Henkel Iberica Essay

649 Words Mar 13th, 2011 3 Pages
[ HENKEL IBERICA (A) AND (B)]
HAIYANG YU

1. Estimate the cost savings to HI if obsoletes and out-of-stocks related to promotions could be eliminated.
For obsoletes, the loss is holding and transportation cost + salvage lost. For out-of-stock, the loss is mainly opportunity cost. If HI eliminate both obsoletes and out-of-stocks, cost saving will be 450,000 + 8% x (8,975,000,000+9,410,000,000)/2 x (66%-44%) +0.2% x (602,000,000+630,000,000)/2 = 162,238,000 + 1232000 = 163.5 million Euros

2. Using Schwarz’ IDIB Portfolio perspective, CPFR might be viewed as an improvement in HI’s information and decision-making systems. Suggest alternatives to CPFR that might involve implementation and/or buffering.
Improvement in
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In particular, best practice would be to collaborate at the lowest data level; sharing promotional plans, forecasts and replenishment orders per trading unit and per point of sales.

3. Were HI and Condis’ incentives “naturally” aligned for the success of the pilot? Examine the KPIs in Exhibit 2: If achievable, do they provide this alignment?
Yes. The pilot project was greatly successful. Based on the exhibit 2 in the case, every item was better than status prior to the implementation of pilot project. The key points were inventory level (from 14 days to 8 days level), forecast accuracy (from 60% to 80%) and service level (from 98% to 99.5%). The result is good enough to convince HI and Condis to install the CPFR system. But both HI and Condis should consider seriously about investments, organizational conflicts, training and regional characters when they decide to conduct the CPFR naturally

4. What has HI gained from the success of the pilot with Condis? What has Codis gained? What are the opportunities and obstacles to “scaling up” from the pilot for HI? For Condis Answer is in the last page!!

HI Condis
Gained Greater forecast accuracy with single shared forecast Inventory reduction Improved relationship between the trading partners Improved responsiveness to consumer demand Increase in sales Improved relationship between the trading partners Inventory

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