xtra power energy systems · 2015-10-19 · xtra power energy systems jmsb consulting elliott...
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XTRA POWER ENERGY SYSTEMS
JMSB CONSULTING ELLIOTT ALTILIA MATTHEW BECK SIMON FOUCHER LYSIANE PROULX
HOW CAN XTRA POWER RECONFIGURE ITS SUPPLY
CHAIN TO ENSURE LONG TERM SUCCESS?
Supply? Demand?
Relationships?
Growth? Profit?
Staffing?
RECONFIGURE CLOSED-LOOP SUPPLY CHAIN
• Partner with DLSP • Integrate Dolphin Power materials • Partner with Harley in Y3
Address logistics issues
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
SWITCHING LOGISTICS IS ESSENTIAL TO ADDRESSING THE MARKET
• Leverage ERP for orders/pickups • IT platform for on-going feedback • Retailer program for recycling
Improve retailer
relationships
• Increase plant staffing • Integrate ERP (leverage partners) • Government relations
Prepare for increased
production capacity
Investment: Rs 42M Staff
Rs 200K Marketing Rs 100K ERP
Timeline: 3 Years
Benefit: Profit: Rs 585M
KEY FINDINGS
HIGH DEMAND LEADS TO HIGH MARKET GROWTH AND COMPETITION
↑25% Market
Split Market Competitive
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
XTRA POWER NEEDS TO BETTER LOGISTICS TO COMPETE
Demand is greater then supply
Price
Efficient Logistics
After Sales Service
↑25% Market
Split Market Competitive
THE CLOSED LOOP SYSTEM IS CURRENTLY BROKEN
Cretto Logistics
Xtra Manufacturing
Plant (assembly)
Cretto Logistics Retailer
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
ABILITY TO CLOSE THE LOOP EFFICIENTLY WILL
Galaxy
Avani International
Cretto Logistics
Customers
Plastic Casting Lead Terminal
Lead Plate Battery Acid
Cretto Logistics
PARTNER EVALUATION: LOGISTICS
Cretto
• 8 year relationship • One of largest provider in India • 20% MS in Delhi • Network of retailers • Volume player • Complaints, little responsiveness
DLSP
• No relationship • ERP usage • Reliable, consistent • Condition: sole provider of lead
plate & electro.
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Cretto DLSP Lead time (days) 12 (one of highest) 4 (lowest) RS /kg of load/km travelled 1.6 2.35
PARTNER EVALUATION: ACID AND LEAD PLATES
Avani
• Long-standing relationship • Supply 2 most imp. components • Negligible inbound logistics cost • Decreasing market shares
Dolphin Power Limited
• No relationship • Reduced lead time • Dolphin Power: fast growth, top
10 supplier • Synergies with DLPS
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Avani DPL Cost of supplies (Rs / cell) 400-1450 535 to 1800 Lead time Industry average: 7
8 4
Distance 63Km 36km
A 40% REDUCTION IN LEAD TIME WILL DOUBLE THE EFFICIENCY
PARTNER EVALUATION: LEAD TERMINALS AND PLASTIC CASINGS
Galaxy
• Relationship • Quality supplies • Negligible inbound logistics
cost
Harley Power
• No relationship • Reduced lead time
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
2/3 LEAD TIME LEADS TO 25% INCREASE IN EFFICIENCY
Galaxy Harley Power Price Rs / unit 200 220 Lead time 6 4 Distance from plant 2.9km 2.7km
PRIMARY BATTERY EXPENSE COMES FROM LEAD PLATES AND ACID RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
REDUCTION IN DISTANCE TRAVELLED CAN OFFSET COST INCREASE
Lead Plates: 28kg
Acid: 11.5kg
Plastic: 3.1kg
Terminal: 1kg
Avani or Dolphin Power Limited
Galaxy or Haley
Average Battery: 43.6kg
XTRA POWER HAS THE PRODUCT BUT NEEDS THE SUPPORT High Quality
Product Low Reconditioned Sales
Retailer Recommendations
Short Production Time
High Reconditioned
Margins
Retailers only customer touch
point
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
A NEW PARTNER IS NEEDED TO SUCCEED
The product is able to address
market need
Necessary to fix closed loop
system
Retail relations are essential to brand strength
High Product Demand
FINANCIALS
Y/Y SALES GROWTH PER CATEGORY RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
EXCEPT FOR OPEN SHIELD BATTERIES, NOT MEETING MARKET GROWTH
-10% -5% 0% 5%
10% 15% 20% 25% 30%
2012-2013 Growth
Market Growth
SAVINGS IN PACKAGING COUNTERED LOSSES IN LOGISTICS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
LEAD DOES NOT SEEM TO BE A SIGNIFICANT CONCERN
-200%
-100%
0%
100%
200%
300%
Raw Materials Packaging Logistics
y/y changes in direct costs
WHAT IF ANALYSIS – EXCLUDING PACKAGING SAVINGS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
PROFITABILITY DROPPED BY 70% IN ONE YEAR
2012 2013 Total Sales 328 360 Raw Materials 84 90 Packaging 74 74 Logistics 26 95 Total Direct Costs 183 258 Other Costs 71 80 Total Profits 74 22
0
20
40
60
80
2012 2013
Total Profits (M INR)
ESTIMATION OF QUANTITY SOLD AND RECYCLED RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
WITH LOSSES, ASSUME 4000 BATTERIES REPURCHASED
Sales (M INR) Low High Heat Shield 89.9 Open Shield 126.2 Reconditionned 17.8 Unit price Heat Shield Battery 9200 20000 Open Shield 9200 25000 Reconditionned 4700 10500 Qty Sold High Low
Heat Shield Barrety 9,772 4,495
Open Shield 13,717 5,048
Reconditionned 3,787 1,695
ASSUMPTIONS ON TRANSPORTATION TO/FROM RETAILERS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
WEIGHED AVERAGE DISTANCE PER TRIP - INBOUND
Delhi Northern Region
% Trips Breakdown 59% 41% Average Distance Travelled (km) 35 100
INBOUND TRANSPORTATION COSTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
DIFFERENCE OF 6M INRS BETWEEN PROVIDERS
Cretto DLSP # repurchased Recycled batteries
4,000
Average weight (in kg, dry) 32
Average Distance 62
Cost/(kg.km) 1.6
2.4
Total Cost to Pickup 12,737,280
18,707,880
OUTBOUND TRANSPORTATION COSTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
ADDITIONAL 36M INRS; FOR A TOTAL OF 41M INRS
Cretto DLSP
# batteries shipped 18000
Average distance / trip 62
Average weight / battery (kg, wet) 43.6
Cost/(kg.km) 1.6
2.4
Total Costs of Delivery 77,852,160
114,345,360
ALTERNATIVES
ALTERNATIVES – COSTS PER COMPONENTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Avani / Galaxy
Avani / Haley
DLSP / Galaxy
DLSP / Haley
Terminals/lead 7150 7150 8172 8172
Acid/Plated 1000 1050 1000 1050
COSTS OVERALL RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Avani / Galaxy
Avani / Haley
DLSP / Galaxy
DLSP / Haley
Terminals/lead 0 0 18 18
Acid/Plated 0 1 0 1
Transportrtation 0 0 41 41
Total 0 1 59 60
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Avani / Galaxy Avani / Haley
DLSP / Galaxy DLSP / Haley
% Market 0.25 0.32 0.53 0.6
# Batteries 18000 23040 38160 43200
Sales (M INRs) 359 459.52 761.08 861.6
Costs 87 111.36 184.44 208.8
Additional Costs 60.0 76.8 99.4 67.9
Profits 212.0 271.4 477.3 584.9
SITUATIONAL SYNOPSIS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
SUPPLY CHAIN IMPROVEMENTS REQUIRED TO MEET DEMAND
Market
Demand > Supply Highly Competitive Price & Seasonally Sensitive
Core Competency
Short-Lead Time Refurbishment
Strategy Distribution Through
Retailers Premium Quality Closed Loop
OPTIONS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Status Quo
25%
At Risk
Haley Alone
32%
At Risk
DLSP
53%
Improve
Full Change
60%
Improve
Ability to Meet Demand
Revenue
Profit
Relationships with Retailer
Decision Criteria
SITUATIONAL SYNOPSIS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Impact of retailer
relationships
Improved experience Faster lead
times
Over change management compensation
Staffing of manufacturing
plant Comprehensive
HR Plan Leverage
supplier network
Risks Mitigations Contingencies
RECONFIGURE CLOSED-LOOP SUPPLY CHAIN
• Partner with DLSP • Integrate Dolphin Power materials • Partner with Harley in Y3
Address logistics issues
RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
• Leverage ERP for orders/pickups • IT platform for on-going feedback • Retailer program for recycling
Improve retailer
relationships
• Increase plant staffing • Integrate ERP (leverage partners) • Government relations
Prepare for increased
production capacity
IMPLEMENTATION
3 YEAR TIMELINE RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Year 1 Year 2 Year 3 June 2013
DLSP Logistics issues
Retailer relationships
Prepare for production capacity
DLSP logistics
Components from Dolphin Power
From Galaxy to Harley Power
CLOSED-LOOP SUPPLY CHAIN RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Cretto Logistics
Xtra Manufacturing
Plant (assembly)
Cretto Logistics Retailer
Galaxy
Avani International
Cretto Logistics
Customers
Plastic Casting Lead Terminal
Lead Plate Battery Acid
Cretto Logistics
CLOSED-LOOP SUPPLY CHAIN RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
START BY ADDRESSING THE LOGISTICS ISSUES
DLSP Logistics
Xtra Manufacturing
Plant (assembly)
DLSP Logistics Retailer
Galaxy
Dolphin Power
Cretto Logistics
Customers
Plastic Casting Lead Terminal
Lead Plate Battery Acid
DLPS Logistics
CLOSED-LOOP SUPPLY CHAIN RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
MOVE FROM GALAXY TO HARLEY POWER IN YEAR 3
DLSP Logistics
Xtra Manufacturing
Plant (assembly)
DLSP Logistics Retailer
Harley Power
Dolphin Power
Cretto Logistics
Customers
Plastic Casting Lead Terminal
Lead Plate Battery Acid
DLPS Logistics
3 YEAR TIMELINE RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Year 1 Year 2 Year 3 June 2013
DLSP
platform for order / pick-up
Logistics issues
Retailer relationships
Prepare for production capacity
DLSP logistics
Components from Dolphin Power
Increase reps visits
From Galaxy to Harley Power
Reconditioned battery campaign
RECONDITIONED BATTERY CAMPAIGN FOR RETAILERS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
PROMOTING RECYCLING SHEDS YOU FROM FLUCTUATING LEAD PRICES
Proprietor Mr. Dutta
Marketing Manager
(Mr. Nanda) Sales Manager
Reps in contact with retailers
Operations Managers (Mr. Sheik)
Develop “Savings for you and the planet” sales kit Provide retailers with sales
kits (flyers, posters, displays)
RETAILER RELATIONSHIPS CAN BE IMPROVED WITH DLSP RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
XTRA POWER CAN LEVERAGE THE ERP EXPERTISE OF DLSP
DLSP Platform
Retailers Consumers
Place orders
Feedback training
Schedule pickup
Client feedback
More frequent representative visits
3 YEAR TIMELINE RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
Year 1 Year 2 Year 3 June 2013
DLSP
Launch platform for order / pick-up
Double plant staff size
Logistics issues
Retailer relationships
Prepare for production capacity
DLSP logistics
Components from Dolphin Power
Increase reps visits
Approach government for subsidy (recycling)
Leverage DLSP IT expertise
From Galaxy to Harley Power
PLANT STAFF MUST BE ADJUSTED RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION
LEVERAGE SUPPLIER NETWORK TO STAFF PLANT
Proprietor Mr. Dutta
Marketing Manager
(Mr. Nanda) Sales Manager
Operations Managers (Mr. Sheik)
DOUBLE plant staff size over 2 years Use ERP system to manage CLSC
RECONFIGURING XTRA POWER SUPPLY CHAIN WILL
NOT ONLY INCREASE ITS BOTTOM LINE BUT ADDRESS AN ESSENTIAL NEED OF THE
MARKET
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