Supply chain Management and Distribution network Strategy Case Study Solution
The case illustrates the supply chain management issue, at W’up bottlery a total wholly owned subsidiary of Hindustan Coca-ColaCompany, in Uttar Pradesh.W’up is the 4thlargest plant that distributes the Coca-Cola, Maaza, Thumps up and other SBUs to the UttarPradesh market.At different locations, with different sizes and designs of the bottles. The company recently experienced good sales margin, which made Rajat Mehra the director of supply chain management, to integrate and streamline the process of the supply chain.By introducing Vendor managed Inventory, through which the demand can be synchronized with the supply, with low working capital and operating cost. Since, the new software required distributors to disclose the client information, it hindered the process of adaptation of the software, as they assumed the new innovation as the zero sum game. Also, along with the key issue other issues like the literacy rate, limited working capital and the frequency of glass trip page, hindered and resisted the supply chain management of W’up Bottlery.
Keywords: Supply chain management, Glass trip page, VMI, zero sum game.
Supply chain Management and Distribution network Strategy Harvard Case Solution & Analysis
Supply chain Management and Distribution network Strategy
Managing the supply chain activities and channeling it towards the effective integration of business strategy and supply chain activities, is the main function of the business.Together, to gain competitive advantage in the market, by reducing the cost of operations and enhancing the sales forecast, through proper use of customer data. In doing so, W’up bottlery came up with the new system of vender managed inventory, which would help the company to forecast the uniform sales level in each season.Without creating backlogs at distributors ends and reduce the cost of production, by optimizing the production with demand in market. Since, it requires to align the interests of different players in supply chain with the company, it is crucial for W’up bottlery, to offer the advantage and benefit sets to the players supply chain.To create benefit-fit among the two parties that will ensure, the effectiveness and efficiency of the supply chain of W’up bottlery in Uttar Pradesh.
In the particular analysis, section: 1illustrates the problems, Rajat faces to implement theVMI model.Section:2 describes the in-depth analysis of the different obstacles the supply chain face,along with its effect on the business performance and cost allocation. Lastly, Section: 3 offers the recommendation to the problems, which will help the company to overcome the issues and maintain a smooth supply chain.
Analysis of Problem and Issues
W’up bottlery faced certain problems and issues internally and externally in Implementing the VMI model, along with reducing the operating cost and improving the demand forecast strategies.
- The distributors of W’up bottlery seek VMI model, as the zero sum game and took it as a threat to their business. Since, the VMI model requires to disclose the clients and customer information, it posited the risk to the distributors about the company’s strategy to directly reach the retailers.Eliminating the additional operating cost and damaging the distributor’s business profitability, by reaching the retailers directly.
- The sales team of the company offered in bulk to the distributors and retailers, without analyzing the right demand.The practiced remain followed by the salesperson, due to sales quota commission offered by company.To each representative on the completion of the sales target.
- W’up faced the demand and supply mismatch at distribution level, since the company operated the sales from three channels(primary, secondary and tertiary) see Appendix: 1.the channel en graved distributors sales offered mismatched sales, leading to stocking of crates at distribution centers, hence creating an imbalanced and un-uniform demand for a particular period.
- Since, sales person acts as an intermediary between the company and the distributors, the proposal of streamlining the process of supply chain by developing direct relationship with the end distributors, seem to be a threat to the sales person.As it would drive their jobs away. This also lead to unacceptability of the new program and accumulated in the issues, hindering the implementation of the new model.
- The literacy rate of the local retailers and distributors also posited a problem for the company, since in order to develop an integrated supply chain plan, the proper data entry along with buying behavior of the customer has to be analyzed.Which requires the basic computer operating skill however, the partners of W’up lacked these skills.
- Glass trip page also posed a problem to the company, since each glass bottle has been procured from bottle making factory.The trip page frequency matter, as it incurred additional cost to the company acquiring the new bottles. Usually each bottle complete 4-5 trips. Doing so, the company faced the issue in Reverse logistic.Since,W’up required the bottles at the same effect rate, as it is dispatched to continue the batch production, the reverse logistic has to be improved..................
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