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CASE
STUDY
Company
Intro
Company Intro
Best Organic Company (BOC)
Why do you think BOC’s profit is not growing at the same rate as revenue?
BOC’s profit is not growing
Import and export clearances delays when paperwork isn’t complete, accurate and valid which leads to delays and therefore accumulation of storage and demurrage fees
High Logistics Costs: BOC mentioned that costs increased with attempts to push inventory to retailers with its own refrigerators, which did not yield the expected sales increase. This approach led to higher costs without corresponding revenue growth.
Supply uncertainty, due to production constraints, might make BOC not be able to utilize the full capacity of the container therefore the shipping and clearance expenses to the shipment will be higher
Supply uncertainty due to variable shipping times from one side and BOC’s target to maintain high service level might lead BOC to decide to ship the cargo by air or at least accept an expensive sea alternative that offers a shorter transit time
Poor sales forecasts: can result in poor inventory management, leading to shortages, excess stock, and increased holding costs.
In a conversation with the Procurement Manager, a consultant talked about how "demand sensing" could improve Purchasing and Sourcing activities. Do you think BOC can use it to increase profitability? Why?
Demand sensing
Yes, implementing a demand sensing approach could help BOC improve profitability by enhancing its procurement and sourcing activities. Demand sensing leverages real-time data and advanced analytics to improve the short term demand forecasting accuracy. This would address the issues of demand variability and lack of accurate forecasts in the short term, leading to better inventory management and reduced costs. With more accurate demand signals, BOC can make informed decisions about sourcing, production, and inventory levels, ultimately reducing holding costs and improving service levels.
How would you recommend BOC to position its inventory throughout the Supply Chain?
Recommend BOC to position
To optimize inventory positioning, BOC should adopt a multi-echelon inventory strategy. This involves placing inventory at various points in the supply chain to balance demand fluctuations, lead times, and cost considerations.
Position inventory in close proximity to customers, on shelves where they can purchase the items and in nearby storage facilities for quick replenishment
Centralized and Regional Distribution: Maintain central warehouses and regional distribution centers in close proximity on shelves where they can purchase the items and in nearby storage facilities for quick replenishment
Can inventory-positioning strategy be associated with a replenishment strategy? How?
replenishment strategy
Yes, where we store products (inventory-positioning strategy) and when we restock them (replenishment strategy) are closely linked. It's important that these two strategies work together to have the right amount of products available and keep customers satisfaction.
Position inventory in close proximity to customers, on shelves where they can purchase the items and in nearby storage facilities for quick replenishment
Demand-Driven Replenishment: For products kept closer to where they're sold, use demand-driven restocking. This means ordering more based on real-time sales and predictions to make sure there's always enough.
Recommend one or multiple technologies to:
a. Deal with BOC’s international trade challenges: Implement a Global Trade Management (GTM) system. A GTM system automates and streamlines the management of international trade processes, including regulatory compliance, documentation, and customs clearance. This technology can help BOC navigate the complexities of import and export regulations, reducing the time and cost associated with cross-border transactions.
b. Provide consumers with the capability to verify the legitimacy of the product and chain of custody integrity throughout the supply chain: Implement QR code to verify the certificate and block-chain technology. Blockchain enables transparent and immutable recording of transactions and product movement throughout the supply chain. BOC can create a digital ledger for each product, allowing consumers to trace the product's journey from farm to shelf, verifying its authenticity, quality, and ethical standards.
Promotion
Provide consumers with the capability to verify the legitimacy of the product and chain of custody integrity throughout the supply chain:
Financial evaluation
• Demand Sensing:
• Reduce el products
• Insert criteria to add new suppliers
• Forecasting will be implemented by planning team cooperate with inventory team and marketing team, logistics team, sales team
THANKS
Thanks
Mohamed Diaa
Ahmed Moustafa
Mohamed Amgad
Mohamed Salah