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Business Case : IBC

Group 2:
DELEU Adrien
JOUSSEAUME DE LA BRETESCHE Philippe
BALIJIREDDY Chaitanya
KOUAME Homawoo Emeric Yann
SPI Profile

German Company Over 5000 employees


Created in 1992

Revenue : 1 Billions (2016)


For B2C, Point of Sales are
large DIY retail stores
Manufactures paint to both industrial - Benjamin Moore
sectors (B2B : marine coating) and to - Home Depot
private individuals (B2C : specialised - Castorama
paint for wood : decorative and Home - Leroy Merlin
paint)
For B2B, SPI delivers its
Located in
products directly to its
Germany (Headquarters)
customers
US, Belgium, China (Production &
Warehouses)
SPI Business Model (Osterwaelder 9 Business Model Dimensions)

Customer Segment Revenue Streams


Satisfy needs of Ship Manufacturers and DIY enthusiasts Maritime Industry : 80% - Retail Store : 20%
Medium Price Segment
Key Resources
Value Proposition Flexible and reliable manufacturing facilities
Specific range of marine coating that can also be used as Brand name : associated with quality and performance among
a wood paint. ship manufacturers
Focus on superior quality and usability
Excellent price-performance ratio Key Activities
Product Development & Quality
Channels Nurture relationship with customers
Large DIY stores, beneficial product placement to raise Brand development and promotion
customer awareness
Direct delivery to Ship Manufacturers Key Partnerships
Manufacturers IBC suppliers Retail stores
Customer Relationship
Assistance and trainings on paint specificities Cost Structure
Manufacturing is cost-driven
Product Development is value-driven
SPI Supply Chain

Retail

Production Planning
Product Development PoS Packaging Customer
Warehouse
Back Office Activities

Production

Industry

Use of IBC
Suppliers Profile

American Company Indian Company


Created in 1972 Created in 2002
Specialized in manufacturing and The company acquires the business of IBC
providing IBC to chemical industries business from BCB
Has plants in the US, Belgium, China Has plants it India
Business Strategy
SPI manufactures liquid paint in its manufacturing plants in China, Germany and US to
both B2B and B2C markets.

SPI has a good brand awareness in the maritime industry. But competition is increasing
and the company needs to hold it at bay, and preserve its competitive advantage.
With the increasing trend of DIY in European and American markets, SPI which to
develop new products lines and increase sales for Retail Stores.

Gain in productivity Gain in responsiveness Gain in responsiveness


Produce More volumes Improve on time delivery New Production Schedules
Endure new production Manufacture different Focus on decorative
schedules product lines (maritime painting
Focus on marine coating coating and decorative Manufacture new products
painting) for retail stores
Problem Statement

Our current supplier (BCB) provides us with good quality containers. These containers
(IBC) are crucial to store and transport the paint. BCB has decided to withdraw from the
container business, sell their licence and will shut-down the concerned manufacturing
plant based in the US.

TikCo, an Indian company, has decided to acquire the IBC business. The company has
bought the IBC licence from BCB, and is building its own manufacturing facility in India.
The use of IBC is paramount in the Supply Chain of SPI.

For the moment, there is no alternate supplier of IBC. If the Indian manufacturer fails to
qualify then the overall impact on SPI business will be 100 million.
Summary
1. Stakeholder engagement
2. Category Mapping
3. Performance Review
4. Market Assessment
5. Strategic Review
6. Category Vision
7. Project Portfolio
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Background Opportunities

Two main activities : Manufacturing marine coating and Increasing Trend in DIY : Retail store are likely to increase their sales.
decorative painting. 2016 : 35 000 000 litres of paint sold Retail marketing surveys expect an increase in 10% in painting cans
Two main customers : Opening of new retail stores in emerging market
- Ship manufacturer Strong competitive advantage in the maritime industry. Customers
- Retail stores associate SPI with quality, on time delivery and custom solutions.
As for DIY retail stores, SPI paint has a specific usage (decorative
Scope : Increase sales of retail store. Maintain leader position paint for wood) and meet precise customer need.
on maritime market. New supplier in Asia : improve efficiency in serving the Asian market
Current contract with BCB

Risks & Challenges Recommendations

Transportation costs SPI desire to keep its rank of leader in the maritime industry.
Poor price/volume ratio In addition, SPI has identified a growing demand in DIY
Distance between plants and end-market decorative painting. Retail stores are likely to increase their
Difficulties of implementing changes demand, and the company should meet this demand accordingly.
Staff Resistance
Costs of setting up new processes To achieve that goal : maintain quality and expand product line
Switching costs Invest in manufacturing plants
Discrepancies between the companys requirements and Find a Supplier for IBC
suppliers offers.
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Stakeholder Mapping

Logistics & Transport


Commercials Product
Manager
Managers
Business Marketing
Manager Manager
Business
Purchasing Strategy Product Line
Manager + Manager
Demand
Planners Problem
Supply Chain Statement Warehouse
Manager Manager

Warehouse
Quality Project workers
Manager Manager
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Stakeholder Support Influence


Responsible for insuring quality of the product Ensure the quality of the IBS provided by the
(limiting defaults) and production (reduce PPMO) new supplier : TikCo
Quality Manager
Take part in implementing Lean Six Sigma Method and Plans to monitor TikCo performance and
continuous improvement of processes provide them with improvement methos
Lease with transport and customers Provide plans to optimize the next 3 month
Coordinate the use of IT systems inventories of BCB IBC;
Keep stock under control and make sure inventories Adapt methods due to the change of
Warehouse Manager
are accurate transportation (From the US plant of BCB to
Monitor staff performance and implement change the new Indian plant of TikCo)
Oversee the maintenance of the warehouse
Oversee the sales performance of next 6
Analyse competition of paint market
months to measure the impact of a change
Set the marketing strategy
Marketing Manager in supplier.
Create Marketing campaigns
Set the new marketing strategy to cope with
Oversee sales performance
the new business strategy.
Manage the launch of new products Manage the launch of new products for retail
Communicate stock level to Marketing Department stores.
Product Line Manager
Set objectives to product managers Ensure the availability of products despite
Ensure products availability the change of supplier
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Stakeholder Support Influence


Coordinate information and allocate resources
Define and allocate key resources
Project Manager to managers to successfully manage the change
Responsible for the success of the project
of supplier.
Evaluate demand of next 6 months and
Elaborate Supply Chain Strategy
communicate it to Marketing and PL Managers
Monitor information and product flows
Supply Chain Manager The new supplier is located in another company:
Optimize stocks
Elaborate a new SC strategy to carry IBC in
Plan the demand and develop strategies to meet it
relevant locations when they are needed.
Monitor and train Procurement Teams
Negotiate a new contract with TikCo
Purchasing Manager Develop and execute Purchasing strategies
Scope for potential other opportunities
Report key metrics to reduce expenses
Coordinate and control order cycles The change in suppliers implies logistics efforts :
Logistic Manager Analyse logistical problems and provide solutions Scope for transport suppliers
Improve transportation processes Find the best ways to transport IBC
Monitor business performance
Monitor commercial performance. The change
Train commercials
Business Manager of supplier must not disrupt their performance.
Communicate business key performance indicator
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Production (in L)
History of Production 14,000,000.00

Spend on IBC (in )


In 2016, SPI signed a contract with 12,000,000.00

a major boat manufacturer located


in China. As a consequence : 10,000,000.00

SPI increased its production


SPI decided to reduce the
8,000,000.00
capacity of the US firm of 10%,
and increase the capacity of its
Chinese plant from 10% 6,000,000.00

Furthermore, SPI managed to 4,000,000.00

renegotiate contracts with BCB to


reduce the price of IBC 2,000,000.00
2015 : 220/u
2016 : 210/u
-
2017 : 200/u
2015 2016 2017
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

History of Production
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

40
Current Situation in 2017 35
30
25
20
15
10
5
0
Total US Belgium China

Expected Sales(Million Liters) Expected Sales (Million euros) Cost Of IBC


Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Prevision for next years


Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Prevision for next years


3,500,000.00

Due to the harsh situation BCB is 3,150,000.00

currently experiencing, the company 3,000,000.00


2,730,000.00
2,835,000.00 2,835,000.00

renegotiated the price of IBC to 210 2,593,500.00 2,608,200.00

2,500,000.00

As SPI plans to increase sales in Retail and 2,000,000.00


in Maritime Industry, the spends in IBC
would be significantly higher. 1,500,000.00

However, SPI aims at reducing costs and 1,000,000.00

is willing to pay:
2018 : 5% less than actual forecast 500,000.00

2019 : 8% less than actual forecast


-
2020 : 10% less than actual forecast
2018 2019 2020

Forecast of Spend in IBC Price willing to pay


Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Assurance of Supply
Ideal Business Improve on time delivery
Requirements for SPI to its customers. Be vigilant in trends in the
market (Seasonality, increase in demand in
Shipping Industry)
Innovation
Improve the processes through A Quality
Lean Six Sigma Methods
Consistent quality of meeting
Elaborate Market-driven innovations
specifications
New products development and
design
I Q Provide Teams with Quality
Management Systems

Costs : Remove unnecessary costs. Service Sharing is caring: Share the


Reduce costs while offering best information with the customers to
possible item in term of quality. C S enhance credibility.
Be responsible by maintaining an
inventory level to confront market change
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Business Requirements for the new Indian Supplier


Assurance of Supply

Ability to supply the exact quantity of IBC's products needed in good conditions ( quality, shape etc)
at the right time to gain customer's trust which could strengthen the short and long-term business relationships.

Quality

Develop an expertise in packaging to avoid undesired situations that can ruin the condition of the
product and try to have the least or at the most 3.4 default per million.

Service

Listen carefully to the market and its needs: Be responsive and develop a strategy to reduce the lead time.
Also enable customers to have access to the information by creating new platform that can help them
track the status of their order or return/ submit a complaint/give new ideas or point of view
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Business Requirements for the new Indian Supplier


Costs

Perform a financial control every 3 to 4 month to reduce the non-value added activities and
unnecessary cost.

Innovation

Invest in R&D to acquire next generation IT systems which will ameliorate processes
(manufacturing , distribution, transportation) and reduce significantly costs.
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

FULFILMENT OF THE RIGHT QUANTITY ORDERED A COMPLY TO REGULATIONS


COMPLIANCE OF REGULATIONS PROVIDE THE EXCEPTED QUANTITY

VERY GOOD QUALITY PRODUCT Q GOOD QUALITY PRODUCT

GOOD RESPONSIVENESS TO THE MARKET QUICK RESPONSIVENESS TO MARKET CHANGE


S
CUSTOMER SATISFIED WITH SERVICE PROVIDED

LOW COST WITH THE BEST POSSIBLE QUALITY OPTIMIZE TRANSPORTATION AND
C
MANUFACTURING COST

NEXT GENERATION INDUSTRIAL PACKAGING


SUSTAINABLE SUPPLY CHAIN I STANDARD SYSTEM

GOOD LEVEL OF RELATIONSHIP R GOOD LEVEL AND LIABLE


MANAGEMENT RELATIONSHIP
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

External Market Profile Supplier Profile

Competition is not really existing USA


Not many firms produce our raw materials Location: east Brunswick, New jersey
Niche market focusing on liquid painting for The company offers plastic packaging, steel, and
Marine Coating and home decoration fiber drums, as well as IBCs
This market profile is an asset for us because The company owns plants across the United States
we can do our own pricing with no pressure from coast to coast
from the competitors No IPO at this precise moment

India- BSE 183.25 INR


HQ in Mumbai and offers various products like IBC,
conipails, drums.
The firm has regional offices across India.
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Market Profile Porters 5 Forces Barriers to entry


No barriers because SPI
needs the IBC containers to
transport our
manufacturing product

Supplier power Supply market rivalry Buyer power


Low bargaining power Just a few produce the Strong price negociation
because Tikko is liquide painting for marine because SPI has a good
establishing a new business coating and experience in this business
so they need an initial home/decoration and is globaly recognize
guidness from SPI

Threat of substitues
No threat because SPI is
actually looking for new
IBC providers
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Market Profile SWOT

Strenghts Weaknesses

Strong reputation
Communication
Specialized in marine coating and
Costs management
decorative & home paint
Difficulties in implementing changes

Opportunities Threats

Growing market
Rules and regulations
Emerging countries, BRICS
Increase of labour cost
Growing demand in
The competitor
DIY decorative painting
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Risk Analysis:

Internal risks Financial risks

Lead time Currency fluctuation


Planning errors Supplier bankruptcy
Demande forcasting Financial insolvency
Manufacturing errors Commodity pricing

External risks Supply chain risks

Natural disaster Quality issues


Labor strikes Transportation cost
Legal barrier Regular auditing of suppliers
Regulatory rules Condition of the product
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Sales Risk Review:

High
5 000 000
Low

Low 100 000 000 200 000 000 360 000 000 High
Value of Sale
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Current Desired Current Desired

Market Review Buyer Review

High
One

Market Difficulty/Risk
Tailored Generic Critical Strategic
Supplier

Custom Proprietary Transactional Leverage


Many

Low
One Customer Many Low Relative spend/Business Impact High
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Market Review Buyer Review


How does SPI operates in the IBC Market ? SPI will deal with only one IBC Supplier at a time
There is no substitution from IBC in the market.
SPI buys specific containers : IBC. This product IBC has little impact on the finished product, but is
is highly qualified and is paramount to the paramount to its transportation.
delivery of SPI paint.
SPI is sensitive to the price of IBC and tend to SPI has always focused on assurance of Supply for BCB
reduce it But in the future :
SPI is ready to negotiate with IBC suppliers to SPI wants to be a major partner of the new IBC
supplier (seek exclusivity)
provide win-win situations.
SPI wants to provide the new supplier with
continuous improvement methods
Focus on IBC innovation so that the product is
more specialized for paint industry
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

VISION

Manage the change of Supplier effectively. Eliminate the threat of Supply disruption. Mitigate Supply Chain risks
Improve supplier relationship to cope with the new business strategy. Increase sales and gain Market share

Short Term Mid Term Long Term

STRATEGY

Preserve its competitive Develop new products lines Secure production with TikkaCo
advantage Increase sales for retail store Keep its rank of leader in
Avoid supply chain Build a efficient intranet and maritime company
disruption during switching extranet system to improve the Building a global network with
of supplier responsiveness, efficiency and all main suppliers
Increase overall flexibility.
transportation power to
achieve on time delivery
Stakeholder Category Performance Market Strategic Category Project
Engagement Mapping Review Assessment Review Vision Portfolio

Short and Mid Term


Option 1
Increase market share by innovations.
Provide the supplier with tools to get
Greener products (Packaging)
more efficient 6 sigma methods
Assisting Tikka Cos R&D team to
Provide Consultancy
leverage the production technology
Focus on the quality control of the new
for the higher quality and lower price
supplier
of IBC.

Long Term
Bargaining for a reasonable price
Set more accurate forecast for the
production
Analyze the market for potential Option 2
demand then launch New Product Safety stock
Development Programs Find new suppliers (back up suppliers)
Make sure the new supplier can keep Implement more quality control
the pace with growing production. Improving the competitive power
Require the new manufacturing plant to Reducing the overall cost to acquire
get ISO norms. more market share in current market.
Thank you for your
attention
Group 2:
DELEU Adrien
JOUSSEAUME DE LA BRETESCHE Philippe
BALIJIREDDY Chaitanya
KOUAME Homawoo Emeric Yann