Maxwell Case Analysis

Submitted By – Group 7

Prakhar Singh 100 Varun S Pilla 119

Somil Joshi 113 Prajith VM 99
Tarun Gupta 117 Rakesh M 43
QUESTION - 2

Analysis of the proposed distribution channels

MODEL 1

Point to Point Model – SW Analysis

STRENGTH WEAKNESS

Distribution Centre Costs are saved No Risk Pooling

Low Lead Time Higher Transportation Costs
MODEL 2

HUB and Spoke Model – SW Analysis

STRENGTH WEAKNESS

Lesser Complexity vis-à-vis P2P Inflexibility in daily operations

mechanism (*)
Most efficient when spoke is closer to
the hub
Hub can focus on complex activities
like
packaging thus saving the spoke’s
time
Better Scheduling of tasks
Reduced Inventory Management
Distortion in one spoke may affect the
whole model
Effective Traffic management is needed
Capacity of the hub is the capacity of the
network
May cause longer delivery time vis-à-vis
P2P

(*) Hub and Spoke Point to Point

No: of Nodes N N
No: of Routes N-1 N(N-1)/2
Complexity O(n) O(n*n)
MODEL 3

Central Ware House Model – SW Analysis

STRENGTH WEAKNESS

Best Inventory Management Higher lead Time

Optimum Resource allocation Higher Transportation Costs
Economies of Scale Prone to Bull Whip effect as per
sudden change in demands

Outsourcing Model – SW Analysis

STRENGTH WEAKNESS

Lesser cycle time Lack of accountability

Decrease inventory Conflicting Interests
Helps to focus on core competencies Share of Margin
Better Cash flow Conflicts with existing channel
members
Higher Working Capital Lesser Control
Leverage 3PL’s distribution and reach Confidentiality Issues

On the basis of the above said analysis, the group would like to suggest Maxwell
Corp to go for an Outsourcing model for their distribution.

The points that substantiate them are as follows

• As discussed in the case, the point to point mechanism is having a variety

of problems.
• The hub and spoke model has a variety of positives. But the positives can
be leveraged only if the company is playing a high volume game. The
nature of product line, variability of demand pattern etc works against the
H&S model.
• The ideal location for the central ware house would be Aurangabad or
Bhopal. But as the main factory is present in Vizag, the transportation
from Manufacturing plant to Central warehouse is itself taxed with
inefficiencies as per the following facts
 Average Logistics costs for a non consumer good: 10-35 % of
revenue
 Average Transporting costs for a non consumer good: 60% of
Logistics Cost
 Source: PRTM Consultancy

Once a decision to outsource the entire supply chain is taken, the

following pointers will keep a check on the efficiency of the proposed
model.
• Accountability – Acquire a stake hold in the 3PL so that mutual
interests are always maintained.
• Confidentiality – Post Company Personnel as interface between
company and 3PL
 • Manage conflicts of the existing channel members

QUESTION – 3

Marketing and Sales Set up

Once the distribution part is well handled, the company should now
focus on the M&S part –

• Focusing on ‘Push’ selling (as product is complex and is

bought aided)
• Tie up with hospitals, clinics for popularizing the product
• Enlist the services of medical representatives for product
promotions
• Establish an effective after sales network
• Leverage the Marketing and Sales Strength of a Budget
competitor (eg. Organised retail)