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Rules:
Team Details
Round 1
The teams need to submit an executive summary (max. 750 words) on the proposed case solution.
Solution format:
1. Font Size – 12, Font Type – Times New Roman, 1.5 line spacing
3. The front page should carry only Name of your Institute, Team Name, Details of the team
members (Name, Email IDs, and Phone Numbers)
4. The details of the participants SHOULD NOT appear anywhere else in the case solution.
5. Send entries to clique.it.imnu@gmail.com with the document name as “Navreeti_Institute
Name_Team Name” and subject of mail as “Perspective_Navreeti_Institute
Name_Teamname”.
6. The entries must reach us positively by, January 29th, 2011 23:59:59 hrs.
Round 2
1. Top 8 teams shortlisted from Round I will have to present their proposed solution in front of
an esteemed panel of judges at IMNU campus.
2. The shortlisted Teams will have to send the detailed report/solution soft copy to
clique.it.imnu@gmail.com by, February 8th, 2011 23:59:59 hrs.
3. Maximum time allotted for presentation is 25 min (including 5 min of Q & A session).
The decision of the organizers of the contest and the panel of judges will be final and binding on all
contestants.
Prizes
“Forecasting demand is a necessary part of our business planning. But as we have seen our forecasts
tend to vary a lot and more the forecasts miss their target, the more orders vary, with the variation
expanding up the chain”, said Amol. Rahul Gupta operation supervisor, Khandelwal Knitwear Ltd.
(KKL), and Amol Khandelwal , Executive Director, KKL, had met up to discuss the issue of
Demand Planning. Amol suspected something was going wrong and it required immediate
attention.
Amol noticed major variations in the demand forecasts. This started becoming a major concern as
mismatch between actual demand and forecasted sales led to both lost sales and increase in
“Earlier forecasts were just based on the personal insight of my father but it is only useful when
product is new and historical sales data is not available. In the current scenario I am not able to
Rahul replied “After having discussions with Mr. Joshi (marketing and sales head) we have realised
that each person down the chain tends to give a forecasted data including a certain level of safety
stock. And this stock level tends to fluctuate leading to variations in our forecasted demand”
“So you mean, we can‟t predict our forecasted demand accurately”, Amol said.
“Forecast is at best an estimate of what may happen in the future- if there are no surprises. Just as
the weather forecaster frames the likelihood of rain in terms of probability, for example 40 percent
chance of rain, and opinion polls often specify a margin of error, demand forecasts should include
forecasting process or arrange the supply chain to accommodate a large amount of uncertainty”,
Rahul replied.
Rahul again said,” I think we do not have a comprehensive IT infrastructure in place which will
Khandelwal Knitwear Ltd. (KKL) a woollen textile manufacturing company was started by Mr.
Ashok Khandelwal in Mewar, Rajasthan in 1982 under the brand name “Kozy Clothes”. Ashok
negotiated contracts from local suppliers who were ready to provide raw wool to the company at
subsidised rates relative to competitors. In return, Ashok promised long term partnership and year
round procurement of raw materials. Not many companies were into woollen segment at that time
in Rajasthan. It helped the company to gain a strong foothold in the regional market easily.
Initially KKL catered to men‟s segment and included a range of products like socks, hats, sweaters,
overcoats, gloves and mufflers. Within a span of 3 years, KKL market share increased from 10% to
25%. The major competitors for KKL were Arun Wollens and Esa Garments. These companies put
together accounted for 65 % market share with no clear market leader. On time delivery and
Amol Khandelwal son of Ashok Khandelwal after completing his MBA joined the family business
in 2005. His main role was to look into the daily operations of the company and to monitor the
external environment for new opportunities and threats. He saw the opportunity to expand in the
neighbouring states of Gujarat and Maharashtra. In 2007 KKL entered these two states and also
The company till now had been functioning as semi-functional enterprise. They had implemented
different information systems to take care of inventory, warehouse, logistics, employee pay roll etc.
to suit their operations. These systems were introduced in the functioning of the organization in an
adhoc manner, as and when the need was felt. The systems worked in isolation as „Silos‟. There
were issues of data redundancy, lack of collaboration between the systems and inefficiency in
External environment had changed a lot since the inception of KKL. Competition had grown
significantly over the last twenty seven years in both organized and unorganized sector. Players in
unorganized sector either sold unbranded woollen clothes or sold them with brand names sounding
similar to leading brands. They even imitated the packaging style of the leading brands. On the
other side, leading players in the organized sector had introduced quality control procedures and
customer‟s orders. In the new competitive environment, KKL was stuck in the middle. It could
neither increase its prices to take care of rising labour and material costs nor did it have the national
presence to take advantage of economies of scale. Between 2007 and 2009 its sales declined and
Besides the demand forecast issue, company was also facing conflict of interest between various
entities involved in the supply chain. Manufacturers preferred large lot sizes because it improves
process control and reduces the per- unit setup costs. However, it also creates high inventory levels
and storage expenses for retailers. Since the company had started manufacturing variety of
products, manufacturing costs had increased while operational efficiency had decreased. In order to
maintain lead times competitive with those of a manufacturer of fewer types of products, smaller
amounts were transported rather than waiting for larger quantities to amass. However the more
different products a warehouse stores, the less space there is for any single product inventory. An
additional challenge is forecasting the demand for each product since each of the product is
competing for the same customer. As a result, higher inventory levels of each must be maintained to
ensure the same level of service. Product variety therefore increased both transportation and
warehousing costs. Also reducing inventories, manufacturing costs and transportation costs
typically comes at the expense of customer service which was the core strength of KKL.
Amol knew deploying latest Enterprise Resource Planning (ERP) systems can help the company to
gather, store, analyze and share large amounts of data among supply chain partners and to facilitate
strategic, tactical and operational planning through data sharing and analysis. It will also help to
gather, integrate and report logistical data to simulate actual supply chain activity and create greater
trust among supply chain partners. But the demand planning concern which the company is facing
currently can be settled off by using better forecasting software. Then what is the need of investing
so much for ERP? Amol had received quotations from some of the vendors regarding the cost of
ERP implementation and the cheapest among them would cost around ` 3 crores.
Amol knew that using sophisticated software that combines the best of techniques is only one part
of successful demand planning. The forecasts have to be put to practice. Each partner in the chain
may have a tradition of doing its own forecasting. To be effective in reducing lead times and
lowering inventory costs, forecasting has to be married to a more inclusive supply chain
management process. And that means building partnerships- and trust- along the supply chain.
Partners must be willing to share information (and do it quickly), collaborate in developing a single
forecast and agree to carry out their supply functions according to the forecast. The goal is to
However before coming to any final conclusion he decided to consider other issues and tradeoffs
before linking to or upgrading to ERP system. Implementation of ERP systems routinely requires
purchase of new computer hardware, systems software, network equipment and security software.
The cost of hardware varies in a wide range depending on the scope of implementation and
platforms employed. He knew the old legacy systems in place had some weaknesses like
inflexibility and requiring unnecessary steps in processes that could be streamlined. Maintenance
and support of these systems was also an issue. However it was too expensive to replace an
otherwise still useful information system to ERP just to conform to latest standard and technology.
Without proper vision or direction ERP is just a set of applications and software should be designed
or selected to fit the business model, not the other way around.
As Amol was returning back to home his mind was filled with all these issues and his future plans
for the organization. He had the vision of pan India coverage of the brand “Kozy Clothes” in the
next 5 years. Various retailers from northern and eastern regions of the country had approached
KKL for dealership. But these offers were put on hold, Amol and his team were struggling with the
current issues.
Exhibit 1 Monthly Sales of KKL for Year 2009-2010 (All figures are in ‘000)
‘000)
SOURCES OF FUNDS
APPLICATION OF FUNDS
clique.it.imnu@gmail.com