Case Statement:
Your client is a vernier caliper manufacturing company and they have seen a decline in revenue for the past 3 months. You are required to analyse the reason and further suggest measures to rectify the situation.
C: Has there been a change in price, or has the volume reduced
I : The volume has reduced.
C: I would like to consider the issue from demand and supply side. In supply side, have we been able to produce enough for the demand, or has there been any trouble in our supply chain?
I: Our supply side has not changed in the past 3 months. We can assume no problems exist there.
C: I would like to consider the sales as follows:
number of retailers * average footfall in each store * fraction of customers enquiring about our product * fraction of customers buying our product
I: all these parameters have remained the same.
C: Have the returns of our product increased in recent times?
I: yes, the returns have increased. Could you figure out why is it the case?
C: It seems the product is not performing as customer expects. This could be a quality issue. Vernier calipers are supposed to measure accurately. They have a caliper, a sliding mechanism and a reading scale to see the final value.
I: Correct. What could be wrong with the reading scale?
C: There are two functionalities – it supposed to be legible and it is supposed to be accurate. In case the ink fades with time, the user would not be able to read it. In case the measurements on reading line are not accurate, they defeat the purpose of Vernier caliper.
I: That is right. The scale is giving inaccurate readings. Could you figure out why that might be the case.
C: I would like to consider the value chain and understand where the error creeping in. I would consider sourcing of raw material, inbound logistics, manufacturing, out bound logistics, warehousing and finally the retailer. Should I consider any other partner in the value chain
I: That’s a complete picture. You can focus on manufacturing. There has been no change in our machine or raw material.
C: Would it be safe to assume that there is a single factory that produces for western India and only that factory has the problem?
I: yes. Only one factory has that problem.
C: I would consider the following parameters for the factory. The people and staff – their training and expertise for job. The process – how the material flows, and other standard operating procedures in the factory. Lastly, the machines – their accuracy and efficiency for production
I: None of those have changed in the past 3 months.
C: It seems the tasks and processes internal to the company have remained the same. I would like to consider the external conditions, how has the environment changed.
I: That is where the problem is. Our factory is located in a building where some construction work is going on. Due to this, there are vibrations which disturb the machine that marks the ink on the reading scale irregular. Due to this our product gives inaccurate reading. Could you give some suggestions to the client?
C: For an immediate action, the client can evaluate if they can source the products from other factories and markets, where this problem is not occurring. They could also evaluate if there are time intervals where the construction does not happen, and they can choose to manufacture only then. In medium to long term, the client can start communication with the building owner where construction is happening and work out a solution. They could also explore manufacturing machines which are immune to such disturbances in physical environment
I: This looks good. We can close the case now.
Background Information:
Company – Makes only vernier calipers. Facing decline in sales in West India
Competitor – No major change in landscape. Company specific issue
Consumer – Science labs (90%) and research schools (10%). Company owns only manufacturing, 3rd party retailers and distributors
Product – Only one product – vernier calipers. Used to measure accurately the length of objects, up to a precision of 0.01cm (for this model). (Candidate had an idea of what a vernier caliper is. You are advised to get more information if not clear)
Case recommendations:
For an immediate action, the client can evaluate if they can source the products from other factories and markets, where this problem is not occurring. They could also evaluate if there are time intervals where the construction does not happen, and they can choose to manufacture only then. In medium to long term, the client can start communication with the building owner where construction is happening and work out a solution. They could also explore manufacturing machines which are immune to such disturbances in physical environment.
Case tips:
This was a very tricky case. Identifying “product returns” as a cause for reduced sales was important. Reaching the final cause was difficult but being structured and calm helps.
