Supply Chain Analytics

(Fiesta Gifts - Mending the Spending)

Dr. Gopal Kumar

gopalkumar@iimraipur.ac.in

IIM Raipur
25 November 2019

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Fiesta Gifts - Mending the Spending
Case Study

6. For each decision, analyze the impact of

implementing it.

< $500

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Fiesta Gifts - Mending the Spending
Case Study

< $500
Rank SKUs Sum of Quantity Sum of TotalPrice Count of InvoiceNo CumSpend %Spend Category %Rank Action

Consolidate

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Fiesta Gifts - Mending the Spending
Case Study

SKUCode 22301

SupplierID Sum of Quantity Sum of TotalPrice

1001001 26 92.82
1001002 25 89.25
1001003 32 114.24
1001004 50 178.5
1001005 7 24.99
Grand Total 140 499.8

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Fiesta Gifts - Mending the Spending
Case Study

SupplierID 100901
SKUCode 22266
SKUCode Sum of Quantity Sum of TotalPrice
SupplierID Sum of Quantity Sum of TotalPrice 20829 320 785.82
100901 16 8.12 20894 5 20.65
100902 28 11.312 21385 46 54.74
21386 31 8.246
100903 151 51.114
21389 4 4.76
100904 82 30.184 21733 277 1072.33
100905 73 22.638 21811 155 91.854
Grand Total 350 123.368 22158 72 297.36
22161 147 39.102
22163 50 55.3
22178 764 1439.648
22185 82 176.932
22217 20 35
22219 156 185.64

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Fiesta Gifts - Mending the Spending
Case Study

SKUCode 22825

SupplierID Sum of Quantity Sum of TotalPrice

10014501 13 144.69
Grand Total 13 144.69
The SKU (22825)
SupplierID 10014501 is ripe for
consolidation
SKUCode Sum of Quantity Sum of TotalPrice
22825 13 144.69
Grand Total 13 144.69

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Fiesta Gifts - Mending the Spending
Case Study

Redesign spend to Category B Supplier

SupplierID Sum of Quantity Sum of TotalPrice Count of InvoiceNo
CumSpend %CumSpend Category Action
10024002 902 1833.86 19 2798379.514 0.933851751 B Continue
10024001 310 463.176 25 2963480.128 0.988947744 C Rationalize
10024003 85 182.91 11 2990755.39 0.998049815 C Rationalize

Consolidate into fewer supplier

SupplierID Sum of Quantity Sum of TotalPrice Count of InvoiceNo
CumSpend %CumSpend Category Action
1003602 2148 786.436 22 2927916.866 0.97707987 C Continue
1003603 231 454.454 30 2963934.582 0.9890994 C Rationalize
1003604 507 446.978 29 2964830.036 0.989398224 C Rationalize
1003601 432 263.704 22 2981522.712 0.994968763 C Rationalize

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Fiesta Gifts - Mending the Spending
Case Study

Consolidate into one supplier

SupplierID Sum of Quantity Sum of TotalPrice Count of InvoiceNo
CumSpend %CumSpend Category Action
1004402 152 301.14 19 2978477.95 0.993952691 C Rationalize
1004403 51 121.45 12 2994078.136 0.999158654 C Rationalize
1004401 61 70.91 10 2995387.57 0.999595628 C Rationalize

Eliminate these supplier

SupplierID Sum of Quantity Sum of TotalPrice Count of InvoiceNo
CumSpend %CumSpend Category Action
1009701 14 69.44 5 2995527.57 0.999642347 C Rationalize
1009702 11 16.45 6 2996502.908 0.999967829 C Rationalize

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Fiesta Gifts - Mending the Spending
Case Study

$10,000

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Fiesta Gifts - Mending the Spending
Case Study

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Fiesta Gifts - Mending the Spending
Case Study

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Fiesta Gifts - Mending the Spending
Case Study

Lakewood (WA)

SKUCode: 22457
1147.78 Supplier ID: 1002601
Redding (CA)
259.95 2410.6
990.99

Sacramento (CA)

San Bernardino (CA)

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Fiesta Gifts - Mending the Spending
Case Study

SKUCode 22457

Count of SuppCity Count of InvoiceNo Sum of Quantity Sum of TotalPrice

260 260 2444 9663.64

SKUCode 22457
CustomerID 17812

Supplier City Count of SuppCity Count of InvoiceNo Sum of Quantity Sum of TotalPrice Average of SuppDCDist
Simi Valley 2 2 2 8.26 4059.3
Grand Total 2 2 2 8.26 4059.3

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Fiesta Gifts - Mending the Spending
Case Study

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Nomis Solutions (A & B)
Case Study

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Nomis Solutions (A & B)
Case Study

Order of the magnitude approach

❑Potential market < $10 million/year

❑For some angel investor:

Potential market is $10 to $100 million/year

❑Potential market > $1 billion/year

(opportunity may be interesting)

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Nomis Solutions (A & B)
Case Study

2002

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Nomis Solutions (A & B)
Case Study

.Auto loan pricing in Houston Market, mid-2004 to mid-2005

FICO = 700
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Nomis Solutions (A & B)
Case Study

2002

Consumer credit = $10.33 trillion

Average interest rate = 5.7%
American were paying 10.33*0.057=$588 billion

❑Experience says revenue management and price

optimization can improve revenue from 2 to 10%.

❑$11.76 billion to $58.8 billion

❑If Nomis captures 10% of this => $1.17 b to 5.8b

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Nomis Solutions (A & B)
Case Study

Creating a business case

1. A bank provides data to Nomis

2. Nomis uses the data to generate
recommended prices for the bank
3. The bank estimates the additional
profitability that would be generated from the
prices.

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Nomis Solutions (A & B)
Case Study

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Nomis Solutions (A & B)
Case Study
Segment Analysis

Ideal pricing point is 5% to 5.5%

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Nomis Solutions (A & B)
Case Study
Segment Analysis

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Nomis Solutions (A & B)
Case Study
Segment Analysis

Eureka!

e-Car might overpricing in this

segment

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 .

Thanks!

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