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Case 5-1 Garland Chocolates
976
Case Analysis
By Steven Nguyen
Background
- Global Food Manufacturer
- Headquarters: London UK
- Annual Revenue: $3 Billion
- 65 Different Brands
- Corporate Goals of Growth, Profitability, and Brand Management
- Customer Service Levels: 98%
Case 5-1: Garland Chocolate
US Division
- 5 Plants
- Director of Operations: Shanti Suppiah
- The Edgeworth Toffee Brand
- Manufacture and packing
- 5500 Cases Produced a Year
- Sold for $145 Per Case
US Division
Problem:
- Packing Lines Outdated And Inefficent
- Sales are flattening
- Maintenance Cost Increasing
Problem
Corporate Goals
Business Performance Objective
Goals
Goals
Packing Line Efficieny
Flattened Sales
Possible Solutions
1
2
3
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Recommendation
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50
Requires New Packing Technology
Increase Sales by 20%
Marketing would like the products introduce a new packaging
New Packaging
More likely to combine this with other possibilties as it does not solve the problems
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Requires New Packing Technology
Increase Sales by 20%
Marketing would like the products introduce a new packaging
New Packaging
More likely to combine this with other possibilties as it does not solve the problems
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50
Requires New Packing Technology
Increase Sales by 20%
Marketing would like the products introduce a new packaging
New Packaging
More likely to combine this with other possibilties as it does not solve the problems
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Requires New Packing Technology
Increase Sales by 20%
Marketing would like the products introduce a new packaging
New Packaging
More likely to combine this with other possibilties as it does not solve the problems
Supplier will pay for raw materials
$35,000 upfront
Martin will be able to accomendate for the new packaging, however will take 6 months to ramp up production
Outsource
Reduce 30% of overhead
Cost $68/unit
Upfront fee paid off in less than a year
Expected Net Profit: $424,703.13
Reccomendation
- Take the deal with outsourcing
- Provides the greatest profit margin per unit
- Slowly cease operations over 6 months for manufacturing and packaging
- Allow time for Martin to ramp up production
- Ensuring to monitor quality and delivery performance
- This is to ensure customer service levels do not drop below 98%
Cost $140,000
Achieve all standard Statistics
Replacing the packing lines will also accomedate for the new packaging marketing suggested
Replace Packing Line
Achieve BPO Efficiency
Pays itself off in 2 years
Expected Net Profit: $320,937.50