SCIENTIFIC GLASS INC. • A Mid-Sized specialized glassware manufacturer operating since 1992 • The company has achieved a significant Top-Line Growth over the years • The Financial Position of the Company during FY 2019 is characterized by high leveraging and long operating cycle. • The company needs to make essential capital expenditure towards upgradation of its infrastructure and at the same time undertake business model restructuring to maintain the growth trajectory • The company is into production of high variety laboratory glassware and enjoys global acceptability and outreach • Looking at the breakdown of 2009 Sales into major product categories, ABC analysis has been carried out which reveals major contribution to its topline comes from
ABC- ANALYSIS Product Category Consumption (000's) Average Unit Value ($) Usage Value ($ 000's) Containers 2321 15.89 36881 Measuring Devices 1283 8.98 11521 Fittings 442 11.01 4866 Funnels 185 12.63 2337 Handlers 1732 5.89 10201 Tubes 4420 4.55 20111 Other 18 23.41 421 Product Category Usage Value ($ 000's) Total Accumulated Value ($ 000's) Total Accumulated Value (%) Classification Containers 36881 36881 42.7 A Tubes 20111 56992 66.0 Measuring Devices 11521 68513 79.4 B Handlers 10201 78714 91.2 Fittings 4866 83580 96.8 C Funnels 2337 85917 99.5 Other 421 86338 100.0
PRESENT SCENARIO • Detailed information of two products ( falling under A category as observed in the previous slide has been taken and demand for all SG’s products • Under three different situations viz. each region having a dedicated warehouse (8 Warehouses); Demand in East could be pooled and demand in West could be pooled (2 Warehouses); All the demand to be pooled (1 Warehouse) • The newly recruited OM professional studied the demand trends and costing structure and intended to minimize the costing equation by re-structuring the business madel. In order to evaluate different options, the costing structure offered by the global logistics company was also factored in.
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- Summer '19