Case: WE ARE THE BEST
We are the Best & Co. is a Company located near to Barcelona.
They manufacture and distribute computer screens.
The are producing 5 different models (screen sizes).
Sales volume of the different sizes during the last 3 years was as follows:
SIZE
PERCENTAGE OF
ANNUAL SALES
10
5%
12
7%
15
45%
18
33%
24
10%
In order to assembly any model, 10 different components are required.
Six of these components are common two all models whereas the other four are specific for each size.
Profit and loss results of the last three years as well the forecasted one for 2022 are as follows:
MILLION EUROS
2019
2020
2021
2022
SALES
10
12
13,5
15
PURCHASING COMPONENTS
5
6,6
7,7
9
TRANSPORTATION COSTS
0,5
0,6
0,9
1,2
SALARIES
2
2,1
2,1
2,2
OTHER COSTS
0,4
0,4
0,5
0,6
GROSS PROFIT
2,1
2,3
2,3
2,0
The behavior of the available cash has been the following:
MIO. EUROS
2018
2019
2020
2021
CASH
1
0,8
0,7
0,5
“We are the Best” is selling the screens in Spain, France and Portugal .
Customers are big distribution Companies as well wholesalers.
30% of the total sales are concentrated during the Christmas period.
Main customers in 2021 were (under brackets central warehouse)
- El Corte Inglés (Madrid): 5 Mio €
- Carrefour (Paris): 3,5 Mio €
- FNAC (Barcelona) : 3 Mio €
- The rest are 9 wholesalers/distributors located in Bilbao (2), Valencia (2), Zaragoza, Sevilla, Oporto (Portugal), Vigo and Bordeaux (France).
All these customers bought less than 0,5 Mio € each.
There is also a huge potential customer (between 3 and 4 Mio € sales) located in Lisbon (Portugal). Big marketing and sales efforts have been made trying to catch this customer.
“We are the best” has 4 warehouses: Barcelona (located in the factory), Madrid, Sevilla and Zaragoza.Inventory of all manufactured products (sizes) is available in all warehouses.Additionally, they always have safety stock of at least 20 days average sales o all products in the central warehouse.
The delivery time agreed with customers are 4 labor days.
Total time for assembly is 2 days.
Factory works from Monday to Friday.
Organization is as follows.
Owner/Managing Director: Joan Soler
Sales and Marketing Manager: Sonia González
Manufacturing and Purchasing : Raúl López
Logistics manager (Transportation and Warehousing): Rafael González
Financial Manager: Pilar Gómez
They have a Board of Directors meeting once a month. Everyone explains improvement and results in their area. Raul and Rafael are very good friends. They work very closely. They think they shouldn´t need any sales department because “with only 3 main customers, Mr. Soler could take care of them”. “Why do we need marketing if there are no new customers to discover.?”
“We give a good service. There are no stockouts and customers are satisfied with our quality.”
Although “We are the best” is the only computer screens manufacturer located in Spain, their market share in the Spanish market is 18%. Their competitors are foreign Companies.
During last Board of Directors Sonia proposed she would like to work closely with Raúl and Rafael. She though it would be a good idea to show to customers the assembly process as well the warehousing facilities.
Rafael and Raúl considered customers didn´t need to visit them. “You are responsible for customers. You take care of them and you deal prices with them. But this is not our business”.
By the other side, Pilar is really concerned because their cash needs are increasing and, as the working capital has been growing the last 3 years (mainly final products inventories), she has problems to fulfill the financial and cash requirements for running the daily activity.
Mr. Soler decided he should need a Managing Director with new ideas. Her older daughter, Marta, recently graduated at the EU Business School at Barcelona, took this position and joined the Company 2 weeks ago and during his first Board of Directors, he said: “We must build an efficient supply chain organization, to improve our customer service and to increase profits”.
Sonia is really excited about this proposal but Raúl and Rafael consider things are running good enough. “The only thing we need to increase profits is to increase sales prices!!!! said Rafael”.
What would you do if you were Marta Sole for the following areas/activities
· Transportation strategy
· Warehousing location
· Supply range optimization
· Manufactured components (possible optimization)
· Overall marketing/sales strategy
· Internal Organization
· Any other strategical/functional issue you consider