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coffee cup nespresso assignement.pptx

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coffee cup nespresso assignement.pptx

  1. 1. OMBA / Create sustainable value Assignement #2: Go to field activity #1: COFFE CUP NESPRESSO V2012(Younes CHITAOUI) Michel Fender, Professor ABS, Dean of Faculty and Research ABS, Adjunct Professor HEC Paris
  2. 2. NESPRESSO’s value equation : « actual » & « futur » C C C Customer centricity ASSET CASH actual C C C Customer centricity ASSET futur SUSTAINABILIT Y Please; Explanation is below
  3. 3. Vision and mission of SC within COFFEE CUP The key roles of SC are to maintain the actual value and address the forthcoming challenges : • Monitoring the demand with the formalisation of the customers offers. • Planning activities of the supply side ; production and procurment. • Stock management. • Guarantee; reliability of suppliers. • Guarantee a constant high quality of the products and services . • Reducing the delivery time • Facilitate accessibility of the products to the consumers • As the company goes global either for its procurment of supplies and for its sales the listed activities become more complexes and the stakes even higher. • Propose new services/idea to be included in R&D and Innovation stream addressing the forthcoming challenges ; • Reducing costs, increasing service levels and speeding up order fulfilment time whilst maintaining the quality of products provided.
  4. 4. Impact on business value creation by Supply Chain Management due to the evolution of the main value network variable ; suppliers, As the number and the location of suppliers grows notably from 12 to 50 and from one location in Switzerland to more than four locations in two continents; the value equation will undergo a shift towards strengthening sustainability (PLANET); since the foot print of the company will be huge. Also, The raise of the number of carriers support this statement. The number of suppliers obliges to adopt new way of stock managements like VMI which lead to invest in ASSET equipped with breakthrough technologies. We can also assume that enhancing the number of suppliers will raise the need to built more depots or warehouses so the parameter ASSET may also be boosted. Thus, the second parameter in value equation to be solicited is ASSET. Digitalization will be a si ne qua non condition to succeed this size and complexity of suppliers. Besides, the 30% in cross trade poses the constraint of securing quality standards. Only digitalization can allow this remote, reel time quality assessment. This lead to more Digitalization implementation and more investments in the digital. It might have an impact on the cost to source.
  5. 5. Impact on business value creation by Supply Chain Management due to the evolution of the main value network variable ; products, As the number of products takeoff; NESPRESSO diversify its products profolio with a large brand of coffee, machines and accessories: this tendency will have direct impact on Customer satisfaction as the main parameter of the value equation that will assist this shift. Besides, the coming of new “ingredients” like chocolate will diversify this offers, the downside is it’s a new raw materials that has its proper flux and particularities (quality, disponibility,…). On the other hand, as stated by the paradigm Trade-off, the bad news for this diversification is that the company need to enhance its stock capacity; the cost of inventory will raise. Also, the need to build new Depot or warehouse may be potential. Thus, the CASH and the Asset will be respectively the two other parameters of the value equation that are implicated in this shift. The company will have to deal with the high rate of obsolescence of the products. 1 to 2 years. That will add much pressure on the cash.
  6. 6. Impact on business value creation by Supply Chain Management due to the evolution of the main value network variable ; cutomers, The internet will ensure up to 55% of the distribution channels, normally the footprint of the company will be enhanced. Hence the SUSTAINBILITY (PLANET), as main parameter of the value chain, will support this shift. We intend to reach customers all over the world, and the commitment of the company to deliver on less than 48H will be a huge obstacle that need to be overcome. In order to deliver parcels anywhere within 48hours lead time delivery, huge investment will have to be made ; new ASSETS have to be located in strategic locations so that the promise of the delivery remain respected. There is a need to scaled up Logistics in order to meet this need. Even if we are subcontracting logistics, at some level of distance the cost to deliver will be substantial this also will lead to activate the COST as another value parameter that is implicated during this process. Digitalization raise again, as the main enabler for NESPRESSO expansion strategy. In some very remote location the paradigm of the Fair value might not be fullfiled.
  7. 7. Proposed projects ; Demand Side. Project 01 : “defining accountabilities related to demand forecasting” its draw from the structural building block of the SC operating system (GOVERNANCE & KPIs) Project 02 : “Designing the demand forecast process or demand plan” its draw from the structural building block of the SC operating system (PRCESSESSES) Project 03 : “The implementation of Digitalization and ERP to facilitate a reliable collected demand’s DATA”. its draw from the resource based building block (IT & DATA) Project 04 : Providing formation and training sessions to people; professionals and non professionnals of SCM. its draw from the resource based building block (PEOPLE)
  8. 8. Proposed projects ; Supply Side. Project 01 : Defining the phase in and the phase out in compliance with the strategy of enhancing number of SKUs. its draw from the structural building block of the SC operating system (PRCESSESSES) Project 02 : The inventories dimensioning assessment in relation to the expansion plan. its draw from the structural building block of the SC operating system (PRCESSESSES) Project 03 : Digitalization of the transportation and delivering activities. its draw from the resource based building block (IT & DATA) Project 04 : Processing and digitalization of the coffee’s quality assessment . its draw from the resource based building block (IT & DATA) Project 05 : Assessment of the supplier’s VMI adoption. its draw from the resource based building block (OPERATIONS) Project 06 : Providing formation and training sessions to people; professionals and non professionnals of SCM. its draw from the resource based building block (PEOPLE)
  9. 9. New functions The after sales Market logistics may be considered as new functions to develops within the coffee cup organization. Since the uniqueness of the combination capsules-machines had provide NESPRESSO with a reliable competitive advantage. This advantage may be enhanced and sustained with logistics after sales possibilities. The quality control/ management is also a functions to reinforce ; at the central level by providing holistic and detailed quality processes & standards and providing digital tools to assess in real time quality of raw materials as finished products . At the regional level the implementation of the quality process and the feeding of the digital tool will enables the company the assess the qualities off all goods and provided new ways to overcome products qualities and sourcing issues.
  10. 10. THANK YOU

Hinweis der Redaktion


  • In 2008, I believe that NESPRESSO has adopted the customer ”offer & satisfaction” as the main parameter of its value equation ; customer was put in the heart of its business focus.
    Developing tailored, bespoke, coffee cup with refined quality and individually portioned, testify for this huge attention given to satisfy customers. Plus, the lead time delivery was always checked and improved.

    Asset take part to NESPRESSO’s “value equation” but in less importance than do customer satisfaction, it can be ranked in the second place. The “in house” production facilities are designed in high-tech manner and involves a lot of knowledge and skills.
     
    Cash ; NESPRESSO subcontracted most of its logistics activities, Its cost 7.8%. NESPRESSO have found the solution the “escape” the constraints of serving the global market (foot print, logistics operations managements,…) but in term of cash it’s a heavy FEES TO pay.

    Cost was not the priority, despite the entry of smaller rivals with lower prices the coffee cup still dominates and the sale has grown. Which mean that NESPRESSO has secure a “comfortable” fair-value for its brand.

     
    In the future ;

    Sustainability wil arise as the first value parameter in priority. It’s three sub pillars are of concerns;
    Profit ; the lack of vision on markets will not permit to draw a clear business strategy and fix the priorities. Arbitration between stakeholders will be biased and may harm the profitability of the company.
     
    People; the team seems not aligned behind one strategy. The background of the executive board may explain the lack of competences, of vision, of information’s toward markets (as stated in the document).
     
     
    Planet ; NESPRESSO envisage to expand its activity in the world. Even if they subcontracted most of its logistics and supplies factories it is still have its own responsibilities for the foot print and accountable also for its suppliers foot-print. Besides, the sales online will cover more than 55% of distribution channels in the future
     
    Customer centricity will be the second priority for NESPRESSO’s future “value equation” the change in consumer habits will forces the company to address the next trends in “coffee’s tasts”. The company will enhance it’s brand offer for both capsules and machines (SKUs growth number). Also, we introduce new elements to “secure” our customer satisfaction (as example chocolate will produce 4% of the value).
     
    ASSET may be the third parameter in term of priority involving in the future’s NESPRESSO value equation. In respect of the paradigm of trade-off, to adreess the customer satisfaction the rise of SKUs will poses the issue of storage capacity; since the NESPRESSO factories are managed in high-tech way asset will be of major importance.
    Also, I may consider Innovations and R&D costs as an immaterial immobilization and may be assessed for ROI. By this statement and due to run out of the capsule patent, a tremendous amount of money need to be deployed to keep the advance of NESPRESSO specially related to the combination “coffee capsules & machines”.
  • First and seconde project : Lack of information from the headquarter toward markets
    The forecast accuracy is 82% for coffee, 55% for the machines et 63% for the accessories
    Lack of vision for mid and long term especially for machines and accessories provided by marketing

    Second project : Low level of competences at both market level and HQ
  • First project : Low level of competences at both market level and HQ and size of resources
  • First project : Low level of competences at both market level and HQ and size of resources

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