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Jerry, the Supply Chain Vice president of ABC Inc.

, waited anxiously for Tom to get back to his office after


the Q2 2016 business review discussion with the board. For many years, ABC Inc., a Fast Moving Consumer
Goods Company based out of Atlanta-GA, was a market leader in the Snacks segment. However, Jerry was
aware that the Q2 numbers werent looking good. In fact, ABCs profitability had been trending downward
since early 2015! Jerry envisioned that Tom, the CEO of ABC Inc., would initiate a slew of measures to get
them back on the growth path. As a precursor to this meeting, Jerry was prepared with a broad action plan
for optimization of Supply Chain costs.
Tom hustled back to his office post the board meeting and invited Jerry to his cabin. Tom began by coming
straight to the point about the issues at hand.
Tom: Wellthis board meeting wasnt the best I have had over quite some time. There was a general
concern raised by the board about our reducing profitability. Our 2016 Q2 numbers didnt help either! Our
rising YoY costs are an area of utmost concern.
Jerry: Yes, based on the reports, we realized that the increase in costs is significantly higher than our
revenue growth.
Tom: The board has identified 3 major focus areas for cost optimization Logistics, Marketing and Capital.
Jerry: Logistics cost is definitely the key area of concern for me and my team. Logistics as a % of revenue
for our company stands at 9%, while some of our best-in-class competitors are delivering at far better costs
roughly 5-6%
Tom: Great! So we already have a head start in identifying the root cause. Whats your action plan?
Jerry: Since rising logistics cost has been a consistent trend, we would need a strategic review of our
logistics operations to realize immediate impact to our bottom-line. We need the support of external
consultants to identify key areas to focus and also help us deliver results. We have had several rounds of
discussions with major consulting firms over the last few weeks and have shortlisted GEP to run a pilot
project for us. If successful, they will be awarded a long term partnership to help us optimize our complete
logistics spend. In fact, we have a call later today with GEP to kick start the pilot project. I have also invited
our Europe team so that we could provide GEP an overview of some of the challenges that were facing in
the US and European markets.
Tom: Oh yes! I remember meeting the GEP team during a recent business conclave and they did impress
me with their wholehearted focus on procurement and supply chain. Do keep me posted on the progress
you make on this front.

GEP CASE STUDY COMPETITION 2016

Jerry: Sure Tom.


Jerry rushed back to his office for the discussion with GEP. He was prepared with a list of key points he
wanted to discuss over the course of the meeting.
Jerry: Hello everyone! Thank you for joining the call today. As you are aware, the primary objective of this
call is to kick-start our pilot project with GEP, who would help us tackle some of the problems we are facing
on the logistics front. To help us on this engagement, we have Kim-GEP Project Lead for this assignment
and Scott-GEP Subject Matter Expert (SME) for Logistics. To provide some context on the issues we face in
the European market, we have Olivier-our French Warehouse Manager and Rita- Plant Manager for our
German manufacturing unit.
Let me quickly get started with some key areas where I see scope for cost savings. We currently have one
of our warehouses located at De Lisle, MS which is serviced by our plants located at Atlanta, GA and Lufkin,
TX. Both our plants manufacture and ship the same SKUs. De Lisle is our primary warehouse for salty snacks
which services customer orders across the United States. This warehouse also serves the New Orleans Port
in Louisiana, which is our primary port for exporting our products. Based on a recent network review, we
are considering moving to a new warehouse location. We have identified four potential warehouse
locations, namely Cedartown-GA, Wharton- TX, Park City- KS and Stryker- OH. We seek GEPs help in
reviewing our existing network and check if there are opportunities for cost savings by moving to any of
these new warehouses. To enable this process, we will be sharing our Inbound and Outbound data for 2015
along with the distance data for our sites, warehouses and customer locations. It will also include some
preliminary information around the warehousing costs for the new warehouses. You could consider all
shipments within this report to be Full Truck Loads (FTLs). We would love to see a solution that provides us
with the least annual costs- considering freight/warehouse operating costs and inventory carrying costs.
Scott (GEP SME Lead): Sure Jerry. We have helped a number of our clients with their supply chain network
optimization and delivered good savings in the process. We could check whether the existing warehouse
at De Lisle is ideally placed from an overall cost optimization standpoint or if moving to any of the new
warehouses, completely or in conjunction with another warehouse, would be the better option. Before we
get started, would ABC Inc. be willing to consider more than one warehouse location if that turns out to be
a feasible option?
Also, have you considered intermodal transportation for some of your longer transit shipments? That might
be a cheaper option.
Jerry: Those are very interesting suggestions. To answer your first question, Yes, we are open to using either
a single warehouse, or a maximum of two warehouses to serve our customers. But, please do note that the

GEP CASE STUDY COMPETITION 2016

maximum output of each plant is 4000 Truckloads in a year without any additional investment. To your
second question- we did consider evaluating the Intermodal option a few years back, but the trial runs were
not really successful then. But, there is no harm in re-evaluating!
The next area of concern for us is vehicle scheduling at our manufacturing plants at Atlanta and Lufkin. Our
inland freight providers complain of high waiting time for their trucks especially in the mornings. This is
because most of our vehicle schedules, both inbound and outbound, are skewed towards mornings. Is there
some way we could work towards better scheduling of trucks at these plants?
Kim (GEP Project Lead): We could consider implementation of a Yard Management Tool and a Slot Booking
Tool for these locations. We can conduct supply market research and recommend you the top 3 players in
this category including some insights into the benefits from these tools and key parameters to further
evaluate the suppliers.
Jerry: That would be great. Thanks! Olivier and Rita, could we now discuss areas where you envisage you
would need GEPs support to optimize costs in the European market?
Olivier (French Warehouse Manager): France is one of our major markets in terms of net sales in Europe.
We currently promise our customers delivery within 3 days. We are proud to be hitting this target
consistently, resulting in high levels of customer satisfaction. This is a phenomenal achievement from our
supply chain team considering that our competitors in this market have a 5-day delivery commitment. We
have achieved this target primarily by ensuring that we dispatch shipments from our warehouse on the
same day that we receive the order. However, of late, the freight costs we incur have been on a rising trend.
I have shared the shipment report for the month of July-16 with you. Can GEP analyze the data to help
identify areas we need to work on? Also, lately we have seen an increase in product returns-which include
ambient and refrigerated products. Based on your past experience, can GEP come up with a list of root
causes for this issue and suggested actions to mitigate this?
Scott (GEP SME Lead): We have strong data analytics capabilities and logistics experience. Im sure Kim can
help address both your concerns. Also, considering that ABC is primarily into the Snacks segment which has
a longer shelf life compared to other perishable food products, I believe modifying the current service level
commitment of 3 days would not significantly affect sales. Do you concur?
Olivier (French Warehouse Manager): Well, that is a difficult one to answer. We take pride in our 3-day
delivery commitment and our customers greatly appreciate this. But having said that, I would like to see
the potential cost savings opportunity.

GEP CASE STUDY COMPETITION 2016

Rita (German Plant Manager): Another area of concern is the rising cost of ocean freight for outbound
shipments from our Berlin plant. We have pulled together the data for May-16, and seek your expertise in
identifying areas of improvement and building potential cost mitigation strategies.
Kim (GEP Project lead): Wed be happy to help!
Jerry: I believe the discussion weve had today will serve as a good starting point for this project. We look
forward to recommendations from GEP in a couple of weeks time on the areas discussed today. Thanks
everyone for your time!
Post the meeting, Kim quickly got onto a call with Scott to understand his recommendations on the way
forward.
Kim (GEP Project Lead): The warehouse positioning for the US market is an interesting challenge. We can
perform a detailed scenario analysis to evaluate whether ABC Inc. would need to shift to other warehouses.
Scott (GEP SME Lead): Yes, but you might not readily know the costs of transportation to/from the new
warehouse locations. We can assume a freight rate of $10 per mile for shipments travelling 0-100 Miles, $
7 per mile for 100-300 Miles, $4 per mile for 300-750 Miles, $3 for 750-1500 Miles and $2.4 for >1500 Miles
to calculate the freight cost. We would also need to consider the additional costs of shifting to new
warehouses based on the information Jerry has provided, so that we can compare the ongoing annual costs
across various scenarios. Also, on the Intermodal transport model I proposed, could you provide a list of
pros and cons of moving to an intermodal model and if it would be a good option for ABC Inc. based on the
existing outbound shipments data only on the current scenario? Just make sure that the intermodal
proposal is kept separate from warehouse positioning problem.
Kim (GEP Project Lead): Sure Scott. Also, on the issues faced in the European market
Scott (GEP SME): Sorry Kim, I need to get onto another call. Apologies for not being able to discuss this
further. I leave it to your best judgement to provide recommendations based on the data shared and what
we discussed before. Just remember, the devil is always in the details, so well need to slice and dice the
data in multiple ways to come up with insights!
Could you help Kim review the concerns shared by ABC Inc., and provide recommendations based on the
conversations above and the additional data provided?

GEP CASE STUDY COMPETITION 2016

GENERAL CASE INSTRUCTIONS:


Putting yourself in the shoes of a consultant from GEP, review the scenario and address the concerns faced
by ABC Inc.
Round 1:
1. Format of Submission:
a. Please prepare a presentation of NOT more than 10 slides along with only one excel file containing
backup calculations for the case solution. Include an extra slide stating your institute name, team
name and team members names.
b. The submission must only be made as a .ppt or .pptx file for presentation and .xls or .xlsx for
excel file.
c. Name your files as GEP Case_<Institute Name>_<Team Name>
d. Submissions that do not follow the file format, slide limit or the naming convention will not be
considered for evaluation
2. Content of Submission:
a. The slides should clearly capture possible & reasonable solutions to the problems faced by ABC Inc.
b. Please clearly indicate the assumptions made while proposing the solutions along with
references/sources used
3. Date of Submission:
a. Submission documents (presentation and excel file) are to be emailed to gameplan@gep.com latest
by 11:59:59 PM, Sept 18, 2016
b. No submissions received after the deadline would be considered for evaluation. A timely submission
would hence be appreciated.

Final Round:
Based on Round 1 responses, one team per campus will be selected as the Campus Winner. The winning
teams from all campuses will have a final presentation at the GEP office in Mumbai, wherein they would be
required to present their recommendations to the evaluation committee and the senior leadership at GEP.
Further instructions for final round will be shared with selected teams.
The winning team will receive a cash prize worth INR 1,00,000 and all the Campus Winners shall receive
PPIs*
*Internship interview for first year students, Pre-Placement Interviews for final year students as per institute placement
committees approval

GEP CASE STUDY COMPETITION 2016