Un Projet Capstone

GoBev ULC $$ Case Study

Overview

This case is based on an actual supply chain consulting study $($name changed$).$ The case is intended to provide students with an opportunity to apply your studies to assist a company be more successful.

Students will need to allow sufficient time to address the $(6)$ subject areas $($A through F$)$ of this Un Projet Capstone case.

You will be assessed on your achievement of the following course learning outcomes:

Make recommendations for each of the $(6)$ subject areas in the case

Your ability to draw from previous studies and apply theories and learnings to this case.

Details for Assignments

GoBev ULC$1$Case

Introduction

GoBev ULC is a company specialized in the manufacturing, packaging and distribution of ready to drink products $($RTD$).$ The company has been in business for over $10$ years. Sales are growing but the current supply chain $($SC$)$ is struggling to meet the spike in demands. The company hired you as a supply chain expert to develop a more effective and responsive SC$.$

You$$ve been provided with information on six strategic supply chain responsibilities. The success of GoBev$$s new SC strategy will contribute to its financial viability. Your report is due within $6-7$ weeks.

Part A: Supply Chain Organization $-$ Karen

The first priority is to look into the reporting structure of the SCM team. GoBev thinks a more integrated SCM model will be important to better support its operations.

Table $1$

GoBev Organizational Chart

What is your proposed structure and what is the rationale for the recommendation?

Which type of change management model would you use to overcome behavioral and cultural barriers and resistance to change?

Part B: Procurement and Supply Management

The second challenge is to reduce the supply costs. You noticed that the supply base is very large with $100+$ suppliers. You$$ve decided to consolidate the supply base and work with fewer suppliers.

How could you proceed to reduce your supplier portfolio?

What are the pros and cons of a consolidated supply base?

GoBev$$s annual procurement spend is ~$$150$M$.$ The financial effect could be a reality if the company can strategically focus on where it spends its money.

Which tools could you use to identify the vital suppliers to reduce the procurement spend?

The remaining suppliers must be evaluated at least once a year.

What are your performance evaluation criteria?

How would you communicate the results to suppliers?

Part C: Inventory management

During your onboarding, the operations manager shared the master production schedule $($MPS$)$ with you, along with the bill of materials $($BOM$).$ It$$s time to place an order for glass bottles.

What methods or combination of methods could you use to make this order?

You are deliberating on material requirement planning $($MRP$),$ Reorder point $($ROP$),$ Economic order quantity $($EOQ$),$ Economic transportation quantity $($ETQ$),$ and Just$-$in$-$time $($JIT$).$ Explain your choice.

From the MRP$,$ the annual demand for bottles is $200$ million units. The estimated ordering cost at $$500$ per order. The bottle value is $$5/$unit$.$ The inventory carrying cost is $25\%$ of bottle cost.

What is the EOQ?

The bottles are filled and sold in carboard boxes of six bottles each. The daily demand is $91,324$ boxes. The standard deviation of daily demand is $400$ boxes. The service level is $95\%,$ and the corresponding service level factor is $1\mathrm{.}65.$ The lead time is three months.

What is the level of the safety stock?

What could you do to improve the service level to $98\%?$

Part D: Project management for SCM

The company is looking for a new syrup filter of $300$ hectoliters$/$hr with an economic life of $10$ years. In the past, the company has used three$-$bids$-$and$-$a$-$buy method to acquire most assets.

Should GoBev remain with this purchasing strategy?

What other methods might be considered?

What is your recommendation for this type of investment?

Based on the filter cost of $$800,000$ and a salvage value at the end of its useful life of $$8,000,$ where the company finances the filter at an interest rate of $4\%.$ The estimated financial benefit derived from the investment over time is $$5,000,000.$

What is the return on asset $($ROA$)?$

What is the payback period $($PB$)?$

The company also needs a new water storage tank. The cost is $$70,000.$ The expected earning is $$80,000$ and the salvage cost is $$10,000.$

What is the net present value if the interest rate is $10\%?$

What is the internal rate of return?

Could the finance manager support this project if the company hurdle rate $($ROE$)$ is $30\%?$

Part E: Operations and process management

The cash$-$to$-$cash cycle is high because capital is tied up in inventory.

What are the risks in production for RTD products in a PG or FMCG market using a JIT inventory?

Which lean tools could you use to increase efficiency, including productivity?

Table $2$

RTD Product