Case study

Analyse the answers of the Neperlog staff members and assess the level of maturity of the concerned activities. For each answer, give a grade from to 0 to 3 and justify your choice

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Company’s data

NEPERLOG France, the French subsidiary of NEPERLOG INTERNATIONAL CORPORATION is faced with some critical issues.

On the one hand, Sales turnover is in permanent progress, but profit level is not in line with mother company wishes.  On the other hand, the subsidiary has to invest several million Euros in a new confidential project, but the US answer is « do as you want to increase profitability and cash flow, knowing that we will not provide you with cash”. The French top management believes that the supply chain can be improved.

You are asked to work on this project. You will have to work on the results of a recent logistics audit that has been conducted on the basis of on a specific reference manual built together with the ASLOG (French Association for Logistics).

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 Finished products

Two non alcoholic beverages :

1. A soda with a cola taste,
2. A soda with a fruit taste.
3. Sales are 1/3 for fruit taste soda and 2/3 for cola taste soda.

Possible contents :

1. A plastic bottle of 1,5 l.
2. A plastic bottle of 0,50 l
3. A metallic can of 0,33 l

• Neperlog France has 17,5% of the non-alcoholic beverages market in France.
• Neperlog France doesn’t export due to the fact that each country where the Neperlog goods are sold has its own subsidiary.
• Customers are exclusively Superstores.

Carefully read the following section of the ASLOG reference manual, then analyse the answer

Chapter 3 – Procurement

3.2.3 - How is procurement managed?

•   1 grade:

A needs’ defining model is set (MRP, consumptions renewal or other…) to supply each type of product (material, components, constituents and/or finished products).

•   2 grades :

While optimizing inventory levels, orders placed to suppliers must prevent from any supply shortage risk.

Supply lead times, frequency and quantities of supplies are considered and optimized. Their regularity and reliability are analyzed through a model which enables to define thresholds or safety inventory.

•   3 grades :

Frequencies and quantities of supplies are both optimized according to the overall volume delivered by the supplier and the shipping costs. Whenever possible, the tight flow, the pull system and the just-in-time distribution concepts have been tested and implemented in close collaboration with the suppliers.

Interview of M. Hortz – in charge of procurement activity

His main target is to always find the cheapest supplier, we want to deal with our suppliers on a DDP basis, same price for both plants. We don’t want to spend time and money in organizing ourselves shipment from the suppliers to our plants. We don’t sign contracts with our suppliers because we want to keep as much flexibility as possible to switch from a source to another, in case of potential one-shot deal, or simply, better price. Of course, as we cannot get each and everything from them, lead-times are not reliable, flexibility is not what it could be.

Basically, the procurement process is both very easy to understand and implement. As soon as the stock level is below a given target, chosen once for the current year, a purchasing order is placed to the supplier, for a given quantity, that is determined once a year too.

Which grade from 0 to 3 do you give to this section? Justify your answer

Carefully read the following section of the ASLOG reference manual, then analyse the answer

Chapter 4 - Production

4.2.1 - How is production scheduled?

•   1 grade:

 Production orders are scheduled according to defined rules and the processed production is monitored closely. Regular meetings are held to follow-up production, control order progress and identify risks and issues requiring action.

•   2 grades :

 A scheduling model adapted to the activity, enables to quickly know the products release lead time, the impact of a failure on the final lead time and the lead time for a new placed order.

•   3 grades :

 This model is subjected to improvements which results are widely conveyed. These improvements aim at meeting the customers’ lead time demands which are getting tighter and tighter; the models implemented by similar businesses and/or competitors are known from the company.

Interview of Daniel HINGOUET – Industrial Manager

Manufacturing global planning is set based on strategic plans. Existing means of production and their rate of use are considered. Various scenarios (one optimistic and one pessimistic) are considered to determine the production means. Regarding production, (at least) one alternative is studied for each hypothesis considering all possible internal and external risks. Production orders are planned according to defined rules and completed production is meticulously controlled. Regular meetings are held to monitor production, check the progress of orders and detect risks and problems to be dealt with.

A scheduli

Carefully read the following section of the ASLOG reference manual, then analyse the answer

Chapter 6 – Keeping stock

6.2.2 - How are inventory levels dealt with?

•   1 grade:

 Apart from the annual inventory count, periodic physical inventories are systematically conducted.

•  2 grades :

 The ageing stock analysis is done (about every three months). From this analysis, proposals are made to define the reserve for inventory loses whereas measures are taken to deal with them and to proceed to their scrappage.

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