GEP GAMEPLAN

Presented by
Team AVATARAN
Biswarup Ghosh- SJMSOM, IIT Bombay
Prakash Giri- SJMSOM, IIT Bombay
 Company Profile Assessment
Problem Statement
Excellentia Stainless is a Europe based stainless-steel manufacturing company with a production capacity of 7.8 MTPA
and they are facing huge reduction in revenue generation potential. The revenue has dropped by 11% compared to last
year, and the gross profit margin has also declined. Also the entire supply chain is not being managed efficiently and
almost every vertical was ascribing other verticals for their inadequacies.
Highlights of the Case
1. Order quantity is not distributed throughout the month, started month with <10% order quantity and skewed to the
last week of month
2. The lead time for Nickel (Ni) is 3 months almost and the price is very much fluctuating, difficult to place the order in
right time with right quantity
3. JIT production model, Capacity utilization is below 70% and the quality deviation is almost 10-15% which is higher
than the industry standard
4. Inbound supply chain is globally speeded and outbound supply chain is mostly domestically speeded, overall supply
chain is not responsive
5. Product mix is very high, raw materials having different lead time, multi layer complex supply chain and export is
very low, mostly Asian market

Price Low order KEY PROBLEMS

Irresponsive lack of Unable to
fluctuation of book value on supply-chain, demand maintain
Raw material the fist week outbound visibility proper
and source of month and trucking from Sales & inventory
location skewed issue and Sourcing, level of raw
spread towards end process Low brand materials
and under complexity in loyal and finished
07/17/2021 utilization of shipping of customer goods 2
plant capacity RM and
 Analysis of the Problem
Approach: Based on our analysis, we broke the whole problem in two-part i.e. Short term issue and long term
issue. We came up with an approach to deal with the issue separately and analyzed to give the proper solution to
overcome the issue
Key Issue Data Required Rationale
Price fluctuation of the Past procurement details and proximity Suppliers quality, pricing, ability to adjust
Raw material with the plant the demand variation, lead time and
Data of demand and price trend of raw supplier's term such as ordering cost,
materials quantity and legal and regulatory
Country that can supply the raw materials compliance
Improper distribution Weekly total order book value of previous To analyses the demand trend in the market
of order book value year for each product and spread of the share for
Details of sales demand for each product each distributor and forecasting MRP to
for each distributor achieve monthly requirement
Order details of each distributor in
different geography
Outbound supply chain- Past data of trucking demand and price To get an product demand and trucking
Trucking issue Data of contractor who can provide availability ratio, potential service provider
trucking service details and cost minimization of logistic
Contract details with the past service
provider
Irresponsive supply Current sourcing structure with all the To evaluate current sourcing structure with
chain management details like minimum order quantity, lead possible sourcing option on price, lead time,
time, quality norm compliance quality, flexibility, legal and regulation
Logistic cost structure for raw materials compliance in shipping line and customs
 Problem Segmentation
After getting identifying few key problems we will now devise the whole problem in two
part i.e. short term problem and long term problem. Then we will proceed with each
type of problem separately to achieve the required solution

Short- Long-
Term Term
Proble Proble
m m

Outbound supply chain- Price fluctuation of the raw

Trucking issue material
Under utilization of Irresponsive supply chain
production capacity management.
Improper distribution of order Improver inventory level of
book value raw materials and finished
goods

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 Short-Term Problem
Outbound supply chain- Trucking issue

Reasons:-
• Unavailability of proper market demand
forecast
• Fixed and inflexible truck service provider
• Lack of planning by logistic department
• Improper inventory management of
distributors

Solutions Source: GEP Game plan Case

• Use rage forecasting model to of demand
by using previous year data
• Explore other contractual truck service
provider
• Revise the current contract with the truck
service provider to have a stringent
regulation and compliance
• Track real time inventory level by using
weight or force sensors and other feedback
system to plan early to meet the
Source: Google Image
 Short-Term Problem
Under utilization of production capacity

Reasons:-
• Month started with 10% order book and
skewed towards end
• Product mix is really high and some
product can not be run next due to quality
compliance
• Order delivery lead time is a reason for
higher cost in manufacturing the product
• Few finished goods are intermediatory Source: GEP Game plan Case
product and the lead time for each product
Solutions
• is high
Can use ABC analysis to identify the main
20 % product who contribute maximum
sales volume to prioritize the SKUs to be
produced first
• Exponential smoothing of production and,
calculate MAD and MSE value for alpha
ranging from 0.1 to 0.9 and take
corresponding alpha value for lowest MAD
and MSE value. It will maximize forecasting
accuracy Source: Google Image
 Short-Term Problem
Improper distribution of order book value

Reasons:-
• 50 % distributors are loyal and rest of them
are opportunistic to have a cost benefit by
using the volatility of the market
• Unrealistic expectations of the customers
and they tends to cancel the order in end
of the month
• Stringent pricing policy set by the finance Source: GEP Game plan Case
Solutions
team, become difficult to negotiate the
• They
price can negotiate
for bulk order with the finance team
requirement
to get a relaxation on pricing policy to get
the order quantity in bulk and also to
attract the new customers to the business
• Give incentive to the distributor for early
order processing and also have a market
development team just to help the
distributors increase the sale. It will also
help to create brand loyalty
• USE management information system to
get the real time and daily basis sales data
Source: Google Image
 Long-Term Problem
Price Fluctuation of the Raw material and Finished Goods

Reasons:-
• Stainless steel – The prices depend on the
demand generated in the market
• Erratic Ni and Cr prices throughout the
year
• Sourcing, inventory, truck placement or
evacuation, everything is market driven as
the price of Key RMs and FGs fluctuates

Solutions Source: GEP Game plan Case

• Negotiating with long standing suppliers to
fix raw material pricing and take on a
higher burden of price risk
• Switching to other alternative raw
materials to minimize price fluctuation
impact
• Forecasting methods which are based on
artificial neural networks. Hybrid
forecasting methods in which fuzzy,
probabilistic, and neural network methods
Source: Google Image
 Long-Term Problem
Irresponsive Supply Chain Management

Reasons:-
• Order books and Order Receipts are
currently poor in shape and skewed
towards month end
• Delay in commercial clearance of domestic
orders
• Receiving orders around 2/3rd week of the
month- order delivery time of one week.
• Difficulty in customs clearance for the
Solutions
shipments and increase the lead time, also
• Negotiate with suppliers to cut Source: GEP Game plan Case
low ordering value increase thedown
cost the
delivery time and also look for other
potential suppliers to meet the demand
flexibility
• ERP system have to be employed to
prevent delay in the commercial clearance
and real time tracking of the shipments
• Cross docking system should be imposed &
try to order in bulk to increase the
availability, cut down the cost and lead
Source: Google Image
 Long-Term Problem
Improve Inventory level of Raw materials and Finished Goods

Reasons:-
• Lack of proper sequencing of product by
sales resulting in piling up of inventory
• Low book order due to demand fluctuation
resulting in higher inventory carrying and
holding costs
• Lack of transparency in demand of finish
goods and supply of raw materials
Solutions
• Inventory management methodologies like
FIFO and LIFO can be employed to get
optimum level inventory
• Segmentation and targeting of loyal
customer base, which will help the
company operate at 95-100% of it’s
capacity from mere 65-70%. This would
lead to better utilization of the products
and less inventory costs.
• Better Demand Forecasting strategies like
Exponential Smoothing has to be Source: Google Image
 Final Recomendation

PLAN 3
Have sensor base
inventory management
PLAN 2 system to get the real PLAN 4
Develop ERP system for time data of in house Develop other suppliers
real time tracking of inventory & sale data for raw materials and
shipment and develop from distributor and truck service provider
cross docking & bulk to meet the demand
purchase system to flexibility
save cost.

PLAN 1 PLAN 5
Exponential Smoothing Negotiate with finance
demand forecast should team for better pricing
be used to get a more policy, it will help to get
accurate sales new customer and bulk
prediction order

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Thank You