Professional Documents
Culture Documents
350
400
12%
60%
14%
Organised Sector Unorganised Sector
Established: 1973 Tailoring and Large manufacturers: Raw Material Increase in stock to
Leading thread household: 56% ZYX – 60% market suppliers sales ratio from 2 in
manufacturer (14% Hosiery: 22% share Marketing team 1991 to 2.48 in
market share) Readymade AAA – 12% market Logistics team 1992-93
Corporate office in garments: 11% share Independent Inefficient use of
Patiala, Punjab Kite flying: 8% New Entrants – 14% Consultant trucks
Manufacturing in Others: 3% Stockouts and
Jalandhar, Punjab excess inventory for
Central marketing Dealers various SKUs
office in Delhi RMG Manufacturers Inaccurate demand
Industry – High forecasting
entry and high exit
cost
Stock to monthly
sale ratio: increase
to 2.48 in 1992-93
from 2 in 1991-92
LTCL SALES
Average Demand in Cartons per month – Sales per month – INR lacs 1992-93
1992-93
20
400
70
1400
1200 60
Higher Inventory for low selling SKUs and lower inventory for high selling SKUs – 21.5 lacs per month inventory
holding cost (2% of total inventory carrying costs per month)
• Lead time from procurement to delivery is high
• Demand forecasts are not accurate
• Plant did not maintain buffer stock – regions maintained buffer stock in response to lead time and demand
variance
• “Additional Requirement” plan – urgency tag for immediate supply around 20th of each month
• Inventory in finished goods stores (FGS – 2700 cartons or Rs. 135 lacs), pipeline and regions (18000 cartons or Rs.
940 lacs)
MAJOR ISSUES – TRANSPORTATION COSTS
• Only full truckload shipments were sent – even though there was no demand, leading to excess inventory at
regional offices
• For fast moving items, cases of stockout occurred, as the company did not dispatch trucks unless they were full
• According to feedback from the market, their competition had better response times in delivering orders and
providing new shades