Case Study AnalysisBy :Abhijeet Prakash Customer Service Level Superior customer service through timely delivery during such peak times can leave an indelible impression in minds of the shoppers. What Strategy? Segmentation based on mean demand. which if proved efficient can increase the overall efficiency of the company in long term. Segmentation based on mean demand and demand Variation: Ensures better Customer Experience. ( As the period tackled here is very short . gift items or home décor items to adorn their homes. Creating a Roadmap To tackle this peak demand period through a well established strategy further strengthens the inherent system of the company . the strategy .new electronic appliances . There are many new buyers during these times who can be converted into permanent customers.Behaviours during a typical festive season Increase in Sales People tend to spend more money to celebrate festivals by buying new clothes . High Margin: Ensures profitability . Segmentation of products based on mean demand & demand variability Variation of demand HIG H LOW Segment 1 Segment 2 Mean Annual Demand > X Mean Annual Demand < X Mean Variation from Mean Variation from Demand during festive Demand during festive season > 5X season > 5X Product Segmentation & Segment 4 Characteristics Segment 3 Mean Annual Demand < X Mean Annual Demand > X Mean Variation from Mean Variation of Demand Demand during festive during festive season < 5X season < 5 X LO W Mean Annual Demand HIG H . x >X <X Mobile & Tablets. apparels . <X SEGMENT 4 Personal care items < 5X . SEGMEN SEGMENT 2 T 1 Items specific to festival i. footwear etc. TV . Diwali items etc.Prioritization of Segments to attain Higher Customer Service Average variation from mean demand during festive season :. baby care items < 5X etc.5x Mean Annual Demand:. ( time sensitive and seasonal products) >X SEGMENT 3 Books. > 5X > 5X gift items .e. supplier/FCs Last Mile Distribution locations. accuracy in delivery. • Remove backlogs well before peak season time. and reducing failed • Prefer 3PLs with more delivery. provide temporary • Tie up with physical warehouses. • Enhance system capacity and optimize inventory for promotional items.r. • Incentivise the customers to increase demand lead time. Fulfilment through FCs • Build temporary resources (such as non skilled labors) • Enhance inventory visibility. • Create a simulation of peak period with temporary workers to ensure accuracy in picking . JIT Fulfilment • Enhance inventory visibility ( Create heat map to spot suppliers for this segment of Long-haul 3PL/Transportation • Segment 3PLs based on the optimized network configuration for meeting demand w.t. • Collaborate with suppliers to maintain adequate buffer. packing & sorting. . • Create segregated bays for these items nearest to picking and packing area. • Pool resources by interconnecting inventory of FC’s. • Strengthen supplier portfolio. customers to reduce • Ensure quick return of touch points for reverse pickups back to converting delivery source. • Order fulfillment optimization – prefer order to be fulfilled from nearest FCs. • Collaborate with suppliers to maintain adequate buffer. stores or with India • Develop reverse supply Post for tier 2/3 as well chain specific to this as tier 1 cities to segment. • Quality assurance at source to reduce returns due to quality issue. • Ensure quick pickups • Prefer 3PLs which can of orders returned.STRATEGIES FOR SEGMENT -1 Direct Supplier Fulfilment Fulfilment • Enhance inventory visibility. • Strengthen supplier portfolio. • Maximize usage of automation and technology. • Increase follow-up • Negotiate for favourable frequency with rates. supply chain distribute the excess which is swift enough to load of last mile return the item quickly to delivery source such that items can be put back for sale. Last Mile Distribution • Increase follow-up frequency with customers to reduce touch points for converting delivery and reducing failed delivery. • Persuade suppliers to build temporary stocks. • Order fulfillment optimization – prefer order to be fulfilled from nearest FCs. • Strengthen supplier portfolio. supplier/FCs locations.r. Fulfilment through FC • Build temporary resources (such as non skilled labors) • Enhance inventory visibility. • Identify strategic temporary storage locations. • Use the fastest mode of shipment. supply chain which is swift enough to return the item quickly to source such that items can be put back for sale. Fulfilment Strengthen supplier portfolio. 3PL/Transportation Long-haul • Segment 3PLs based on the optimized network configuration for meeting demand w. . • Enhance system capacity and optimize inventory for promotional items.t. • Quality assurance at source to reduce returns due to quality issue. • Maximize usage of automation and technology. • Prefer 3PLs which can provide temporary warehouses. • Ensure quick pickups of orders returned. • Collaborate with suppliers to maintain adequate buffer. • Tie up with physical stores or with India Post for tier 2/3 as well as tier 1 cities to distribute the excess load of last mile delivery. JIT Fulfilment • Options contracts. • Create temporary bays for these items near picking and packing area. • Develop reverse supply chain specific to this segment. Collaborate with suppliers to maintain adequate buffer. On board temporary suppliers for these products.STRATEGIES FOR SEGMENT -2 • • • • Direct Supplier Fulfilment Enhance inventory visibility. • Pool resources by interconnecting inventory of FC’s. • Negotiate for favourable rates. • Promote these products well before the festive season to take off extra load during festive season. • Prefer consolidated shipping of orders to same location to reduce the cost. • Incentivise the customers to increase demand lead time.STRATEGIES FOR SEGMENT -3 Fulfilment Direct Supplier Fulfilment • Enhance inventory visibility. • Enhance system capacity and optimize inventory for promotional items. • Strictly forecast based Inventory management system. Fulfilment through FC • Suppliers of these type of products can be persuaded to stock temporary inventory for segment 1 & segment 2 products. Last Mile Distribution • Increase follow-up frequency with customers to reduce touch points for converting delivery and reducing failed delivery. • Strictly follow forecast based inventory management system. • Tie up with physical stores or with India Post for tier 2/3 as well as tier 1 cities to distribute the excess load of last mile delivery . • Maximize usage of automation and technology. • Ensure quick pickups of orders returned. • Order fulfillment optimization – prefer order to be fulfilled from nearest FCs. • Strengthen supplier portfolio. JIT Fulfilment • Utilize current supplier base having capability to meet sporadic increase in demand. 3PL/Transportation Long-haul • Exploit low cost 3PLs. • Fulfilment through FC • Suppliers of these type of products can be persuaded to stock temporary inventory for segment 1 & segment 2 products. 3PL/Transportation Long-haul • Exploit low cost 3PLs. • Strictly follow forecast based Inventory management system. JIT Fulfilment • Utilize current supplier base having capability to meet sporadic increase in demand. • Prefer consolidated shipping of orders to same location to reduce the cost. • Incentivise the customers to increase demand lead time. • Carry out SKU rationalization to remove obsolete products. • Promote these products well before the festive season to take off extra load during festive season and to concentrate on first two segments.STRATEGIES FOR SEGMENT -4 Fulfilment Direct Supplier Fulfilment Strictly follow forecast based inventory management system. Last Mile Distribution • Increase follow-up frequency with customers to reduce touch points for converting delivery and reducing failed delivery. • Persuade suppliers to stock products from segment 1 & Segment 2. • Ensure quick pickups of orders returned. . • Create segregated bays for these items farthest from picking and packing area. 15 0.3 89% 96% 99% 100% 79% 0. * The data mentioned here is just for representational purpose and does not consider actual . • The last three segments have a cumulative volume sales of just 4%.05 0 100% 1 2 3 4 5 6 7 8 0% Further segmentation of Segment 1 & Segment 2 demand during festive season can be done to identify categories which can be given maximum managerial attention• The first two segments have a cumulative volume sales of 55%.2 55% 60% 0.35 120% 0.Segmentation of Section 1 & Section 2 Products based on demand during festive season 0.25 80% 68% 0.1 40% 31% 20% 0.