1. Supply Chain Innovation at Geddy´s Team Name: Buffalo Consulting 1 st Round Room: RAWLS 3097 Amit Chaudhary Pan Debora Manea Ralf Tischler

2. GSCMI 2013 Case Competition 2 Team Overview Amit Chaudhary  MBA Class of 2014  BSc Engineering, Bangalore University, India Experience:  Market Research Analyst at Fidelity Investments Pan  MBA Class of 2014  BSc Economics, Hubei University of Economics, China Experience:  Client Manager at Agricultural Bank of China Ralf Tischler  MSIA Class of 2013  BSc International Business, ESB Business School, Germany Experience:  Consulting internships at Booz & Company and KPMG  Online marketing at a Sheraton Hotels property Debora Manea  MSIA Class of 2013  BSc International Business, ESB Business School, Germany Experience:  Consulting internship at Oliver Wyman  Finance internship at GE Capital Pan

3. GSCMI 2013 Case Competition 3 Agenda 1 3 4 2 Geddy´s and SC Planning Challenges Operations Analysis Future Outlook Recommendations Pan

4. GSCMI 2013 Case Competition 4 Geddy´s  Franchised retail outlets but own buildings  No sale in major supermarkets  Collaboration with ´Just Bake´ Bakeries  Competitively priced  No price differentiation  Ice-cream: 40 flavors  Low and high margin flavors  No particular customer segment  Electronic and print media 1 3 4 2 Pan

5. GSCMI 2013 Case Competition 5 Ambiguous growth opportunities in India 1 3 4 2 Low ice-cream – per capita consumption Demand Constraints:  Economic conditions  Affordability  Product availability  Inadequate infrastructure  Many other desserts High Seasonality PRESENT FUTURE Significant growth of ice cream consumption Growth enabler:  Strong growth of disposable income (especially: urban) Branded: 20-25% p.a. growth expected Market-driven challenges Amit Chaudhary

6. GSCMI 2013 Case Competition 6 Supply Chain 1. Product (ice cream) and ingredient durability 2. Cold-storage requirements 1.Production planning based on service level policy 2.Idle capacity 1. Cold transportation requirements 2. Missing cold-storage infrastructure at supermarkets 3. Product availability Challenges for Supply Chain Planning Challenges 1. High price fluctuations 2. Import tariffs 3. Inbound logistics 4. Currency fluctuations 5. Middlemen costs 6. Supplier selection Procurement Inventory Mgmt Manufacturing Outbound logistics/Retailer 1 3 4 2 Amit Chaudhary

7. GSCMI 2013 Case Competition 7 Demand is highly dependent on temperature 1 3 4 2 Debora Manea

8. GSCMI 2013 Case Competition 8 High discrepancy of actual and expected sales Weekly Profit (100 Rupee) Total Weekly Sales 1 3 4 2 Debora Manea

9. GSCMI 2013 Case Competition 9 Weekly Profit (100 Rupee) Total Weekly Sales Drop in sales & profits High fluctuations High discrepancy of actual and expected sales 1 3 4 2 Debora Manea

10. GSCMI 2013 Case Competition 10 Different service level policies are used Weekly Profit (100 Rupee) Total Weekly Sales Target Service LevelScaled Stocking LevelCommon Service Level Target Level Top 3 MarginTarget Level Top 2 Margin 1 3 4 2 Debora Manea

11. GSCMI 2013 Case Competition 11 Changing the policies led to loss in profits 1 3 4 2 Scaled PolicyCommon Service Level PolicyChange in Profit% Change Scaled 1,296 Rs4.5 % Common Service1,264 Rs4.4 % Top 2 Margin(477) Rs- 1.7 % Top 2 Margin Policy Actual Weekly Profit (in ‘000 Rs) Policy Change Estimated Weekly Profit (in ‘000 Rs) * * Assuming we would sell at least the minimum between expected demand and order, for previous stock-out instances Debora Manea

12. GSCMI 2013 Case Competition 12 Part of the gap was driven by overall lower demand Expected Demand for TV, BBS and LL (in units) Actual Sales for TV, BBS and LL (in units) Period of few or no stock-outs 1 3 4 2 Debora Manea

13. GSCMI 2013 Case Competition 13 The storage capacity cap limits profits 1 3 4 2 REVENUES COSTS PROFIT Policy Optimization Capacity Cap Ralf Tischler

14. GSCMI 2013 Case Competition 14 Two options might lead to higher profits 1 3 4 2 REVENUES COSTS PROFIT 2.Cost Efficiency Policy Optimization Capacity Cap 1. Expansion Ralf Tischler

15. GSCMI 2013 Case Competition 15 Fast capitalization on cost efficiencies Price differentiation (2 Categories) Applications BenefitCost/Risk  Increases margins  Accounts price fluctuations  Less customer convenience  Sales volume decrease Decrease number of flavors  Unties capacity  Eases sourcing/production  Disliked by customers  Sales volume decrease Change receivable / payable policy  Less working capital needs  Free cash for investments  Resistance of franchisee  Resistance of supplier Beneficial & less risky Less beneficial and/or risky Not beneficial or too risky Cost Efficiency Increase capacity of stores (peak season)  Reduces SG&A overheads per unit: Margin & Sales ↑  Required investments  Unused equipment Increase sourcing from foreign supplier  Reduces sourcing costs if Rupee is strong  High ex-rate dependency  Difficult relationship building 1 3 4 2 Ralf Tischler

16. GSCMI 2013 Case Competition 16 Expansion offers long term opportunities Expand the product line (related product) Applications BenefitCost/Risk  Balance the off season demand  Extra production cost  Increase in Operational cost Enter retail  Reach to new customers  Brand awareness: Sales ↑  Expensive shelf space  Compete with other brands In-store Freezer/Kiosk  Low upfront investment  Meet peak demand  Low margin  Space constraints Expansion Standalone Parlor  Increase the market share  Reach out to diff. markets  High initial investment  Longer breakeven period Vending Cart  Increases mobility  Nominal initial investment Beneficial & less risky Less beneficial and/or risky Not beneficial or too risky 1 3 4 2 Ralf Tischler

17. GSCMI 2013 Case Competition 17 Cost efficiencies will enable future expansion  Volatile and low demand  Uncertain margins  Storage constraints  Stable cash inflow  Meet current demand  Increasing demand  Market consolidation  Decrease utilization gap  Capital  Infrastructure Long-term focusShort-term focus Environment Needs Cost EfficiencyExpansion 1 3 4 2 Ralf Tischler

18. GSCMI 2013 Case Competition 18 Recommendations 1 3 4 2 SOLUTION Space constraint in peak season and high seasonality PROBLEM Scaled Stocking Level Policy Short-term focus: Cost Efficiency Long-term focus: Expansion 1 2 3 Ralf Tischler

19. Thank you for your attention! Q&A Amit Chaudhary Pan Debora Manea Ralf Tischler

20. Back-up Slides

21. GSCMI 2013 Case Competition 21 Fast capitalization on cost efficiencies Price differentiation (2 Categories) Applications BenefitCost/Risk  Increases margins  Accounts price fluctuations  Less customer convenience  Sales volume decrease Decrease number of flavors  Unties capacity  Eases sourcing/production  Disliked by customers  Sales volume decrease Change receivable / payable policy  Less working capital needs  Free cash for investments  Resistance of franchisee  Resistance of supplier Beneficial & less risky Less beneficial and/or risky Not beneficial or too risky Cost Efficiency Increase capacity of stores (peak season)  Reduces SG&A overheads per unit: Margin & Sales ↑  Required investments  Unused equipment Increase sourcing from foreign supplier  Reduces sourcing costs if Rupee is strong  High ex-rate dependency  Difficult relationship building Ralf Tischler

22. GSCMI 2013 Case Competition 22 Expansion offers long term opportunities Expand the product line (related product) Applications BenefitCost/Risk  Balance the off season demand  Extra production cost  Increase in Operational cost Enter retail  Reach to new customers  Brand awareness: Sales ↑  Expensive shelf space  Compete with other brands In-store Freezer/Kiosk  Low upfront investment  Meet peak demand  Low margin  Space constraints Expansion Standalone Parlor  Increase the market share  Reach out to diff. markets  High initial investment  Longer breakeven period Vending Cart  Increases mobility  Nominal initial investment Beneficial & less risky Less beneficial and/or risky Not beneficial or too risky Ralf Tischler

23. GSCMI 2013 Case Competition 23 India- Disposable income vs. ice-cream consumption

24. GSCMI 2013 Case Competition 24 Ice-cream – per capita consumption

25. GSCMI 2013 Case Competition 25 Market shares of organized players

26. GSCMI 2013 Case Competition 26 Temperature and Investment costs

27. GSCMI 2013 Case Competition 27 Cost Structure Every percent point saved in sourcing proportionately increases EBITDA!

28. GSCMI 2013 Case Competition 28 Business model and value proposition

29. GSCMI 2013 Case Competition 29 Manufacturing Process

30. GSCMI 2013 Case Competition 30 States with operations

31. GSCMI 2013 Case Competition 31 Exchange Rate

32. GSCMI 2013 Case Competition 32 Menu