Inventory Control Case Study SCM Material Management
Materials Management, Supply Chain Management
Brick and Wood Ltd is in business of making beverages of all kinds. The company has various brands catering to different market segments. it has both premium and Mass Brands. Recently the company has hired you as their inventory control consultant as they feel that there is duplication of work across brands and the production can work on a plan for reduced wastage.
The premium Fruit drink - Firsto, which is pure - without added sugar and target the health conscious market is discarding 90% of inputs due to high level of quality check. You indicate that if the company uses Value Engineering, it can achieve zero % wastage. The Sub brand "Refresh" which adds sugar and permitted food additives to taste can take 50% of the this discarded as main raw material . the balance of 50% can be utilisted towards third brand "Moo" which is Cattle food variety. one of the main ingredient - Plums" for "Firsto" is imported and is 20 times expensive than the added plums which are sourced locally. However the percentage of imported plums in the Firsto is only 15% rest of the mixture is taken from local/domestic produce.
The "orangy" drink factory is based out of Nagpur, hence there is no shortage of raw material. The oranges are literally free since the orchards belong to the factory, and only the best are exported. The balance oranges come in for fruit drink. Ooty Plums are readily available but are Rs 500 per crate. The cost of transport is Rs 5000 for 20 crates and lead time is 20 days. Pineapple Pulp is taken seasonal and when the production is at peak.
The Cattle Feed "Moo" is sold on 20Kgs Bags for Rs 50 Each and everyday the balance residue of the production goes in to "Moo", Since there is scarcity of the space in warehouse sometimes given free to local farmers who provide fruits to the company. "Moo" is popular with cattle owners in the district and small farmers/cattle owners come in the evening to purchase "Moo" at concessional rates also. fruits which are Purchased in return of "Moo" are mixed as "Mixy" brand which is mixed fruit drink and the market is below average/ not the best selling product. The company incurs loss due to "Mixy". You have found the demand is not going to change and suggest to drop the brand and distribute the fruits to local school or include in Moo itself.
The company has its own Guava orchard and directly taken for fruit juice based on demand. The quality of Guava is premium. The Mango Drink "Alpy" is the flagship brand and has demand for the full year. The company ensures it gets the premium Alphonso mangoes from the direct source and there is no compromise on the taste, texture and quality of "Alpy" as its the main Brand for the company.
Questions for MBA Students.
1. Discuss which Inventory Control technique you will use for above raw materials and finished goods FSN ABC SDE VED 2. Do you think "Moo" Brand is underrated and can be a game changer for the company. if the equivalent cattle feed is sold at Rs 100 per bag. and "Moo" Sold at premium due to fruits extracts used at Rs 120 then it will be sold across the country. If your proposal of promoting "Moo" is accepted by Company, What Inventory control strategy would you recommend to implement?
3. Give your Comments to the Management regarding overall scenario and your suggestions to improve.
Lakshminarasimman V Rao | Supply Chain Management| Corporate Neeti Consulting | Mysuru
All data above is a combination of data from Internet, purpose of this doc is for research and education only and responses received from Class students and interaction.