Thursday:
All the teams drove or flew down and checked in around 6pm. We were then taken to a nice reception dinner by Kelley volunteers where we got to interact with all the other teams. It was a delicious meal and a fun time was had by all, with everyone being friendly and forthcoming.
Note to self: Do not dress in a skirt when you have to walk 10 mins between hotel and restaurant in 3 degree weather.
Friday:
At 8am on Friday morning (that's 5am west coast time!) we were given the real-life case that we had to analyze. Here's the crux of it.
Sam owns three not-for-profit fair-trade stores in Indiana. His goods are the creations of artisans from developing countries like Bangladesh, Chile, Zambia, etc. He currently buys 95% of his goods from wholesalers who purchase the items directly from artisan co-ops. The wholesalers charge a 100% markup on the goods because they have to account for shipping, custom duties, inventory storage etc. Sam makes just 3-4% profit when he sells the goods from his store.
Sam is now thinking about getting up to 20% of his product base directly from artisan co-ops, in an effort to reduce his COGS (cost of goods sold) and build better relationships with the artisan community. Some of the questions he has are:
1. Will the savings in COGS cover the shipping and other costs that he would incur?
2. Since artisans have to be paid 50% of the price when the order is placed and 50% after delivery, how will this affect his cash flow?
3. Most of Sam's store sales happen in the holiday season from Oct-Dec. Buying directly from artisans means a lead-time of 6-7 months. Will he be able to place his orders that much in advance, and how will he store the inventory in the meantime?
4. How would his relationship with the wholesalers (who would still be providing 80% of the products) be affected if he went the direct route?
These were just some of the many considerations we had to keep in mind while coming up with a strategy for Sam. We were taken on a quick field-trip to one of the stores to get a feel for the products, and talk to the store manager and volunteers at the store.
We then had until midnight to brainstorm, conduct research, analyse the financials and put together our slides.Meals were provided but sadly there was no coffee after 9am! It was stressful and a lot of work for one day, and particularly hard without caffeine, but all the teams pulled through. I personally found the case very interesting so that helped. Slides were submitted by midnight, teams practiced their presentation for a while after that and it was around 2am when we went to sleep, ready to present at 8am the following day.
All the teams drove or flew down and checked in around 6pm. We were then taken to a nice reception dinner by Kelley volunteers where we got to interact with all the other teams. It was a delicious meal and a fun time was had by all, with everyone being friendly and forthcoming.
Note to self: Do not dress in a skirt when you have to walk 10 mins between hotel and restaurant in 3 degree weather.
Friday:
At 8am on Friday morning (that's 5am west coast time!) we were given the real-life case that we had to analyze. Here's the crux of it.
Sam owns three not-for-profit fair-trade stores in Indiana. His goods are the creations of artisans from developing countries like Bangladesh, Chile, Zambia, etc. He currently buys 95% of his goods from wholesalers who purchase the items directly from artisan co-ops. The wholesalers charge a 100% markup on the goods because they have to account for shipping, custom duties, inventory storage etc. Sam makes just 3-4% profit when he sells the goods from his store.
Sam is now thinking about getting up to 20% of his product base directly from artisan co-ops, in an effort to reduce his COGS (cost of goods sold) and build better relationships with the artisan community. Some of the questions he has are:
1. Will the savings in COGS cover the shipping and other costs that he would incur?
2. Since artisans have to be paid 50% of the price when the order is placed and 50% after delivery, how will this affect his cash flow?
3. Most of Sam's store sales happen in the holiday season from Oct-Dec. Buying directly from artisans means a lead-time of 6-7 months. Will he be able to place his orders that much in advance, and how will he store the inventory in the meantime?
4. How would his relationship with the wholesalers (who would still be providing 80% of the products) be affected if he went the direct route?
These were just some of the many considerations we had to keep in mind while coming up with a strategy for Sam. We were taken on a quick field-trip to one of the stores to get a feel for the products, and talk to the store manager and volunteers at the store.
We then had until midnight to brainstorm, conduct research, analyse the financials and put together our slides.Meals were provided but sadly there was no coffee after 9am! It was stressful and a lot of work for one day, and particularly hard without caffeine, but all the teams pulled through. I personally found the case very interesting so that helped. Slides were submitted by midnight, teams practiced their presentation for a while after that and it was around 2am when we went to sleep, ready to present at 8am the following day.
Loved the field trip part of it. Very, very interested in your recommendations - can you slideshare it?
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