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