Supply Chain Innovation at Geddy’s

Asia - Pacific Consulting Group1st Round Room 4009

Momo (Chenyang) LiuLuis Carnero

Randall (Jie) MiaoJun Karamon

GSCMI 2013 Case Competition 2

Meeting at glance 1. Case approach2. Supply Chain at Geddy’s3. Recommendation4. Look into the Future5. Conclusions

GSCMI 2013 Case Competition 3

We based our approach on the upfront diagnostic / “as is” assessment which include:

Case Approach

Short-term:

1. Forecasting to:

Meet demand.Conduct strategic Sourcing.Optimize utilization.

2. Inventory management:

Product mixIncrease sales and profitability.Reduce costs

Long-range plan:

3. Manufacturing process: Level production vs. seasonal Capacity utilization.

4. Distribution Network5. Vertical integration

“As Is” Findings “Transitioning to Success”

Market trends

+Supply Chain

Innovation

Positive• Market Value of ~ $900 M.• Growth rate ~ 25% ( 250M).• Growth of personal income.• Growth of ice cream consumption

(~100%).

Challenges• Unbranded players ~ $300 M• Developing infrastructure• Fragmented supplier base• Substitutes (variety of desserts)• Quality• Seasonality

Luis Carnero

GSCMI 2013 Case Competition 4

Supply Chain at Geddy’s

Suppliers Geddy’s Manufacturing

Warehouse & Distribution

Sales & Outlets

Price and volume fluctuations due to seasonality.

Quality issues on critical ingredients such as a milk

Quality issues in packages

Too many product ingredients (200 -300)

Idle capacity and different utilization sue to seasonal production plan

Accurate location and distribution lead time

“Treat people with the authentic ice-cream made with the right ingredients in the artisan way”

Demand constrained by seasonality

Sales capacity constrained by stores’ capacity (350)Competitive Strategy: High

QualityCompetitive drivers: cost & salesSCM strategy: Cost Efficiency

Luis Carnero

GSCMI 2013 Case Competition 5

Current Situation:

Proposed Solution:

New efficiencies: Increase plant utilization by ~7.72% Increase profit by ~8%

Recommendation

SuppliersGeddy’s

Manufacturing

Warehouse &

Distribution

Sales & Outlets

Inventory

Policy

Total Invento

ry

Total Sales

Stock Over

Profit(100Rupee

)

Mix as per case 17,870 15,108 3,762 48,457

Inventory

Policy

Total Invento

ry

Total Sales

Stock Over

Profit(100Rupee

)

Common Service Level

19,250 16,491 2,759 52,010

Efficient zone

Assumptions:Model: Periodic inv.P = 1 weekL = 0 (same day)Holding cost = 0

Jun Karaman

GSCMI 2013 Case Competition 6

Look into the Future

SuppliersGeddy’s

Manufacturing

Warehouse &

Distribution

Sales & Outlets

Supplier Manufacturing Distribution

1. Strategic Souring to secure:

Avoid raw material fluctuations.

Stabilize prices Ensure proper

quality For example:

long term contract /partnership with Farmers.

2. Vertical Integration

1. Change to level production.

2. Reduce product mix (lower than 60 flavors).

3. Product innovation

1. Own truck fleet.

2. Plan new distribution centers for future expansion.

3. Consolidate in Bangalore

Randall Miao

GSCMI 2013 Case Competition 7

Conclusions 1. Selling price is the same. But the cost for each

flavor is different; therefore, Geddy’s should focus on cost efficiency.

2. Short-term plan:1. Increase the demand during summer is the key to gain more profit2. Keep all types of flavor in-stock is important on the retailer side3. Shift the inventory policy to common service level policy with 350 units per

week4. Potential risks: what if we cannot ignore the holding cost? Change the

inventory policy to the target service level(S.L 90%)

3. Long-term plan:1. Focus on cost efficiency in its current operations model with current retailers2. Later, expand its business to some states adjacent to Bangalore and establish

their distribution center3. Set up new contracts, or develop the new relations with suppliers as they are

expanding the market to other states.4. Expand our business by producing private label products to deal with the

excessive capacity

Luis Carnero

GSCMI 2013 Case Competition 8

Q&A

GSCMI 2013 Case Competition 9

Appendix

TV BBS LL BT TV BBS LL BT TV BBS LL BTJuly 29 127 138 69 16 119 133 52 127 91 77 44 16

30 129 140 70 11 107 109 71 111 93 77 47 11

August 31 127 138 69 16 125 126 64 104 96 64 38 16

32 127 138 69 16 110 124 57 105 81 65 38 16

33 126 137 69 18 110 102 55 114 84 71 56 18

34 125 136 68 21 95 116 55 128 92 69 42 21

35 123 134 67 26 121 139 67 113 103 70 44 26

TL for Top Margin Average Demand Estimated Sales

Microsoft Office Excel Worksheet