Moo Homestead

ASCM CASE COMPETITION SCHOOL ROUND 2020-21

ASCM ID : 2208863
KARTIKEYA ARYA, DIVY PRAKASH, MANISHA GARG, HIMANSHU SHARMA
 Moo Homestead is a wholesale milk distributor in the US, with a
regional footprint concentrated in the northeast.

Moo Homestead is a leading wholesale milk distributor. Due to COVID-19, they realized a sudden shift in the demand of milk. As a result,
Consideration their complete system got disrupted and the anticipated supply chain forecasts turned out to be highly inaccurate. The transportation
system got a hit due to COVID protocols, due to which they have to restructure their entire logistics process.

Moo Homestead have to revise their forecasting model and optimize the inventory management process. They also have
Objective
to come up with technological solutions that would help in their transportation and logistics.

Forecast Analysis & Demand Planning Inventory Management Transportation Solutions

The Fill rate and inventory management

Strategy Analysing demand forecast showed Introducing a digital tracking platform
were at the lowest point in july 2020 for all
product categories in restr./catering had which will give consumers and vendors
the distribution channels. This outcome is
highest +ve mean error, & saw maximum options to choose and help prioritizing fleet
due to the pandemic induced logistic
unit sale decline during pandemic. according to the chosen option.
inefficiencies.

The pandemic has forced Moo Homestead to restructure their entire supply chain, right from the forecasting demand aspect to transport operations. With the inefficiencies
pointed out by us, and implementing the mentioned tech solutions, the pandemic shall prove a blessing in disguise, helping Moo Homestead ein the longer term.

2 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Forecast Analysis - Margin Erosion & Financial Impact during pandemic.

We categorised products for ABC Analysis based on profit generation. Bucket Distribution

Bucket A Bucket B Bucket C

CATEGORIES

4 8 1 5

3 7 2 6

Profit Generation
Bucket A
Bucket B Bucket C
{

{
{

Distribution
Restaurants Supermarket Supermarket

Channels
& & &
Catering Grocery Grocery
Analysing A, B and C’s individual curves for cost, revenue, profit and
quantity sold, has given clear reasons for the trend change:
4, 8: Whole milk Whole Milk Skimmed milk

Type
3, 7: Skimmed milk

Forecast Analysis Excel Model

3 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Forecast Analysis - Margin Erosion & Financial Impact during pandemic.

Gross Profits Quantity Shipped

During the pandemic, the gross profits for Bucket A which consists The gross profits of Bucket B and C saw little change as these
of Whole and skimmed milk for channels Restaurants and catering buckets constituted of milk being consumed in grocery and SMKT.
fell sharply. This can be attributed to the crash of the hotel and As people grew health conscious the quantity shipped of these
tourism industry leading up to the pandemic. We can see a steady categories increased
recovery in the same matching the end of the first wave.

4 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Forecast Analysis - Margin Erosion & Financial Impact during pandemic.

Gross Profit Margin

Bucket A, which includes products of Category 4, 8, 3
and 7, contributes to an enormous 75% of the
company's revenue.

During the pandemic, revenue from Bucket A fell by

as much as 80%

Units sold in Buckets B and C rose by almost 100% in

the same period.

During pandemic, revenue per unit for Buckets B and

C rose by 15%, but costs rose by 27%, thereby
cutting margins.

5 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Forecast Analysis - Mean Absolute Percent Error (MAPE) Calculation

Packaging MAPE
Packaging Product Category MAPE Bias ● Demand for all products with Plastic HDPE Jug 0.319
HDPE Jug Category 1 0.317 -1 Bag packaging were over-forecasted. Plastic Bag 0.599
HDPE Jug Category 2 0.317 -1 ● Demand for all products with HDPE
Plastic Bag Category 3 0.599 1 packaging were under-forecasted. INFERENCE
Plastic Bag Category 4 0.599 1 ● Plastic bag packaging is used in case Restaurant/caterers (B2B) have variable demand (esp.
HDPE Jug Category 5 0.321 -1 of all Restaurant/Catering supplies, dueto pandemic) and stronger negotiating power.
HDPE Jug Category 6 0.321 -1 while HDPE Jugs are used in
SMKT/Grocery shipping. Groceries/Supermarkets (B2C) have fixed demand and
Plastic Bag Category 7 0.600 1 lowed negotiating power.
Plastic Bag Category 8 0.600 1

The problem statement demanded calculation of MAPE for all product categories and Packaging Mixes for 2020

Assumptions & formula used:

● MAPE = |Forecasted Quantity – Actual Shipped Quantity | / Forecast
● Bias Tracking Point: [Forecasted Quantity – Actual Shipped Quantity] / |Forecasted Quantity – Actual Shipped Quantity|
● MAPE values across months have been averaged
● Since, data point for individual products were provided separately for each DC, forecasted demand of DCs has been used a weight for averaging across DCs.
● Same weight has been used while calculating MAPE of packaging mixes

6 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Inventory Management - Average fill rate for different distribution centres

Distribution Centre 2016 2017 2018 2019 2020

The Average fill rates before

{ the pandemic for all the
distribution channels was
99.5%
USNE1

USNE2

USNE3

The Average fill rate post USNE4

pandemic for all the

FILL RATES

USNE5
distribution channels fell to
70.45%. This can be USNE6
improved with proper
demand forecasting USNE7

USNE8

The average fill rate was the

least for distribution centre
one indicating the need for a
better management system
for that centre Increasing fill rate

Inventory Management Excel Model

7 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Inventory Management - Inventory turnover

After calculating the inverturns we found that they are lowest

in the month of july 2020. Reason seems to be the pandemic
induced logistics and supply chain management inefficiencies.

Lower ratio Indicates

Generally, a low
Moo Homestead did
ratio signals bad
more stocking than
sales or surplus
required during
inventory
pandemic.

- Better Forecast
- Focus on selling top selling
0.76 1.98 products
- Eliminate safety Stock and
old inventory
0 Inventory Turn 2 - Reduce purchase quantity

Post Pandemic
Pre Pandemic

8 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 To identify opportunities to increase cost savings and improve overall
efficiency across the inbound transportation division

35%
Inbound freight managed by Moo Homestead

1) Use Location and idle time mapping of outbound vehicles to use them for viable inbound transportation.
2) Identification of top freight lanes and focus on increasing control in these lanes via:
Increase company managed
Third party vendors/contracts, backhauling outbound freight allowing a given route diversion.
inbound loads
3) Backhauls: Use company-owned trucks returning from Customer Deliveries for Inbound loads from vendors near
DCs/Depots

1) Load consolidation: Consolidate multiple LTL Shipments into FTLs

Reduction of outbound costs 2) Freight sourcing: Switch current FOB/Collect Lanes managed by the company to a cheaper carrier/broker
3) combine shipments with other companies that are operating in the same freight lanes.

Deadhaul % :Deadhaul Distance/ Total Distance travelled

Introduce KPIs to measure freight
Freight Cost Per Unit : To measure cost effectiveness of all the strategies implemented
management efficiency
Turnaround Rates : To assess loading and unloading efficiency

9 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Launching a digital platform to keep track of freight market data and
potentially induce fleet prioritization to increase inbound freight

Adoption of electric vehicle fleet for

becoming commercially viable

Producer Storage Container Shipping Distribution Centre Shipping Customers

35% inbound share 100% outbound share

The digital platform will allow Moo Homestead’s customers and vendors to effectively economically choose
from cheap and effective options according to their preference and urgency

Digital tracking platform to keep

track of the inbound and
outbound freight

Adoption of EV fleet Fastest, cheapest, Most Reliable

Option of electric vehicle will provide cheaper and Inbound Distribution Channels and outbound
sustainable transportation solutions customers can choose between quotes

10 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Customers and vendors gain transparency and shipment options that
fits them the best with an option of choosing EV fleet

Increasing the share of inbound freight for Moo Homestead

Quote Book Manage

About Moo Homestead Solutions Search

Current logistic partners The digital tracking platform will
help prioritize between orders Fastest Cheapest Reliable Boston Texas

and will ultimately increase the

inbound share 25 days 85% 12% USD 2700
Estimated Delivery Time Delivery Stability Storage Risk = Choose

Addressing the fact that not everyone one is satisfied with a single option as one size doesn’t fit all, this digital infrastructure will help
track the freight and prioritize the fleet allocation according to the options given to the customers (Fastest, Cheapest, Reliable)

20 days 89% 10% USD 3000

Estimated Delivery Time Delivery Stability Storage Risk = Choose

Cost reduction due to adoption of Electric vehicle fleet

Adoption of EV fleet will help in

overall reduction of fuel costs by
~40% and help achieve the
global sustainable goals.

11 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 Moo Homestead should adopt the circular economy model to reduce
the overall waste in the SC delopving glass bottles

These glassed bottles collected from the customers by Moo Homestead’s collection
trucks will then reach the distribution channels. There these bottles will be sanitized
and will be processed for reusage. This whole process will reduce the overall waste
in the supply chain as a whole

The bar code attached to very bottle will help keep track of the bottles
and will ultimately result in efficient route tracking

Customers are transported these Our collection trucks will collect The whole circular economy
Every bottle is have a bar code specific glass bottles by our outbound these bottles next day framework will ensure reduced
to a trait which can be tracked using logistics (EV fleet). waste and spoilage.
the blockchain technology

12 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions
 With our proposed strategies, we believe that Moo Homestead can
improve its overall supply chain solutions.

Demand for restaurants/caterers was over-forecasted while for groceries/SMKT was under-forecasted. Demand
Conclusion 1 forecast requires significant modifications. Even after a spike in grocery/SMKT products during pandemic, profits
went down by 65%, as the restaurants/caterers (which holds 75% market share) was hit very badly.

The fill rates strongly depicts that there are a lot of factors involved including the pandemic, seasonality, accuracy in
demand forecasting, safety factor and inventory turnovers. To increase the fill rates, our forecast need to be as close
Conclusion 2 as the actual forecast. Moo Homestead have to identify the channels where there’s a need of safety stock to
compensate for the increased demand and order extra safety stock according to the demand forecasts in order to
reduce customer dissatisfaction and unnecessary high on-hand inventory.

The Electric vehicle fleet will allow Moo Homestead to save on fuel costs and reduce the overall transportation cost
Conclusion 3 by approximately ~40%. With the help of the new digital tracking platform, vendors can choose from the 3 logistics
options: Faster, Cheaper and reliable transportation. They can also keep a track of market data so as to allocate fleet
into inbound and outbound transportation and prioritize based on the order type from the 3 available options.

13 © 2017 APICS Confidential and Proprietary

Executive Summary Forecast Analysis Inventory Management Conclusion
Transportation Solutions Technology Solutions