1. Henkel Ibérica Presented by Group 5: Darshan Singh S-17 Hitesh Arora S-26 Sachin Sharma S-51 Sanjeev Vyas S-54 6 th October 2010

2. Context of the Case 2002: Henkel operating in a highly competitive laundry detergent space in Spain & Portugal Immense pressure from private labels who retail at 50% of Henkel’s price Brands resorting to special promotions & product variants to create brand differentiation Growth in SKU’s & product offerings became more complex leading to a strain on the infrastructure of both manufacturers & retailers Manufacturers & retailers finding difficulty in developing accurate sales forecast & demand planning system Leading to higher levels of obsolete and out-of-stock items

3. Problems Lack of viable long range forecasts increasing the production costs as well as increasing over or under- stocks Highly complex portfolio putting strain on the sales, production and distribution systems Rising competition from discount chains & private labels

4. Alternatives 1. Cut back or abandon special promotions 2. Introduce CPFR (Collaborative Planning Forecasting and Replenishment) 3. Reduce product complexity and competing with everyday low prices (EDLP)

5. Alternative 1: Cut back or abandon special promotions Pros: Less strain on infrastructure of both manufacturers & retailers Reduced complexity of product offerings Less confusion and better inventory management Cons: Difficult to compete without special promotions Will lead to decreasing sales Lack of new products could stagnate growth

6. Alternative 2: Introduce CPFR Pros: Benefits of CPFR attractive More accurate forecasts through continuous collaboration Streamlining of inventory management and will help in forecasting promotional items Considerable reductions in obsolete items, out of stocks, inventory levels, and production costs

7. Alternative 2: Introduce CPFR Cons: Relatively new tool and still in the formative stages of development No global standard for CPFR Each company uses different software systems for recording, processing and transmitting data Difficult to change a company’s processes, cultures, and relationships

8. Alternative 3: Reduce product complexity & competing with EDLP Pros: More manageable Reduced complexity leading to more efficiencies in production, retail and sales Lower tussles between manufacturing and marketing Cons: Difficult to create brand differentiation and preference in the market Direct competition from other brands and private labels

9. Recommendations Trim down the product variations and special promotions Reduce dependence on Sales Promotions and invest in building brands in the medium to long term Implement CPFR and continuously improve with each iteration Invest in the future with CPFR while managing with lower number of SKUs for the present

10. Thank You!