Case Located in the south of Turkey, Alanya Ice Cream Company produces and distributes 30 different ice creams. The products are distributed by the company itself, using their refrigerated truck fleet, to the hotels in Alanya. Its annual turnover is currently around 10 million TL. It is distributed among the hotels as indicated in Table 1. The company controls about 35% of the market, but this decreases below 10% in the countryside of Alanya where there are many smaller competitors. The company typically keeps stock in its central cold storage warehouses for up to four weeks to meet the distribution requirements of its six major customers. The operation of cold storage costs approximately 5000 TL per month. Storage costs are a significant expense, especially during the winter months when consumer demand is significantly reduced. Moreover, in summer, demand is sensitive to temperature. Therefore, the company estimates its sales based on increases in real spendable income. The Company ignores seasonal effects and hopes stocks will be sufficient to cope with the increased demand during periods of extremely high temperatures. The raw materials needed to make ice cream (vegetable oil, butter, milk, and sugar) are relatively inexpensive. They are delivered with tankers and are stored at the facility. Ice cream is then produced in two main processes, mixing and shaping, and then packaged according to the specific demands of the customers. The company recognizes the importance of a customer-centric approach to marketing and distribution, but they feel exploited by some customers who are never satisfied with the level of service provided. Satisfying the whims of customers began to cost huge sums of money, so the company decided to conduct a detailed analysis of customers and their changing needs. Customers summarized: 1. Beach Hotel uses standard packaging and barcode reading systems. They insist on discounts on high volume purchases and place large and regular orders. As a result, delivery demands and inventory holding requirements are highly predictable. 2. The Sandy Hotel is located approximately 240 km north of the company base and they require delivery in their own unique packaging. Despite their remote location, they insist on free deliveries and want big discounts for bulk orders. Internal inventory control procedures are not well developed, causing them to frequently request "last minute" deliveries to deal with stock issues. 3. Stone Hotel always pays on time and has a reputation for demanding low discounts. Inventory-keeping procedures are perhaps the best in the business, and the Company has a JIT planning system fully aligned with that. Deliveries do not require special packaging or fleet requirements for refrigerated vehicles. 4. Sun Hotel always pays late, and requests all available discounts even if they are strictly not valid. They insist on daily deliveries, they also make additional delivery requests. They threatened to work with another company if all inventory holding requirements were not fully met. 5. River Hotel places infrequent bulk orders. Asks for discounts, needs occasional visits from the ice cream company sales team, and buys on credit and pays every 3 months. 6. Organization of the Lake Hotel is very good. They are located close to the ice cream company, but they often call in staff from the ice cream company to assist with administrative operations and to help place the ice creams on the shelves. They also demand refunds for every product they return and make complex orders that are unclear (what they want is unclear), so each delivery of ice cream results in a lot of conflicts and visits that need to be followed up. Table 1. Market shares and growth rates of customers Customer Share % Growth Rate% Beach Hotel 19 2.6 Sandy Hotel 12 -0.2 Stone Hotel 25 5 Sun Hotel 9 -1.4 River Hotel 14 0.6 Lake Hotel 20 3 Total 100 • Analyze the BCG matrix using the given information. • Propose an appropriate strategy for each of the 6 customers.

Case Located in the south of Turkey, Alanya Ice Cream Company produces and distributes 30 different ice creams. The products are distributed by the company itself, using their refrigerated truck fleet, to the hotels in Alanya. Its annual turnover is currently around 10 million TL. It is distributed among the hotels as indicated in Table 1. The company controls about 35% of the market, but this decreases below 10% in the countryside of Alanya where there are many smaller competitors. The company typically keeps stock in its central cold storage warehouses for up to four weeks to meet the distribution requirements of its six major customers. The operation of cold storage costs approximately 5000 TL per month. Storage costs are a significant expense, especially during the winter months when consumer demand is significantly reduced. Moreover, in summer, demand is sensitive to temperature. Therefore, the company estimates its sales based on increases in real spendable income. The Company ignores seasonal effects and hopes stocks will be sufficient to cope with the increased demand during periods of extremely high temperatures. The raw materials needed to make ice cream (vegetable oil, butter, milk, and sugar) are relatively inexpensive. They are delivered with tankers and are stored at the facility. Ice cream is then produced in two main processes, mixing and shaping, and then packaged according to the specific demands of the customers. The company recognizes the importance of a customer-centric approach to marketing and distribution, but they feel exploited by some customers who are never satisfied with the level of service provided. Satisfying the whims of customers began to cost huge sums of money, so the company decided to conduct a detailed analysis of customers and their changing needs. Customers summarized: 1. Beach Hotel uses standard packaging and barcode reading systems. They insist on discounts on high volume purchases and place large and regular orders. As a result, delivery demands and inventory holding requirements are highly predictable. 2. The Sandy Hotel is located approximately 240 km north of the company base and they require delivery in their own unique packaging. Despite their remote location, they insist on free deliveries and want big discounts for bulk orders. Internal inventory control procedures are not well developed, causing them to frequently request "last minute" deliveries to deal with stock issues. 3. Stone Hotel always pays on time and has a reputation for demanding low discounts. Inventory-keeping procedures are perhaps the best in the business, and the Company has a JIT planning system fully aligned with that. Deliveries do not require special packaging or fleet requirements for refrigerated vehicles. 4. Sun Hotel always pays late, and requests all available discounts even if they are strictly not valid. They insist on daily deliveries, they also make additional delivery requests. They threatened to work with another company if all inventory holding requirements were not fully met. 5. River Hotel places infrequent bulk orders. Asks for discounts, needs occasional visits from the ice cream company sales team, and buys on credit and pays every 3 months. 6. Organization of the Lake Hotel is very good. They are located close to the ice cream company, but they often call in staff from the ice cream company to assist with administrative operations and to help place the ice creams on the shelves. They also demand refunds for every product they return and make complex orders that are unclear (what they want is unclear), so each delivery of ice cream results in a lot of conflicts and visits that need to be followed up. Table 1. Market shares and growth rates of customers Customer Share % Growth Rate% Beach Hotel 19 2.6 Sandy Hotel 12 -0.2 Stone Hotel 25 5 Sun Hotel 9 -1.4 River Hotel 14 0.6 Lake Hotel 20 3 Total 100 • Analyze the BCG matrix using the given information. • Propose an appropriate strategy for each of the 6 customers.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...

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