KURLON

LIMITED
Submitted By:
Group No. A5
Submitted To: Akash Debnath (16004)
Manchit Mehta (16022)
Prof. Rajendra Todalbagi Md Sarfaraz Alam (16024)
Naina Singh (16027)
Pratik Ghosh (16034)
Sweta Snigdha Sahu (16053)
 INTRODUCTION
 Kurlon Limited is the largest manufacturer of mattresses in India, with sales of Rs 110 crore.
 Kurlon roughly had a 65% market share of the branded rubberised coir mattress market.
 It had witnessed rapid growth in sales and market share in the mid-nineties, but from 1996
onwards sales and market share had stagnated and profitability was on the decline.
 In 1998, Kurlon was worried about the increased competition, from other branded and un-
branded mattresses, and the challenges of providing higher variety to the customers.
 In the wake of the already high number— 126 configurations of mattresses and another 75
configurations that would come after Kurlon enters into a joint venture with DuPont—the
managing director of the firm is concerned that the current system of operations and supply
chain are inefficient to handle the load in an increasingly competitive market.
CASE OBJECTIVES:
o The Kurlon case is useful for an introductory purpose because it describes the
totality of a supply chain context that is simple to understand at the same time
case is comprehensive in nature.
o The case also covers a wide range of issues in supply chain management and
can be used to developing skills in supply chain diagnostics.
o Supply chain strategy and performance measures

o Supply chain planning practices

o IT and SCM

o Supply chain integration and Supply chain restructuring

ORGANIZATION STRUCTURE
Chairman

President & C.E.O

VP Finance
VP Production VPMarketin
g
Manager
Deputy Works Manager,
Assistant
Manager,Banglore Bhubaneswar
Manager

Asst. Asst. Asst. Asst. Sales

Manager Manager Manager Manager Officer
Production Maintenance
Shift Inspection Despatch
Superintenden
t
workers
PRODUCT VARITY IN KURLON
MATTRESSES
PRODUCTION & OPERATIONS:
o Coir mattress produced by kurlon consists of RC pad, foam (made in-house),covering
cloth and the fabrication is done inhouse.
o RC PAD MANUFACTURING: It is made by combining coconut fibre and latex with a
ratio of 3:2.Coir fibers are kept in rope form for 80 days further carried out by
untwisting, sheeting, sheet cutting, pressing,vulcanising ,cooling & pad cutting.
o Problem in the supply chain is the fluctuation in the coir production owing to seasonality
in coconut husk supply and fluctuation of the latex price as the price changes by
around 12% in 1 month.
o UNTWISTING: This is done when the moisture content of rope is less than 15% with 8
twisting machine and the average yield rate in operations being 85%.
o SHEETING: The coir fibre are fed continuously to a conveyor in a sheet form of specific
width(75,78 or 81 inch) with constant thickness.
o The sheet is flowed at a speed of 5.2 inches per second at around 100 degree C to
ensure proper bonding of the rubber and the coir.
PRODUCTION & OPERATIONS:

o SHEET CUTTING: The RC sheet are cut to 1 of the 12 specific widths ranging
from 62 to 86 inch and the output is referred to as fleeces.
o All the 3 operations being part of the continuous flow process does not includes
in-stage inventory and includes a total of 10 workers in a shift of 8 working
hours the whole process.
o PRESSING:A specific number of fleeces are pressed, at a temperature of
about 120 degree C and a pressure of 2.5 bars and the output is known as
semi-finished composite RC pad.
o This semi-finished composite pad consists of 3 length and 2 width and to
obtain a 2.5 inch thick RC pad , 5 fleeces are pressed and so on.
o The pressing time is 27 minutes for 2.5 inch pad,31 minutes for 3.5 inch pad
and the 3 presses requires 10 workers in each shift
 PRODUCTION & OPERATIONS
o Vulcanizing: the purpose of vulcanizing is to make the pads elastic and springy. This
operation lasts for 30 minutes. It has the least capacity among the different RC pad
manufacturing operations.
o Cooling: The vulcanized pads are cooled before being sent to the pad cutting section using
overhead fans. This operation consumes minimal time and is never a bottleneck. The
vulcanizing and the cooling operations together involve five workers per shit.
o Pad Cutting: This is the final operation in the manufacturing of the RC pads. There are 2 pad
cutting machines. The cutting is done in a specific widths because it helps in better utilisation
of capacity in the pressing and vulcanizing operations. It also reduces trim loses. There is
excess capacity in this operation and hence no inventory pile up. Also the set up time is
negligible.
o Foam Making: This has two operations. After 24 hours of curing and foam edges are trimmed
to obtain the exact foam dimensions. About 30 workers are engaged in the foam making
operations. On an average there are 3 days stocks of raw materials as well as semi-finished
foams. It involves minimal set up time and also has never been a constraint in the past.
SUPPLY CHAIN PRACTICES
o Overhaul of supply chain practices.

o With this online portal Kurlon managed to streamline its ordering process and
achieve efficiency in terms of stock.
o Sufficient buffers were maintained for each SKU(stock keeping unit) in the
sales office.
o The online ordering system also reduced the manufacturing time, transit time,
and the frequency of the truck visits to the sales office.
o Other practices are as follows:

o Forecasting.

o Inventory management.

o Transportation management.
DISTRIBUTION RDC managers
fax/mails work

PROCESS: 42 regional distribution center

order to the HO
once a month
Transportation is done by roadways

Dis Bangalor North

p
Se atch e
ctio
n warehous
ecentral / South Retail
HO Outlets
Factory
Finishe
d goods West

Bhubanesh
war East Retail
Warehouse Zone Outlets
PROBLEMS / THREATS FACED
o For work order placing, there is no formal forecasting process. Area sales
manager uses his experience and understanding of the market to finalize
work order.
o Kurlon does not have any system for measuring performance in terms of
customer service.
o No means to estimate “lost sales” and no monitoring to avoid excess
inventory.
o No retailer loyalty.

o Retail inventory space was less to stock up.

o No proper ordering system for the retailers.

ANALYSIS OF NORMAL TRUCK VERSUS
JUMBO
TRUCK FOR SHIPMENT TO DELHI:
There is a trade-off between transportation cost versus inventory-carrying
cost. Let us assume that mattress cost is Rs 2000 per unit and the inventory-
carrying cost is 20%.
The breakeven volume would be:
Breakeven volume = (D/160) * 14000 + 80 * 2000 * 0.2
= (D/320) * 24000 + 160 * 2000 * 0.2
= 5200
If the volume to Delhi is less than 5200, Kurlon should use a normal truck;
when the volume is more than 5200, Kurlon should use a jumbo truck.
Q1.EVALUATE THE PERFORMANCE OF
KURLON
SUPPLY CHAIN AND THE CAUSESOF
THE
PROBLEM FACED BY KURLON?
Firm performance In 1997, inventories and receivables were Rs 390.6 million out
o
of a total asset base of Rs 624.5 million and total income of 1.12 billion. The PAT,
Rs 40.1 million in that year, could be substantially improved by reducing the
current assets in inventories and receivables.
o Problem in the supply chain is the flucutuation in the coir production owing to
seasonality in coconut husk supply and fluctuation of the latex price as the price
changes by around 12% in 1 month.
o Competition in the Indian domestic market is heating up and the success of a
firm would be measured by how it was providing a high variety of products at
low cost.
IMPORTANCE OF SCM
o Firm has to manage higher variety in future

o High inventory compared to European players

o High receivables (May be company is following the push strategy with its retailers leading to high
receivables)
o Supply chain related costs: SCM cost account for 10.6 % of sales

 SCM cost = Inventory-carrying cost + Distribution cost

 145. 8 * 0.2 + 8.95 = 118.6 million (assuming that inventory-carrying cost is 20%). This implies
that SCM cost is about 10.6% of sales compared to the net profitability of 4%
QUS 2.
Analysis for one specific SKU (72 * 35 * 4)
The sales data shows interesting pattern:
 Week 28 represents Diwali
 Skewed sales pattern: Last week accounts for about 62% of sales.
 Unlikely that sales pattern at retailers show similar patterns (high skew at month
end). Very likely that Kurlon is dumping products with retailers at month end
resulting in high receivables and low sales in first week of the month

Analysis of supply chain planning

 Forecasting capability at region is quite poor.
 Inventory management is not proper and, in general, Delhi stock points keep
significantly higher stocks.
 Analysis of data would shows that Kurlon needs to improve processes in the area of
production planning and dispatch planning.
 Weekly receipts (receipts from Bangalore CW) using the material flow balance
equation
  Period SDL 72X35X4     Apsara 72X35X4    
                       
    Indent sales Operating stock Closing Stock Receipt Indent sales Operating stock Closing Stock Receipt
1 210 0 404 404 0 90 0 0 0 0
2 90 68 404 666 330 60 6 0 108 114
3 90 180 666 594 108 60 24 108 150 66
April 4 30 402 594 270 78 30 126 150 84 60
5 330 56 270 520 306 90 60 84 216 192
6 480 235 520 1107 822 60 42 216 186 12
7 300 213 1107 1020 126 90 42 186 234 90
May 8 150 508 1020 806 294 0 192 234 78 36
9 150 6 806 650 150 30 0 78 204 126
10 0 55 650 895 0 78 18 204 186 0
11 0 249 895 646 0 30 60 186 186 60
June 12 0 646 646 0 0 60 66 186 120 0
13 450 24 0 294 318 90 0 120 180 60
14 300 73 294 551 330 30 54 180 210 84
15 330 140 551 993 582 30 42 210 174 6
July 16 150 569 993 424 0 60 72 174 162 60
17 60 12 424 886 474 60 0 162 168 6
18 330 28 886 1086 228 60 48 168 204 84
19 300 136 1086 950 0 0 50 204 184 30
August 20 0 631 950 325 6 90 126 184 148 90
21 48 0 325 653 328 36 0 148 172 24
22 480 18 653 845 210 120 12 172 316 156
23 300 150 845 1079 384 60 36 316 388 108
September 24 0 436 1079 649 6 60 196 388 192 0
25 36 0 649 889 240 60 0 192 408 216
26 2370 294 889 1663 1068 252 126 408 342 60
27 270 544 1663 2781 1662 72 108 342 234 0
October 28 270 1198 2781     42 24 234    
3. WHAT IS YOUR EVALUATION OF
COMPANY’S PLANNING PROCESSES?

Though this is not the focus of the case, one can identify vulcanizing or
quilting as the bottleneck processes, depending on the likely product mix
(Apsara brand does not need quilting).
o We can examine the impact of skewed sales pattern on production
planning.
o We can examine the role of annual planning to take care of peak sales
during Diwali.
4. WHAT SPECIFIC ACTIONS DO YOU
RECOMMEND TO NARENDRA KUDVA TO ADDRESS
THE SUPPLY CHAIN PERFORMANCE PROBLEMS?
o Improper forecasting mechanism at regions: Kurlon can explore possibility
of designing better forecasting models (use time series data).
o Kurlon should put in place supply chain performance management system.
o Ad-hoc inventory policies (excessive stocking) followed, owing to pressures
at the retailer end (competing with other brands), push strategy (sell what
can be produced), improper understanding of the demand (seasonality),
and various uncertainties at different stages.
o A substantial amount of skewness is caused internally owing to the push
strategy: Inventory norms to be defined. Focus on supply chain integration
with retailers.
o Order placements are through costly means such as telephone and fax. There
is lack of an integrated IT strategy. Design appropriate IT strategy.
o Purchase department orders raw materials in huge quantities owing to
anticipated price fluctuation. This leads to high stock-piling. Kurlon should keep
monitoring price trends and based on recent price trends use appropriate
sourcing strategy.
o Too much importance given to economies of scale in transportation. Focus on
total cost (transportation + inventory-carrying cost).
o Poor coordination between various functions.