Logistics

&
Supply Chain
Management
CASE
STUDY:

KURLON LIMITED
Submitted By:

KURLON LIMITED
Largest manufacturer of mattresses in India

sales Rs. 110 Crore.

65% market share of branded rubberised coir
mattress.
From 1996 onwards sales and market share
stagnated and profitability was declining.
In 1998, Kurlon worried about increased
competition and the challenges of providing
higher variety to the customers.
Already had 126 configurations of mattresses
and 75 configurations that would come after

KURLON LIMITED
The M.D of the company concerned about the

current system of operations and supply chain was

inefficient to handle the load in an increasingly
competitive market.
Was also concerned about the huge inventory lead

times as compared to far more efficient European

firms.
The case provide detailed description of production

and distribution planning practices at Kurlon and

also provide detailed data which can be used for the
diagnosis of the supply chain system at Kurlon.

Business Environment &

Firm Performance

In branded segment Kurlon has 65% market

share.
Multi brand outlets as a result retailers are
constrained.
Kurlon has to keep stocks close to market and
provide quick and reliable service to retailers.
Kurlon was forced to offer a wide variety of sizes
portfolio, apart from this it is also expected to
customise its offerings.
Increased competition from the unorganised
sector.
In 1997, inventories and receivables were Rs.

Importance of SCM in
Kurlon:
High inventory compared to European firms.
Firms has to manage higher variety in future.
High receivables.
SCM cost as percentage of sales
o Supply chain related cost: cost account for

10.6% sales
o SCM cost= Inventory - carrying cost +
Distribution cost
SCM performance measures: Lost sales not
measured and customer service not tracked.

Case Objectives
Case

is useful for an introductory purpose as it

describes the totality of the supply chain.
It also covers a wide range of issues in SCM and can
be used to developing skills in supply chain
diagnostics.
It majorly focuses on supply chain fundamentals such
as:
Supply
chain
strategy
and
performance
measures- use of financial data to analyse SCM
performance
Supply chain planning practicesForecasting
Inventory management
Transportation management

of SCM at Bangalore Central

Warehouse Level:
Mattresses from the CW (central warehouse)

transferred to RW (regional warehouse) in

southern, western and northern parts of India
in the lots of 160 or 320 mattresses in
ordinary and jumbo truckloads.
The transportation time varies considerably
for instance, time from Bangalore CW to Delhi
RDC vary from 3 to 10 days.
The orders are dispatched only according to
the indent raised which sometimes may be
one or two truckloads spread throughout the
week.

Evaluation Of Performance
Of SCM At Regional
Distribution Centres:
42 RDCs across the country.
Manager of each RDC send a work order

once a month by mail or fax to Bangalore

CW, which specifies size and variety of the
mattresses, that to be dispatched to
RDCs on weekly basis.
There are no formal forecasting technique
to follow.
The Area sales manager use his
experience and his understanding of the
market in finalizing the work orders for the
coming months.

Evaluation Of Performance
Of SCM At Retail Centres:
Around 5000 retailers who stock Kurlon products as the

concept of exclusive outlets for mattresses is not yet possible

in India.
The orders are placed mostly verbal, orders are placed on
weekly basis with the average time for replenishment of 1-2
days.
Retailers are only interested in stocking fast-moving
mattresses on the average holding time of 1-2 weeks for
these.
Kurlon offers mattresses in 21 sizes but still face demands for
non-standardized sizes which constitute about 10-30% of total
demand.
Because of the absence of exclusive outlets, most of the
Kurlons retailers also stock other branded mattresses due to
which Kurlon has to constantly maintain pressure on the
retailers for placing orders.

Problems faced by Kurlon:

For demand forecasting has no formal technique.
Delay in transportation of truckloads.
In the absence of any particular configuration of

mattresses some other configuration were loaded.

Did
not had any system for measuring
performances in terms of customer service.
Inventory management is not proper, for example
Delhi stock points keep significantly higher stocks
(from the data given in exhibit 8a)
No exclusive retail outlets due to which Kurlon has
to face tough competition from other branded
mattresses.
Customization of standard sized mattresses.

In production planning one can identify that

vulcanizing or quilting as the bottleneck

processes
Skewed sales pattern on production planning
Role of annual planning to take care of peak
sales during Diwali.
After analysing the data given in the case (as
exhibit 7B), Kurlon needs to improve
processes in the area of production planning
and dispatch planning.

Analysis Of Sales
Pattern In Delhi Region
Analysis Of One Specific SKU (72*35*4)

Analysis of Sales
Pattern in Delhi Region
Analysis of one specific SKU (72*35*4)
Sales data shows interesting pattern
Week 28 represents Diwali
Skewed sales pattern : Last week 62% sales
Sales pattern at retailer shows similar
pattern
Very likely that Kurlon is dumping products
with retailer at months end resulting in high
receivable and low sales in first week of
month.

Evaluation
Of Process
Companys
Planning
Planning Process
The Supply chain planning processes and
practices at Kurlon which includes the
following can be easily examined by taking
example of one SKU (72 * 35 * 4).
1.
2.
3.
4.

Forecasting
Inventory management
Transportation planning
Production planning

Using the data from exhibit 8a. one can

compare:
1.
Indent versus sales: Measure of
forecasting capability at region.
This analysis can be done with different
units of time week, month.
2. Indent versus receipt: Measure of
service from Bangalore CW.
This analysis can be done with different
units of time week, month.

 Forecasting

Looking at the variations in the indenting vs actual

sales figure, it
seems that the company has very poor forecasting
methodology.
Inventory management

1. No proper inventory planning technique

is
followed at regional and
central level and from exhibit it can be clearly
seen that Delhi stock
points keep significantly higher stocks which in
turn puts a big question
mark on the companys planning process.
2. Kurlon has to keep stocks close to the markets and

Transportation
Weekly transfers through road results in repeated
accidents. Monthly transfers with the improvement in
inventory and forecasting could be beneficial.
Part truck load can be considered during low sales
requests.
Production
No proper planning for non-standard sizes.
No proper safety measures as four fires in the last fifteen
years resulted in 2-3 days loss each time.
Long production process and does not match with the
sales requirements.
Keeping in view the unorganized furniture manufacturing
industry in India, Kurlon was forced to offer a wide variety
of sizes in its product portfolio. But apart from large
variety, it was also expected to customize its offering
which up to certain extent failed.

Exhibit 8a.

Recommendation & Suggestion For

Supply Chain Performance Problems
Improper forecasting mechanism at regions: Kurlon can explore

possibility of designing better forecasting models (use time series

data).
Kurlon should put in place supply chain performance management
system.
Ad-hoc inventory policies (excessive stocking) followed, owing to
pressures at the retailer end (competing with other brands), push
strategy (sell what can be produced), improper understanding of the
demand (seasonality), and various uncertainties at different stages.
A substantial amount of skewness is caused internally owing to the
push strategy: Inventory norms to be defined. Focus on supply chain
integration with retailers.
Excess overall inventories havent translated to high service levels.
Stock-outs were very common. Excess inventory also contributed by
despatching configurations not demanded by ASOs. SKUs to be
divided in to ABC categories and appropriate policies to be designed
for each category.

Monthly

indents from ASOs also contributed to

building many wastes. Design less rigid systems
Order placements are through costly means such as
telephone and fax. There is lack of an integrated IT
strategy. Design appropriate IT strategy.
Purchase department orders raw materials in huge
quantities owing to anticipated price fluctuation. This
leads to high stock-piling. Kurlon should keep
monitoring price trends and based on recent price
trends use appropriate sourcing strategy.
Too much importance given to economies of scale in
transportation. Focus on total cost (transportation +
inventory-carrying cost).
Poor coordination between various functions.

THANK YOU!