Project #94866 - supply chain managment

 

CASE: WE ARE THE BEST & CO.

 

 

We are the Best & Co. is a Company located close to Barcelona.

They manufacture and distribute computer screens.

The are producing 5 different models (screen sizes).

Sales volume of the different sizes during the last 3 years was as follows:

 

SIZE

PERCENTAGE OF

ANNUAL SALES

10

5%

12

7%

15

45%

18

33%

24

10%

 

In order to assembly a model,  10 different components are required.

Six of these components are common two all models whereas the other four are specific for each size.

 

Profit and loss results of the last thre years as well the forecasted one for 2009 are as follows:

 

MILLION EUROS

2012

2013

2014

2015 (forec.)

SALES

10

12

13,5

15

PURCHASING COMPONENTS

5

6,6

7,7

9

TRANSPORTATION COSTS

0,5

0,6

0,9

1,2

SALARIES

2

2,1

2,1

2,2

OTHER COSTS

0,4

0,4

0,5

0,6

GROSS PROFIT

2,1

2,3

2,3

2,0

 

The evolution of the available cash has been the following:

MIO. EUROS

2011

2012

2013

2014

CASH

1

0,8

0,7

0,5

 

“We are the Best” is selling the screens in Spain , France and Portugal .

Customers are big distribution Companies as well wholesalers.

 

30% of the total sales are concentrated during the Christmas period.




 

Main customers in 2014 were (under brackets central warehouse)

 

  • El Corte Inglés (Madrid):  5 Mio €
  • Carrefour (Paris): 3,5 Mio €
  • FNAC (Bacelona) : 3 Mio €
  • Te rest are 9 wholesalers/distributors located in Bilbao (2), Valencia (2), Zaragoza, Sevilla, Oporto (Portugal), Vigo and Bordeaux (France).
    All these customers bought less than 0,5 Mio € each.

 

There is also a hudge potential customer (between 3 and 4 Mio € sales) located in Lisbon (Portugal). Big marketing and sales efforts have been made trying to catch this customer.

 

“We are the best” has 4 warehouses : Barcelona (located in the factory), Madrid, Sevilla and Zaragoza.

Inventory of all manufactured products (sizes) is available in all warehouuses.

Additionally they always have  safety stock of at least 20 days average sales o all products in the central warehouse.

 

The delivery time agreed with customers are 4 labour days.

Total time for assembly are 2 days.

Factory works from Monday to Friday.

 

Organization is as follows.

Owner/Managing Director: Joan Soler 

Sales and Marketing Manager: Sonia González

Manufacturing  and Purchasing : Raúl López

Logistics manager (Transportation and Warehousing): Rafael González

Finantial Manager: Pilar Gómez

 

They have a Board of Directors meeting  once a month. Everyone explains improvement and results in their area. Raul and Rafael are very good friends. They work very closely. They think they shouldn´t  need any sales department because “with only 3 main customers, Mr. Soler could take care of them”. “Why do we need marketing if there are no new customers to discover.?”

“We give a good service. There are no stockouts and customers are satisfied with our quality.”

 

Although “We are the best” is the only  computer screens manufacturer located in Spain, their market share in the spanish market is 18%. Their competitors are foreign Companies .
During last Board of Directors Sonia proposed she would like to work closely with Raúl and Rafael. She thouhg it would be a good idea to show to customers the assembly process as well the warehousing facilites.

Rafael and Raúl considered customers didn´t  need to visit them. “You are responsible for customers. You take care of them and you deal prices with them. But this is not our business”.

 

By the other side, Pilar is really concerned because their cash needs are increasing and, as the working capital has been growing the last 3 years (mainly final products inventories), she has problems to fulfill the finantial and cash requierements for running the daily activity.

 

Mr. Soler decided he should need a Managing Director with new ideas.

Pedro López joined the Company 2 weeks ago and during his first Board of Directors, he said: “We must create a real logistics department, to build a supply chain organization, to improve our customer service and to increase profits”.

 

Sonia is really excited about this proposal but Raúl and Rafael consider things are running good enough. “Tne only thing we need to increase profits is to increase sales prices!!!! said Rafael”.    

 

What would you do if you were Pedro López?                         

Subject Business
Due By (Pacific Time) 11/24/2015 12:00 am
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