erp board of directors presentation
TRANSCRIPT
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Eric Edmonds Sarah WhiteJordan KirwinAshish Bagree
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Plant Cumulative Sales
Cumulative Net Profit Net Margin ROE ROA Market
Share
OO $5,188,979 $306,194 5.90% 3.69% 1.52% 14%
PP $6,429,579 $1,206,243 18.76% 13.10% 5.69% 17%
Silo Busters $8,079,652 $2,092,739 25.90% 20.74% 9.47% 22%
RR $6,075,736 $1,717,409 28.27% 17.67% 8.28% 16%
SS $4,414,461 ($826,064) -18.71% -11.51% -4.25% 12%
TT $7,357,153 $1,895,696 25.77% 19.16% 8.56% 20%
PERFORMANCE REVIEW
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Quarter 1 – Initial market investment/sensitivity to determine consumer preference
Revenue market share of 19% - 20%
Return on Assets – 25% (based on +5% from last year)
Return on Equity – 45% (based on +5% from last year)
Constantly evaluate our product off erings
Compete on margins
Compete on analytics
BUSINESS GOALS
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Product Strategy Offer 6 products to spread our
risk Test market sensitivity in Q1 Introduce new product to
market Only sell in distribution
channels 10 and 12 Advertising Strategy
No marketing expenses Pricing Strategy
Specialize in DCs to learn the customer
Monitor our prices relative to industry average
Utilize Monopoly Index
MARKETING STRATEGY
Blueb
erry
Mixed
Fru
itNut
Origin
al
Raisin
Stra
wberry
0%5%
10%15%20%25%30%35%40%45% 42%
22% 22%19%
27%
39%
Monopoly Index
Blueb
erry
Mixed
Fru
itNut
Origin
al
Raisin
Stra
wberry
0%5%
10%15%20%25%30%35%
20%
6%
30% 31%26%
19%
Gross Margins
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$ 3.
00
$ 3.
10
$ 3.
75
$ 3.
80
$ 4.
00
$ 4.
12
$ 4.
17
$ 4.
25
$ 4.
30
$ 4.
49
$ 4.
50
$ 4.
75
$ 4.
80
$ 4.
99
$ 5.
00
$ 5.
25
$ 5.
50
$ 5.
75
$ 5.
99
$ 6.
00
$ 6.
25
$ 6.
50
$ 6.
80
$ 6.
99
$ 7.
00
$ 7.
49
$ 7.
50
$ 7.
99
$ 8.
00
$ 8.
99$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
Price vs. Revenue (DC #12)
Total
PRICE VS. REVENUE
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PRICE VS. REVENUE
$3.0
0
$3.2
5
$3.7
0
$4.0
0
$4.4
9
$4.5
5
$4.9
0
$5.0
0
$5.2
0
$5.4
0
$5.5
0
$5.9
2
$6.0
0
$6.1
5
$6.2
5
$6.5
4
$6.8
0
$6.9
2
$7.0
4
$7.9
2
$8.1
8$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Price vs. Revenue (DC #10)
Total
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Production lot size of 50,000 units per product to reduce down time
Improve set up time from 12 hrs. to 8 hrs. by investing in production improvements
Game time decisions each quarter
Procure at day 20 of each quarter to be ready for production on day 1 of subsequent quarter
Prevent stocks outs! – Continuous production initially
Plan to have no finished products on Quarter 4 Day 30
OPERATIONS STRATEGY
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OPERATIONS STRATEGY
Blueberry Mixed Fruit Nut Original Raisin Strawberry0
20,000
40,000
60,000
80,000
100,000
120,000
Quarter 1 - Operations
ProductionQuantity SoldEnd Inventory
Produce more of the products we did not have in stock Keep prices relatively high on Strawberry/Blueberry in
anticipation of other companies selling out Aim to end quarter with 25,000 units of each product in stock
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@RISK SIMULATION – QUARTER 2
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OPERATIONS STRATEGY
Blueberry Mixed Fruit Nut Original Raisin Strawberry0
20,000
40,000
60,000
80,000
100,000
120,000
140,000 Quarter 2 - Operations
ProductionQuantity SoldEnd Inv.
Anticipated increased sales due to slight lowering of prices Increased production on Strawberry/Blueberry due to
Monopoly Index and low commodity prices Monopoly Index of Strawberry in Q1 – 72%; Blueberry – 30%
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OPERATIONS STRATEGY
Blueberry Mixed Fruit Nut Original Raisin Strawberry0
20,000
40,000
60,000
80,000
100,000
120,000Quarter 3 - Operations
ProductionQuantity SoldEnd Inv.
Low production of Strawberry/Blueberry due to high inventories Very low Nut prices to make way for new product – sold out in
few days Introduction of Buster Nut Cereal™ Procurement on Day 20 to last remainder of year*
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*FORECASTING ERROR
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101105109113117$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
Inventory Levels
Finished Product Inv. Raw Material Inv.
Day
Invento
ry V
alu
e
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OPERATIONS STRATEGY
High raw materials inventory forced abandonment of margins strategy
Anticipated price war, drastically cut prices across the board Took advantage of our short set up time to produce at will
Blueberry Mixed Fruit Nut Original Raisin Strawberry0
20,000
40,000
60,000
80,000
100,000
120,000
Quarter 4 - Operations
ProductionQuantity SoldEnd Inv.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 300
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Quarter 4 Inventory
1 Kg Blueberry Muesli 1 Kg Mixed Fruit Muesli 1 Kg Nut Muesli 1 Kg Original Muesli 1 Kg Raisin Muesli 1 Kg Strawberry Muesli
Days
Invento
ry (
Finis
hed P
roduct
s)
ENDING INVENTORY
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Assets Q1 Q2 Q3 Q4Cash $1,352,266 $1,181,357 -13% $2,942,324 149% $2,654,847 -10%
Inventory - FP $449,290 $1,119,149 149% $1,100,894 -2% $56,792 -95%
Inventory - RM $1,188,464 $327,525 -72% $1,381,082 322% $1,069,949 -23%
Receivables $1,511,521 $2,028,059 34% $1,383,934 -32% $1,879,333 36%
ST Assets $4,501,541 $4,656,090 3% $6,808,235 46% $5,660,921 -17%
Land $2,000,000 $2,000,000 0% $2,000,000 0% $2,000,000 0%
Building $10,000,000 $10,000,000 0% $10,000,000 0% $10,000,000 0%
Depreciation -$79,545 -$147,727 86% -$215,909 46% -$284,091 32%
Machinery $5,000,000 $5,000,000 0% $5,000,000 0% $5,000,000 0%
Depreciation -$79,546 -$147,727 86% -$215,909 46% -$284,091 32%
LT Assets $16,840,909 $16,704,545 -1% $16,568,181 -1% $16,431,818 -1%
Total Assets $21,342,450 $21,360,635 0% $23,376,416 9% $22,092,739 -5%
Liabilities
Payables $937,450 $0 -100% $1,535,727 $0 -100%
Debt $12,000,000 $12,000,000 0% $12,000,000 0% $12,000,000 0%
Equity
Capital Stock $8,000,000 $8,000,000 0% $8,000,000 0% $8,000,000 0%
Retained Earnings $404,999 $1,360,635 236% $1,840,689 35% $2,092,739 14%
Total Liabilities + Equity $21,342,450 $21,360,635 0% $23,376,416 9% $22,092,739 -5%
BALANCE SHEET
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Q1 Q2 Q3 Q4 YEAR Nearest Competitor
Revenues $ 1,782,782 $ 2,047,268 $ 1,801,363 $ 2,448,238 $ 8,079,652 $ 7,357,153
Cost of Goods Sold
$ 778,028 44% $ 582,814 28% $ 882,108 49% $ 1,771,269 72% $ 4,014,219 50% $ 3,743,390
Gross Margin $ 1,004,754 56% $ 1,464,454 72% $ 919,255 51% $ 676,969 28% $ 4,065,433 50% $ 3,613,763
Other Expenses $ 599,755 34% $ 508,818 25% $ 439,202 24% $ 424,919 17% $ 1,972,694 24% $ 1,718,067
Net Profit $ 404,999 23% $ 955,636 47% $ 480,054 27% $ 252,050 10% $ 2,092,739 26% $ 1,895,696
INCOME STATEMENT
Percent shown is % of revenues
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Operating ActivitiesNet Income $ 2,092,739
Depreciation Building $ 284,091
Depreciation Machinery $ 284,091
Increase in Inventory $ (56,792)
Increase in A/R $ (1,879,333)
Increase in Raw Material $ (1,069,949)
Net Cash from Operating Activities
$ (345,153)
Investing Activities
Building $ (10,000,000)
Land $ (2,000,000)
Machinery $ (5,000,000)
Net cash from investing activities
$ (17,000,000)
Financing Activities
Bank Loan $ 12,000,000
Common Stock $ 8,000,000 Net cash from financing activities
$ 20,000,000
Net Increase (Decrease) in Cash $ 2,654,847
STATEMENT OF CASH FLOWS
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No stock outs
Investment to our processes
Specializing in distribution channels to learn the market
Game-time decisions (Day 20)
New product introduction
COMPETITIVE ADVANTAGE
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QUESTIONS?
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Continue to maximize shareholders wealth
Further invest in our processes and equipment to improve effi ciency
Fix the Raw materials cost error
Analyze distribution channel and regional opportunities
Continue to compete on margins
LOOKING AHEAD
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Outstanding Inventory – 39 daysA/R Outstanding – 24 daysPayables – 0Cash-to-Cash Cycle – 63 days
High A/R High raw materials inventory
Inventory Turns – 9.4
RATIOS (Q2-Q4)