FastGood Case Study Analysis
FastGood is a multinational Fast-Moving Consumer Goods (FMCG) which operates across South-East Asia. Recently, the company faced a major challenge in managing its business portfolio represented via a number of retailers located across the region. After conducting an initial investigation, it was found that the company’s current supply chain network design and associated policies cannot efficiently support the company’s upstream and downstream stakeholders (e.g., customers, suppliers, distributors, logistics providers). This resulted in significant negative financial downturns and caused several drastic operational issues in almost all regional businesses.The supply chain innovation head of the company, Mrs. Indra Banerjee was assigned by the CEO to review and redesign the company’s supply chain network and relevant policies. As part of a collaborative project with La Trobe University’s master of logistics and supply chain management program, a group of students are selected to participate in this project. They have received a comprehensive Dataset (see ATTACHED) from the analytics department and are asked to review and analyze the company’s existing and future supply chain. The ultimate goal is to identify key problems and suggest solutions to address the company’s supply chain challenges.
Current design and policies
- Physical Supply Network: FastGood owns 3 factories (shown in yellow) which operate in Indonesia, Thailand and Malaysia. Factories are supplied by 5 main suppliers (shown in green) in the region. Mrs. Banerjee decided to focus on 4 top-performing products selected based on their sales volume. These products are shipped to 440 customers (shown in blue) through 13 distribution centres (shown in red).
- Demand: To enhance the supply chain network, FastGood focuses on their best-selling product categories including Shampoo, Facial Cream, Coffee and Detergent. The selected products have always been known for their stable market demand and a reasonably long lead-time required by end customers. One year’s (or 52 weeks’) historical customer and product-level demand data has been provided to students.
- Supply: FastGood has a fixed-price contract with its suppliers to deliver 5 tons of each raw material at the first day of every month. FastGood pays $ 200,000 per month to all suppliers to cover material and transportation costs to its factories.
- Transportation: Goods can be transported from factories to the distribution centres (1st leg), between distribution centres (inter-site) and from distribution centres to end-customers (2nd leg). Transportation from factories to distribution centres is handled by a 3PL company and charged per-vehicle, per-shipment ($100). FastGood uses in-house truck capacities for shipment among distribution centres. Therefore, the inter-site cost is assumed to be Zero. The company has made a last-mile delivery (i.e. from DC to customers) agreement with a logistics service provider, where the service provider applies a product-distance based policy ($ 0.5 per kg/km).
- Distribution Centre: Inventory carrying costs (including taxes) of items in DCs are considered to be 5% of the product selling price per case per month.
- Inventory Policy: Products are replenished from a factory to a DC, or between DCs based on a “Regular inventory policy” (3,500 cases per week).
- Estimated lead time (ELT) by products and orders
- Number of vehicles used for transportation
- Vehicle utilization rates
- Inventory level per DC
- Demand fulfillment rate
- Distribution centres and transportation costs
Students have received information from the marketing team revealing that the existing customers’ demand is being shifted to FastGood’s competitors. This has led to a high demand fluctuation in all regions, making the market demand less predictable. In addition to the loss of market share and the high demand fluctuation, the customer service department announced that customers now expect that the maximum acceptable delivery lead time should be significantly reduced to only 24 hrs. This means that the customer would be able to simply cancel orders which take more than 24 hrs to deliver. The transport authority of Thailand enforced a new rule which reduces a truck’s load limit to 6 tons in the South region. Last week the East Java region of Indonesia was affected by floods, restricting accessibility to customers through only motorbikes for the next 6 months.
Considering the above-mentioned challenges, an updated statistic from the Data Analytics department revealed a 20% drop (on average) on all performance metrics.
Assessment 1 instructions
Case Study Analysis
After initial investigations made by FastGood’s independent consultants it has been found that, while internally designed and implemented, FastGood’s current supply chain strategy has not been clearly communicated with external stakeholders. This is flagged as one of the significant strategic issues and needs to be carefully addressed. To address this shortcoming, you have been asked to investigate the company’s existing supply chain strategy and, considering the key challenges and recent changes demonstrated in the Case Study and associated dataset, propose a new supply chain strategy. You need to take the key aspects of the company’s products and supply chain characteristics (e.g., demand, supply, delivery lead time, supply chain integration level) into account and discuss the contingencies surrounding both the current and proposed supply chain strategies.
Your discussion should be based on the information provided in the FastGood case study and associated dataset with reference to both the material covered in Module 1 and relevant academic literature (at least 3 academic sources e.g. peer-reviewed journal articles, book and book chapters). To help managers for better decision-making, you’re also expected to use appropriate tools and techniques to present your propositions and demonstrate your insights.
- Read through the FastGood Case Study and associated dataset before before you start.
- Read carefully through the marking guide for this assessment task, and make sure you understand the criteria of this task before you start.
- Submit your final report as a Word document, including your analyses and recommendations.
- Remember to use the Academy of Management referencing style. (Note that your calculations and your reference list are not included in your total word count.)