Supply Chain Innovation at Geddy’s Asia - Pacific Consulting Group 1 st Round Room 4009 Momo (Chenyang) Liu Luis Carnero Randall (Jie) Miao Jun Karamon

GSCMI 2013 Case Competition 2 Meeting at glance 1.Case approach 2.Supply Chain at Geddy’s 3.Recommendation 4.Look into the Future 5.Conclusions

GSCMI 2013 Case Competition 3 We based our approach on the upfront diagnostic / “as is” assessment which include: Case Approach Short-term: 1.Forecasting to:  Meet demand.  Conduct strategic Sourcing.  Optimize utilization. 2.Inventory management:  Product mix  Increase sales and profitability.  Reduce costs Long-range plan: 1.Manufacturing process:  Level production vs. seasonal  Capacity utilization. 2.Distribution Network 3.Vertical integration “As Is” Findings“Transitioning to Success” Market trends + Supply Chain Innovation Positive Market Value of ~ $900 M. Growth rate ~ 25% ( 250M). Growth of personal income. Growth of ice cream consumption (~100%). Challenges Unbranded players ~ $300 M Developing infrastructure Fragmented supplier base Substitutes (variety of desserts) Quality Seasonality Luis Carnero

GSCMI 2013 Case Competition 4 Supply Chain at Geddy’s Suppliers Geddy’s Manufacturing Warehouse & Distribution Sales & Outlets  Price and volume fluctuations due to seasonality.  Quality issues on critical ingredients such as a milk  Quality issues in packages  Too many product ingredients ( )  Idle capacity and different utilization sue to seasonal production plan  Accurate location and distribution lead time “Treat people with the authentic ice-cream made with the right ingredients in the artisan way”  Demand constrained by seasonality  Sales capacity constrained by stores’ capacity (350) Competitive Strategy: High Quality Competitive drivers: cost & sales SCM strategy: Cost Efficiency Luis Carnero

GSCMI 2013 Case Competition 5 Current Situation: Proposed Solution: New efficiencies:  Increase plant utilization by ~7.72%  Increase profit by ~8% Recommendation Suppliers Geddy’s Manufacturing Warehouse & Distribution Sales & Outlets Inventor y Policy Total Inventory Total Sales Stock Over Profit (100Rupee) Mix as per case 17,87015,1083,762 48,457 Inventor y Policy Total Inventory Total Sales Stock Over Profit (100Rupee) Common Service Level 19,25016,4912,759 52,010 Efficient zone Assumptions: Model: Periodic inv. P = 1 week L = 0 (same day) Holding cost = 0 Jun Karaman

GSCMI 2013 Case Competition 6 Look into the Future Suppliers Geddy’s Manufacturing Warehouse & Distribution Sales & Outlets SupplierManufacturingDistribution 1.Strategic Souring to secure:  Avoid raw material fluctuations.  Stabilize prices  Ensure proper quality For example: long term contract /partnership with Farmers. 2.Vertical Integration 1.Change to level production. 2.Reduce product mix (lower than 60 flavors). 3.Product innovation 1.Own truck fleet. 2.Plan new distribution centers for future expansion. 3.Consolidate in Bangalore Randall Miao

GSCMI 2013 Case Competition 7 Conclusions 1.Selling price is the same. But the cost for each flavor is different; therefore, Geddy’s should focus on cost efficiency. 2.Short-term plan: 1.Increase the demand during summer is the key to gain more profit 2.Keep all types of flavor in-stock is important on the retailer side 3.Shift the inventory policy to common service level policy with 350 units per week 4.Potential risks: what if we cannot ignore the holding cost? Change the inventory policy to the target service level(S.L 90%) 3.Long-term plan: 1.Focus on cost efficiency in its current operations model with current retailers 2.Later, expand its business to some states adjacent to Bangalore and establish their distribution center 3.Set up new contracts, or develop the new relations with suppliers as they are expanding the market to other states. 4.Expand our business by producing private label products to deal with the excessive capacity Luis Carnero

GSCMI 2013 Case Competition 8 Q&A

GSCMI 2013 Case Competition 9 Appendix