Logi Case Study

Question
Case Study 1
M/s Britecolor Paints Ltd. (BPL) is a manufacturer of decorative paints for households, commercial
premises and industrial applications.
a) M/s BPL has embarked on a policy of satisfying every possible customer in respect of
shades, delivery and durability. Thus, it went ahead and created twenty-five depots, one
in almost every city. The manufacturing base was, however, maintained in Pune. The
factory received information in connection with stocks from depots once a week and there
was no intercommunication between the depots. Since they were in the competitive
market, price was pre-determined, i.e., the manufacturer had no liberty to price the
product as per his own choice.
b) In their enthusiasm and effort to satisfy their customers, M/s BPL strived to manufacture
every possible shade by combining various primary shades and would await the
prospective customer to carry out the purchase. It ensured that these shades were
available at each and every depot even at the cost of transportation incurred in sending
goods in less than full truck load lots. This certainly provided a very high service level and
the customers would get their shades as per their desires and thus they were fully
satisfied.…
c) While on one hand M/s BPL had a population of very highly satisfied, they had almost 50%
of their total domestic sales lying as finished goods inventory at various depots, on the
other hand.
d) Industrial paints, though not very customized, the respective industrial customer was
quite satisfied. Consequently, the inventory of finished goods was very low in this
segment. But, at the same time, realization was also lower due to stiff competition from
other industrial paint manufacturers than the domestic market.
e) Nevertheless, the economic runs of industrial paints were always assured due to high off-
take by the industrial customers
f) The objective of the manufacturer was to increase the realization taking into account
economic runs, inventory, seasonality, and individual choices of domestic/industrial
customers.
If M/s BPL appoints NAVEEN as their Logistics Consultant, how would you advise them in respect
of the following:
Questions:
1) How can the company achieve economy in transportation, by maintaining almost the same
service level?
2) Demand forecasting technique to take care of seasonality as well as reduction in inventory?
3) Information technology to substitute maintenance of high inventory without affecting customer
service level?
4) Connectivity between factory and depots (networking diagram)?
Answered by Expert Tutors
1) The main issue is the overstretching of the distribution channel. The transportation cost tends to
rise due to lack of communication in twenty-five distribution centers.
2) The manufacturer can employ a data mining, time series model, and predictive analytics model to
forecast the demand.
3) Enterprise Resource Planning (ERP) and Microsoft Forecaster information technology can
substitute for maintaining high inventory and the same service level.
4) The networking diagram of manufacturing factory and depots is provided in the explanation
below.
Step-by-step explanation
1) The main issue is the overstretching of the distribution channel. The transportation cost tends to
rise due to lack of communication in twenty-five distribution centers. Setting up more
manufacturing units in different eastern, western, eastern and southern Pune can reduce the
transportation cost; leverage the economies of scale, which will decrease the production cost.
Increasing costs and lower profits can also be leveled by lowering down the unnecessary
inventories.
Depots are not only maintaining stocks for the customers but also industrial clients. An efficient
order placement system can cover both customer and industrial client requirements and reduce
inventory costs more.
2) To handle the complexity and new product categories, demand forecasting can be employed. It
helps in identifying the particular stock that is needed to fulfill the market demands. These
techniques prevent the manufacturer from losing sales due to fluctuations, seasonal changes, and
market demand shifts. Since the objective is to increase the realization of inventory, economic runs,
individual choices of domestic/industrial customers, and seasonality, the manufacturer can employ
data mining, time series model, and predictive analytics model to forecast the demand.
Data mining is a crucial process to uncover the patterns in existing data. The analysis from the data
can be used to make future business decisions. It adds a solution to the existing problem and helps
in unleashing the new business growth areas. The time series model allows forecasting future sales
based in the past time frame. It evaluates the past sales and during the same time frame and helps
to determine seasonality demand. However, the Prediction method is predictive analytics, similar to
the above two methods. It examines the pattern in the data to determine or predict future sales.
3) Information Technology (IT) is vital to sustaining the competitive market. The company has 50% of
loyal customers and maintaining cost leadership, focused niche, and product differentiation,
information technology is essential for long term growth. Information technology can influence the
entire supply chain system in a much more manageable way.
Following are the IT that the company can substitute for maintaining high inventory and the same
service level:
i. Enterprise Resource Planning (ERP) - It is software that integrates the business parts on one
platform for easy management. It replaces all the paper-based working and covers all the essential
functions such as manufacturing, logistics, inventory management, finance, purchases, supplier
management, and distribution.
ii. Microsoft Forecaster- This commercial tool is a platform highly recommended for collaborative
planning. It helps in organizing projects and related activities such as discussions and project
management. It coordinates the entire project or operation in an easy, manageable, and
sophisticated way.
4) The networking diagram of manufacturing factory and depots is as follows:

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4) The networking diagram of manufacturing factory and depots is as follows:

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