Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50%...
Transcript of Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50%...
![Page 1: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/1.jpg)
1
Prabhat Dairy: The Crossover Challenge
DeGroote Consulting, Strategy Division
Sarah SchweinbergerBriana KnowltonMichael WidlickiShelby Gorelle
![Page 2: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/2.jpg)
Opportunity Statement
2
How can Prabhat Dairy execute a successful product mix and distribution strategy to maximize profitability and realize an optimal
balance between B2B and B2C?
![Page 3: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/3.jpg)
Recommended Solution
3
We recommend that Prabhat Dairy aims for a 50:50 B2B and B2C mix, by increasing value added and polypack products, and maximizing production capacity, using the MILK
strategy:
![Page 4: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/4.jpg)
4
Key Considerations
![Page 5: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/5.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 5
Urge
ncy
ImportanceHighLow
High
Low
Product Profitability
• As a public firm, Prabhat Dairy must deliver profitable results to its shareholders
• Alternatives will be scored highly based on their ability to deliver a profitable solution
Profitability
![Page 6: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/6.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 6
Urge
ncy
ImportanceHighLow
High
Low
Declining Working Capital
• Prabhat is getting stretched on both ends (AR and AP)
• High receivables, interest free loans to farmers and cattle feed has led to declining working capital
Profitability
Declining Capital
![Page 7: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/7.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 7
Urge
ncy
ImportanceHighLow
High
Low
Optimal Expansion Strategy re: Distribution and Market Mix
• Currently, Prabhat utilizes a two pronged strategy – focusing on Mumbai, and then Tier 2 & 3 cities
• Management is divided on this strategy – some feel that Prabhatshould move into Tier 1
• The optimal recommendation will provide justification for the selected distribution strategy and reconcile these differences
Profitability
Declining Capital
Expansion Strategy
![Page 8: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/8.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 8
Urge
ncy
ImportanceHighLow
High
Low
Optimal Capacity Usage
• For some products, Prabhat is running at low capacity; for others, near maximum capacity
• An ideal recommendation would allow Prabhat to optimally use its capacity, eliminating waste
Profitability
Declining Capital
Expansion Strategy
Capacity usage
![Page 9: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/9.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 9
Urge
ncy
ImportanceHighLow
High
Low
Lack of B2C Branding Competencies
• Prabhat is mostly a B2B player and does not have competencies in selling to customers, branding and retail marketing
Profitability
Declining Capital
Expansion Strategy
Capacity usage
Branding competencies
![Page 10: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/10.jpg)
Key Considerations
Key Issues Analysis Alternatives Solution Execution Contingencies 10
Urge
ncy
ImportanceHighLow
High
Low
Key Takeaway: Prabhat’s profitability and working capital are suffering.
Profitability
Declining Capital
Expansion Strategy
Capacity usage
Branding competencies
![Page 11: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/11.jpg)
11
Analysis
![Page 12: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/12.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 12
Population: 1.254B, 17.5% of the world’s population
![Page 13: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/13.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 13
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
![Page 14: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/14.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 14
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
![Page 15: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/15.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 15
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
• Lactose-tolerant individuals
• More milk consumed here than rest of country
• Food preferences: spicy and traditional
• Conflict prone region along border
• Home of New Delhi
![Page 16: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/16.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 16
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
• Lactose-tolerant individuals
• More milk consumed here than rest of country
• Food preferences: spicy and traditional
• Conflict prone region along border
• Home of New Delhi
• Food preferences: fried, traditional foods
• Most traditional of four provinces
![Page 17: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/17.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 17
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
• Lactose-tolerant individuals
• More milk consumed here than rest of country
• Food preferences: spicy and traditional
• Conflict prone region along border
• Home of New Delhi
• Food preferences: fried, traditional foods
• Most traditional of four provinces
• Food preferences: sweeter spice, likely due to proximity to Asia
![Page 18: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/18.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 18
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
• Lactose-tolerant individuals
• More milk consumed here than rest of country
• Food preferences: spicy and traditional
• Conflict prone region along border
• Home of New Delhi
• Food preferences: fried, traditional foods
• Most traditional of four provinces
• Food preferences: sweeter spice, likely due to proximity to Asia
• Food preferences: freshness
• Home of Mumbai
![Page 19: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/19.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 19
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
Indian Consumers• 72% rural areas, 28% cities• 47% live in North/West India• Growing labor force/income• More women in the workforce• 80% consume only liquid milk• Family oriented; meals are eaten at
home, filling spiritual/relationship needs as well as physical ones
![Page 20: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/20.jpg)
Breakdown of the Indian Market
Key Issues Analysis Alternatives Solution Execution Contingencies 20
Population: 1.254B, 17.5% of the world’s population
Broken down into four key territories:
North India South India East India West India
Indian Consumers• 72% rural areas, 28% cities• 47% live in North/West India• Growing labor force/income• More women in the workforce• 80% consumer only liquid milk• Family oriented; meals are eaten at
home, filling spiritual/relationship needs as well as physical ones
Key Takeaway: The Northern and Western territories of India are a good fit for Prabhat’s products in a B2C environment.
![Page 21: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/21.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 21
Farmers
• Located close to Prabhat facilities (Maharashtra)
• 10,000• 3rd party
![Page 22: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/22.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 22
Farmers
450 Collection Points
Milk Contractors (3rd
party)
65% of milk
35% of milk
![Page 23: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/23.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 23
Farmers
450 Collection Points
Milk Contractors (3rd
party)
65% of milk
35% of milk
Loans, cattle feed, vets
Key Takeaway: No formal contracts in place, but Prabhat enforces good
relationships via benefits
![Page 24: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/24.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 24
Farmers
450 Collection Points
Milk Contractors (3rd
party)
65% of milk
35% of milk
Loans, cattle feed, vets
15 Chilling Centers
• 80 bulk milk coolers total
![Page 25: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/25.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 25
Farmers
450 Collection Points
Milk Contractors (3rd
party)
65% of milk
35% of milk
Loans, cattle feed, vets
15 Chilling Centers
2 Centers for Manufacturing
• Owned by Prabhat• Can process 1.5M
L/day• ISO certified, award
winning
Current Capacity Usage:50% Polypack milk
71% condensed milk20% value add products (ex. Ghee)
96% milk powder
![Page 26: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/26.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 26
• Fast Food Chains• MNCs (ex. Cadbury)• Hotels• Local Players (Prabhat
owns some)
B2B• Milk powders• Condensed milk
![Page 27: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/27.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 27
• Fast Food Chains• MNCs (ex. Cadbury)• Hotels• Local Players (Prabhat
owns some)
B2B
500 Distributors
B2C • Polypack (liquid) milk• Value add products (ex. Ghee)
![Page 28: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/28.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 28
• Fast Food Chains• MNCs (ex. Cadbury)• Hotels• Local Players (Prabhat
owns some)
B2B
500 Distributors
Large Chain Stores
Kiranas (15,000)*10K in Mumbai
B2C
![Page 29: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/29.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 29
• Fast Food Chains• MNCs (ex. Cadbury)• Hotels• Local Players (Prabhat
owns some)
B2B
500 Distributors
Large Chain Stores
Kiranas (15,000)*10K in Mumbai
End Consumer
Key Success Factor: Retailers must be within walking distance of consumers
B2C
![Page 30: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/30.jpg)
End to End Supply Chain
Key Issues Analysis Alternatives Solution Execution Contingencies 30
• Fast Food Chains• MNCs (ex. Cadbury)• Hotels• Local Players (Prabhat
owns some)
B2B
500 Distributors
Large Chain Stores
Kiranas (15,000)*10K in Mumbai
End Consumer
B2C
Key Takeaway: There is excess capacity that Prabhat can take advantage of, especially in the value-add product category. There are also redundancies (ex. Milk contractors, B2C distributors).
![Page 31: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/31.jpg)
Cash Conversion & Performance
Key Issues Analysis Alternatives Solution Execution Contingencies 31
AssumptionsCOGS is 43% of Total OpEXAccounts Payable is 20% of Current Liabilities
Key Takeaway: Cash conversion cycle continues to be pressured by Customers and Suppliers, result is a decrease in Financial Performance
Cash Conversion Cycle 2015 2016
DIO 23.3 25.1DSO 27.4 35.8DPO 28.5 16.9
Days 22.3 44.0
DuPont 2015 2016
Profit Margin 2.59% 2.09%Asset Turnover 2.12 1.75Leverage 2.01 1.28
ROE 11.04% 4.68%
![Page 32: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/32.jpg)
32
Alternatives
![Page 33: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/33.jpg)
Alternatives - B2B 70: B2C 30
Key Issues Analysis Alternatives Solution Execution Contingencies 33
Maintain product mix of approx. 70:30 ratio, favoring B2B.
• High revenue generation• Capitalizes on existing structures
and core competencies of Prabhat
• B2B only requires a few key relationships, as selling is done in bulk
• B2B is less susceptible to economic fluctuations than B2C
• Lost potential for polypackmilk; does not target the high number of consumers that drink it – little sold B2B
• More resource intensive from a marketing standpoint; B2B dependent on building and maintaining relationships
• Current operations are not at full capacity for B2C, but are close for B2B
Key Takeaway: While B2B markets are profitable, Prabhat has nearly maximized its capacity in this space; this alternative also does not meet Prabhat’s future goal of expanding into B2C.
![Page 34: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/34.jpg)
Alternatives - B2B 50: B2C 50
Key Issues Analysis Alternatives Solution Execution Contingencies 34
• Aligned with management goals of a 50:50 split
• Capacity exists to meet demand (ex. Polypack milk at 50% of Prabhat)
• Appeases both sides of management (disagreed over B2B or B2C focus)
• Vast market to tap in India• Diversified portfolio
• No competencies in marketing to B2C customers
• Low working capital; this is taking a risk
• B2C is more susceptible to economic fluctuations
• Existing product focus of condensed milk and milk powder are traditionally B2B products
Key Takeaway: This alternative is directly aligned with management goals, and offers a balance between B2C and B2B.
Maintain product mix of approx. 50:50 ratio.
![Page 35: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/35.jpg)
Alternatives - B2B 30: B2C 70
Key Issues Analysis Alternatives Solution Execution Contingencies 35
• 80% of Indians drink only liquid milk; this is where Prabhat primarily sells liquid milk
• Excess capacity for value-add products and polypack(B2C preferences)
• Unions and cooperatives in this space are losing economies of scale
• There are redundancies using distributors for Prabhat in the B2C channel
• Addressing these redundancies could lead to retaliation by distributors
• Processing awards won by Prabhat were issued by B2B clients; takes longer to build back B2B relationships
• No B2C marketing competencies
Key Takeaway: While focusing heavily on B2C would allow Prabhat to tap a new market, there are inherent risks that must be considered, including misalignment with existing competencies.
Maintain product mix of approx. 30:70 ratio, in favor of B2C.
![Page 36: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/36.jpg)
Decision Matrix
Key Issues Analysis Alternatives Solution Execution Contingencies 36
Key Considerations Weight B2B 70: B2C 30 B2B 50: B2C 50 B2B 30: B2C 70
Profitability 0.3 1 5 3Declining Capital 0.2 1 5 3Expansion Strategy 0.2 3 3 3Capacity Usage 0.1 1 3 5Branding competencies
0.1 5 3 1
TOTAL 1.0 1.7 3.7 2.71 – does not address5 – fully addresses
![Page 37: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/37.jpg)
Recommended Solution
Key Issues Analysis Alternatives Solution Execution Contingencies 37
We recommend that Prabhat Dairy aims for a 50:50 B2B and B2C mix, by increasing value added and polypack products, and maximizing production capacity, using the MILK
strategy:
![Page 38: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/38.jpg)
38
Implementation Plan
![Page 39: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/39.jpg)
Implementation Overview
Key Issues Analysis Alternatives Solution Execution Contingencies 39
M I L KMarketing and Positioning
Improving DistributionRedundancies Lean
Manufacturing
KPIs and Evaluation
![Page 40: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/40.jpg)
Marketing and Positioning
Key Issues Analysis Alternatives Solution Execution Contingencies 40
MMarketing and Positioning
• Target Northern India• Highest consumers of dairy• Highest consumers of spicy food
• Hire 2-3 marketing specialists, with B2C competencies• Competencies should include: digital marketing, brand
marketing and product marketing
![Page 41: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/41.jpg)
Marketing and Positioning
Key Issues Analysis Alternatives Solution Execution Contingencies 41
MMarketing and Positioning
• Target Northern India, Tier 1 cities (ex. New Delhi)• Highest consumers of dairy• Highest consumers of spicy food
• Hire 2-3 marketing specialists, with B2C competencies• Competencies should include: digital marketing, brand
marketing and product marketing
And now, where should they start?
![Page 42: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/42.jpg)
Marketing and Positioning
Key Issues Analysis Alternatives Solution Execution Contingencies 42
MMarketing and Positioning
• Target Northern India• Highest consumers of dairy• Highest consumers of spicy food
• Hire 2-3 marketing specialists, with B2C competencies• Competencies should include: digital marketing, brand
marketing and product marketing
And now, where should they start?• “Lassi” pairing – a dairy beverage paired with spicy food, offered
by both street vendors and restaurants• Offer an “at home” Lassi alternative, for sale via organized sector
• Look into two product lines – standard for sale at supermarkets/hypermarkets, and if successful, add a gourmet line for gourmet stores
• Advertise to Northern Indian, female consumers via social media and taste testing in supermarkets; explore CSR
![Page 43: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/43.jpg)
Improving Distribution Redundancies
Key Issues Analysis Alternatives Solution Execution Contingencies 43
IImproving DistributionRedundancies
• Transition away from 3rd party contractors and B2C distributors
![Page 44: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/44.jpg)
Improving Distribution Redundancies
Key Issues Analysis Alternatives Solution Execution Contingencies 44
![Page 45: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/45.jpg)
Improving Distribution Redundancies
Key Issues Analysis Alternatives Solution Execution Contingencies 45
IImproving DistributionRedundancies
• Look in to transitioning away from 3rd party contractors and B2C distributors
• Ensure that there are no regulations requiring their assistance• Build relationships (ex. Loans, veterinary assistance) with farmers
using contractors, and attempt to create a direct relationship• Replace distributors with existing 250 Prabhat salespeople
currently working in B2C• Hire more as necessary
![Page 46: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/46.jpg)
Improving Distribution Redundancies
Key Issues Analysis Alternatives Solution Execution Contingencies 46
IImproving DistributionRedundancies
• Look in to transitioning away from 3rd party contractors and B2C distributors
• Ensure that there are no regulations requiring their assistance• Build relationships (ex. Loans, veterinary assistance) with farmers
using contractors, and attempt to create a direct relationship• Replace distributors with existing 250 Prabhat salespeople
currently working in B2C• Hire more as necessary
Assumptions:Retail price of 21 rupees/LCo-ops pay 77% of this to the farmer (assume we pay 70% - 14 rupees to the farmer)5% of retail cost goes to contractor
Savings:5% of retail price per L sold
![Page 47: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/47.jpg)
Lean Manufacturing
Key Issues Analysis Alternatives Solution Execution Contingencies 47
LLean Manufacturing
• Increase production of value add products• Currently using 20% of capacity• Goal: 100%• Threshold target: 60%
• Increase production of polypack products• Currently using 50% of capacity• Goal: 100%• Threshold target: 60%
![Page 48: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/48.jpg)
Lean Manufacturing
Key Issues Analysis Alternatives Solution Execution Contingencies 48
LLean Manufacturing
• Increase production of value add products• Currently using 20% of capacity• Goal: 100%• Threshold target: 60%
• Increase production of polypack products• Currently using 50% of capacity• Goal: 100%• Threshold target: 60%
Utilize Lean Six Sigma methodology
• Eliminates 8 key types of waste: TIMWOODS
Assumption: biggest contributor is defects; more information required.
![Page 49: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/49.jpg)
Lean Manufacturing
Key Issues Analysis Alternatives Solution Execution Contingencies 49
LLean Manufacturing
• Increase production of value add products (ex. Cheese)• Currently using 20% of capacity• Goal: 100%• Threshold target: 60%
• Increase production of polypack products• Currently using 50% of capacity• Goal: 100%• Threshold target: 60%
Utilize Lean Six Sigma methodology
• Eliminates 8 key types of waste: TIMWOODS
Assumption: biggest contributor is defects; more information required.
• Look to source milk directly from farmers; order more to meet capacity requirements
• Hire 1-2 operations analysts to better understand wastes and bottlenecks
• Lean 6 Sigma Competencies
![Page 50: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/50.jpg)
KPIs and Evaluation
Key Issues Analysis Alternatives Solution Execution Contingencies 50
KKPIs and Evaluation
• Measuring success is vital when entering a new market
![Page 51: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/51.jpg)
KPIs and Evaluation
Key Issues Analysis Alternatives Solution Execution Contingencies 51
KKPIs and Evaluation
• Measuring success is vital when entering a new market
Marketing
• Sales (rupees and volumes)
• Impressions via social media
• Taste testing uptake at store locating
• Conversions after testing• Grant usage
![Page 52: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/52.jpg)
KPIs and Evaluation
Key Issues Analysis Alternatives Solution Execution Contingencies 52
KKPIs and Evaluation
• Measuring success is vital when entering a new market
Marketing
• Sales (rupees and volumes)
• Impressions via social media
• Taste testing uptake at store locating
• Conversions after testing• Grant usage
Operations
• % waste reduction• Reaching two 60%
capacity targets• Leaner supply chain; by-
passing redundancies
![Page 53: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/53.jpg)
KPIs and Evaluation
Key Issues Analysis Alternatives Solution Execution Contingencies 53
KKPIs and Evaluation
• Measuring success is vital when entering a new market
Marketing
• Sales (rupees and volumes)
• Impressions via social media
• Taste testing uptake at store locating
• Conversions after testing• Grant usage
Operations
• % waste reduction• Reaching two 60%
capacity targets• Leaner supply chain; by-
passing redundancies
Financials
• ROE > 11%• Cash conversion
cycle > 25 days
![Page 54: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/54.jpg)
Timeline
Key Issues Analysis Alternatives Solution Execution Contingencies 54
Short Term (0-6 months)
Medium Term (6-10 months)
Long Term (11+ months)
Increased supply chain capacity
Hire new personnel
Rebranding DesignLaunch of “Lassi” line
Lassi expansion
Negotiations with farmers
![Page 55: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/55.jpg)
Costs
Key Issues Analysis Alternatives Solution Execution Contingencies 55
Marketing Costs2-3 marketing specialists 1,100,000Budget marketing 2,500,000
Events, Re-brandGrants 500,000
Operations CostsOperations Budget 5,000,0002-3 operations specialists 1,100,000Source more Milk 8,400,000
Total Costs 18,600,000
Assumption 50:1 Rupee to USD
![Page 56: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/56.jpg)
Revenue Expansion
Key Issues Analysis Alternatives Solution Execution Contingencies 56
% Capacity UsedTotal Output possibility
Currently (1500000 L/day) Price Margin DaysPolypack 0.50 375,000 21 6% 270Milk Powder 0.96 375,000 17 15% 270Condensed Milk 0.71 375,000 25 30% 270Value-add Products 0.20 375,000 160 30% 270
(in Rupees) Utilization of Capacity70% 80% 90%
Polypack 25,515,000 38,272,500 51,030,000Milk PowderCondensed MilkValue-add Products 2,430,000,000 2,916,000,000 3,402,000,000
Additional Profit 2,455,515,000 2,954,272,500 3,453,030,000Growth in Revenue from Base year 2016 21.0% 25.2% 29.5%
![Page 57: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/57.jpg)
57
Risks & Contingencies
![Page 58: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/58.jpg)
Risks & Contingencies
Key Issues Analysis Alternatives Solution Execution Contingencies 58
Situation Trigger Likelihood Solution
Cost of Fodder RisesFor three consecutive
years Fodder costs increase 5-8%
Low
Investigateintegrating Fodder
production into Supply Chain
B2C Customertraction is low
Demand for products does not hit capacity production of >60%
LowIncrease marking
Budget according to demand discrepancy
Polypack and Value add machinery is
overwhelmed
Processing Machinery cannot keep up with
demands for 3-4 consecutive months
Medium
Purchase additional machinery
accordingly to demand
![Page 59: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/59.jpg)
Recommended Solution
59
We recommend that Prabhat Dairy aims for a 50:50 B2B and B2C mix, by increasing value added and polypack products, and maximizing production capacity, using the MILK
strategy:
![Page 60: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/60.jpg)
60
Appendix
![Page 61: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/61.jpg)
Products and Competitors
61
Private DomesticPlayers Cooperatives MNCs (ex. Nestle) Prabhat
Polypack X Value Add: X
Milk Powder X
Condensed milk X X
![Page 62: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/62.jpg)
Calculation for milk we need to buy
62
Current Capacity-50% Polypack-96% Milk Powder-71% Condensed Milk-20% Value Add Products
(50+96+70+20)/4 = 237/4 = 60%
60% of 1.5ML = 0.9M
1.5M – 0.9 = 0.6M
![Page 63: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/63.jpg)
Milk Market
63
Product Market Dynamics Key Players
Ghee Homemade preferred; 90% unorganized
Amul (coop) 8% market share: Parag (private),
CavinKare (private)
Cheese 52% institutional market, 48% retail market
Amul (coop), Mother Dairy (coop); Prabhat (private)
Curd Homemade preferred; 15% branded, 85% unbranded
Amul (coop), Danone(MNC), Nestle (MNC)
Paneer Consumer market: 40-50%: bulk market: 50-60%
Amul (coop); Prabhat(private), Britannia
Yogurt Nascent but finding quick acceptance
Nestle (MNC), Danone (MNC)
Flavored Milk Nascent but fast-growing Mother Dairy (coop), Nadhini
Ice cream North and West India account for 70% of sales
Amul (coop), Mother Dairy (coop), Vadilal (private),
Kwality (private)
![Page 64: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/64.jpg)
Financial Statements
64
Income Statement2015 2016
Revenue 1,004.33 1,171.97Operating Expenses 874.25 1,023.07Personnel Cost 25.60 28.19Depreciation 34.40 39.90Interest & Financing Cost 41.20 42.70Provision for Taxation 2.90 13.59Profit after Tax 25.98 24.52
![Page 65: Prabhat Dairy: The Crossover Challenge - … to End Supply Chain. Key Issues. Analysis. ... 50% Polypack milk. 71% condensed milk. 20% value add products (ex. Ghee) ... (ex. Cadbury)](https://reader030.fdocuments.us/reader030/viewer/2022021511/5ac175c97f8b9ad73f8cee9c/html5/thumbnails/65.jpg)
Financial Statements
65
Balance Sheet2015 2016
Fixed Assets 289.53 295.88Current Assets
Inventories 24.04 30.30Trade Receivables 75.50 114.80Other Current Assets 84.77 229.15
Total Assets 473.84 670.13
Long-term Debt 91.64 44.97Current Liabilities 146.89 101.76Shareholders' Capital 235.31 523.41Total Liabilities & Shareholders' Capital 473.84 670.13