APICS Case Competition

Transcription

1 Page 1 of 5 APICS Case Competition Case Study Document Developed in collaboration with Deloitte Consulting LLP S&A Processed Seafood Company S&A Company is a distributor of processed seafood products. Over the past several years, S&A Company has grown through acquisition to expand their product line. That broader offering of products has improved sales in their current focus area of Western Europe. Sales have improved with the new product acquisitions, but S&A now wishes to expand the entire product line into more of Eastern Europe. However, the company realizes that their current model of putting a distribution center (DC) in each country that they service may no longer be the best option as they look to expand. Their increased sales and plans for aggressive growth will now require greater concentration on the design and operation of their supply chain. S&A Company is looking to drive significant organic revenue growth in the European market growing from $340M (as of the end of the fiscal year ending June 30, 2017) to $550M over the next 3 years. They need a supply chain strategy that helps them answer some fundamental questions regarding the expected inventory (in case units and value) and flow of goods that will be required three years from now to support the desired sales growth. The company needs advice regarding the supply chain network, infrastructure and processes needed to serve its customers within the expected delivery window while optimizing costs. Products, Customers, Sales, and Costs S&A currently has five product lines that they sell to retailers in seven countries (see data page). Customers for all product lines, except Processed Mussel, currently expect a 36- hour delivery window. Processed Mussel customers have traditionally allowed delivery to take up to a week. The company now has one DC in each of its seven markets and supplies each market from the DC in that country; for example, orders from customers in Hungary are handled by the DC in Hungary. S&A sources all products from suppliers in Thailand. Because the company s headquarters is in London, all products are currently shipped from Thailand to the DC in UK and then are distributed to the other DCs (See Figure 5). Each of the S&A DCs have the ability to ship in bulk (from DC to DC) and parcel (from DC to customers), plus ship domestically and internationally. S&A s Thai suppliers sell products at FOB, and the processed seafood is shipped in bulk via sea freight from Thailand to the UK. The product is then shipped via trucks in mainland Europe.

2 Page 2 of 5 All countries and DCs have the ability to receive product directly from Thailand; however, due to quality assurance requirements, Processed Mussels must be imported into the UK for inspection before distribution to other countries. S&A believes that it is not operating efficiently and would like to assess the current network vs. reducing the number of DCs to three. Also, from its experience, the DCs and the entire supply chain network start to experience operational challenges when utilization is high. Additionally, the company believes that the warehouse fixed costs per case will not change soon. S&A has seen cost of goods sold (COGS) for high growth product lines (annual growth greater than 15%) decline by approximately 5% annually. Inventory costs per case for all product lines have been declining at 4% annually due to improved technology. The company does not anticipate any significant changes to the average price per case for each product line over the next three years. It also appears that freight costs will be stable over the next three years. One of the firm s goals is to meet or exceed the industry benchmark of inventory turnover of fifteen. S&A has a standard case size for all their product lines. The company has asked for your perspective on the Supply Chain of the future including, Industry Assessment Competitive Position within the Supply Chain Network Design and Geographic Considerations Inventory and Flow Planning Customer Service Level Tradeoffs Technology Considerations

3 Page 3 of 5 S&A Product Lines, Sales, Costs, and Inventory Data Current year baseline through June 30, 2017 Figure 1 Country Ireland UK Germany France Belgium Poland Hungary Product Lines Country & Product Line shares Avg. Price ($/case) Processed Fish 10% 80 Processed Mussel 5% 75 Processed Squid 15% 70 Processed Shrimp 20% 70 Processed Crab 12% 75 Processed Fish 15% 50 Processed Mussel 70% 45 Processed Squid 20% 40 Processed Shrimp 12% 40 Processed Crab 20% 40 Processed Fish 20% 55 Processed Mussel 8% 50 Processed Squid 12% 45 Processed Shrimp 15% 45 Processed Crab 20% 40 Processed Fish 15% 70 Processed Mussel 5% 65 Processed Squid 10% 60 Processed Shrimp 10% 60 Processed Crab 15% 60 Processed Fish 12% 75 Processed Mussel 3% 70 Processed Squid 13% 65 Processed Shrimp 15% 65 Processed Crab 12% 70 Processed Fish 15% 50 Processed Mussel 5% 45 Processed Squid 15% 45 Processed Shrimp 15% 40 Processed Crab 12% 40 Processed Fish 13% 75 Processed Mussel 4% 70 Processed Squid 15% 65 Processed Shrimp 13% 65 Processed Crab 9% 70

4 Page 4 of 5 Figure 2 Product Lines % Revenue by Product Line Avg. % COGS Annual growth ( ) Processed Fish 20.50% 50% 5% Processed Mussel 10.40% 30% 5% Processed Squid 13.20% 40% 20% Processed Shrimp 50.20% 50% 20% Processed Crab 5.40% 25% 45% Figure 3 Warehouse Avg. Inventory Cost per Case ($) Avg. Inventory ('000 cases) Full Capacity ('000 cases) Ireland UK Germany France Belgium Poland Hungary Figure 4 Bulk Parcel Western Eastern Inbound Outbound Outbound Handling Domestic Europe Europe Warehouse freight Western Eastern cost outbound outbound outbound ($/case) ($/case) ($/case) ($/case) ($/case) ($/case) ($/case) Ireland UK Germany France Belgium Poland Hungary

5 Page 5 of 5 Figure 5