
Number Monthly Yearly Margins Profit Margins 0
200000
400000
600000
800000
1000000
1200000
1400000
Standalone ParlourIn Store FreezerVending Cart
Problem Recommendation Analysis Implementation Risks Q&A
Capacity Planning-Peak Season (Vinod)
Replenishment of high demand products against high margins
Improve Shelf Utilization by eliminating low demand/ no demand flavors
Leverage excess production capacity to address peak demand through retail
Problem Recommendation Analysis Implementation Risks Q&A
Capacity Planning-off-peak Season (Vinod)
• Test and gather consumer feedback on newer
flavor to be implemented during peak season
• Develop new ice cream based products to
stimulate demand
• Leverage on impulse buy’s by market
expansion into retail
Problem Recommendation Analysis Implementation Risks Q&A
Seasonality vs. Profits (Vinod)
Assumption that high margin products high profits is proven false
Problem Recommendation Analysis Implementation Risks Q&A
Average Weekly Profit/Policy (Deepika)
Policy Week Average Profit /Policy
Average De-sesonalized Profit/ Policy
Target Service Level Policy
Week 1-13 790.6 971.68
Scaled Stock Keeping Level Policy
Week 14- 20 1020.9 952.43
Common Service Level Week 21-28 1020.9 892.28
Target Level for Top 3 Margin
Week 29- 35 1087.6 634.70
Target Level for Top 2 Margin
Week 36-43 807.7 831.90
Target Service Level Policy
Week 44-55 919.2 993.80
Problem Recommendation Analysis Implementation Risks Q&A
Implementation (Deepika)
2013 2014 2015 2016 2017 2017 onwardsService Level PolicyReplinishment policy Retail
Reach retail stores Establish Contract
Kiosk establishment and Selling
Problem Recommendation Analysis Implementation Risks Q&A
Analyzing Risks (Deepika)
Threat to quality in retail stores
Customer reaction to new product category might affect current sales
Changing customer behavior Im
pact
of R
iskLikelihood of Risk
1
2
3
1
2
3
0% 50% 100%
$
Problem Recommendation Analysis Implementation Risks Q&A
Overcoming the Challenges (Deepika)
Now is the time to:• Expand locally• Adopt demand based replenishment policy • Eliminate target service level policy based on margins
Problem Recommendation Analysis Implementation Risks Q&A
Questions?
Problem Recommendation Analysis Implementation Risks Q&A
APPENDIX
Problem Recommendation Analysis Implementation Risks Q&A
SWOT
Stre
ngth
s
OpportunitiesTh
reat
s
Weaknesses
• Quality • Strong supplier base • Economies of scale through alliances
• Less awareness compared to market players • Adulterated market • Seasonality of the demand • Target customers are traditionally non –ice cream eating
• Expand locations • Expand into retail market • Increase the product range
• Established competitors • Increase in raw material cost
owing to macro economic factors
Problem Recommendation Analysis Implementation Risks Q&A
Profit calculations for Expansion
Format Number Monthly Yearly Margins Profit
Margins
off-peak(8 months)
Peak (4 months )
Standalone parlour 1 80000 150000 1240000 0.45 558000
In store freezer 14 25000 60000 6160000 0.225 1386000
Vending cart 10 10000 30000 2000000 0.3 600000