SAR Inc.LINKS SIMULATION

High Forecasting Accuracy

Best value for money

High Fill rate

Increased

Margins

Less Tariffs

Minimize Variable

Costs

Increase inventory turnover

Goals

Our products

Hyperware• H55111

Metaware• M55532

Product positioning

Our strategy was to provide maximum value to customers at the best cost possible, for which we continuously tried to improve the efficiency of our value chain…

SAR Inc.

• Procurement

What

• To get best value out of purchase

Why

• To gain better margin• To gain volume discounts• To keep inventory turnover high• For better reliability• Keep minimum number of suppliers & low inventory level.

Pros

• Frequent change of suppliers affecting quality

• Increased investment in IT integration

• Fluctuating ratesCons

Decision

• Distribution

What

• To reduce transportation cost and tariffs

• To serve the customers locally

• To reduce costs by cross docking

Why

• Flexibility to meet demand• Reduction in RFID cost/piece• Better control over

production• Cushion by postponement of

P-0

Pros

• High initial investment in DC & insourcing RFID

• Inaccurate forecasting will affect the planning

Cons

Decision

• Manufacturing• Try to maximize production

of P0• Try to make as per forecast

What

• For better demand accuracy

• No holding up of inventory

Why

• To increase accuracy of forecast• Reduce unplanned production• Low level of finished goods were produced at DC

• Reducing variable cost /unit

Pros

• Inaccurate forecasting• Reduction in price by competitorCons

Decision

• Transportation

What

• To avail best transportation cost

• To gain transportation discount

• For better reliability• To remain sensitive to

market demand

Why

• Select carrier on basis of lowest prices as per updated research reports

• Use air transport for both regions for 100% reliability

• Select carriers with lower prices• Keep minimum number of carriers

Pros

• Limited carriers with cross docking

• Surface carriers had high failure rate

Cons

Decision

• Service level remained constant

• Marketing spend• Reduce price at regular

intervals• Recycling

What

• Tradeoff between marketing spend and price reduction

Why

•Better income to revenue ratio on reducing marketing spend•To gain return on assetPros

• No gain in customer satisfaction from Recycling in one month

• Increased expenses on recycling• Fear of losing customer due to

reduced marketing spend• Unfulfilled orders due to surge in

demand when price was reduced

Cons

Decision

Our results

Our results

Our results

VSA1 88.4% Forecasting Accuracy % is higher than approximately 93% of all historical firms in Month 9.

Our results

Our failures

Our mistakes/learnings

Initial overlooking of postponement

RFID insourcing was missed during month 4

and 5

Forecasting was taken as just average

Went ahead with the highest cost supplier even though low cost

and nearly same reliability suppliers

were available in the market

Epsilon forecasting was totally haphazard.

Initially we bought it in excess and were in

short supply in the end

↑Marketing expenditure ≠ ↑Sales!

Must have a set strategy in the start

and stick to it

Adhere to the rules of the game!

Blindly aping competitors strategy without proper basic

understanding can be suicidal