Competitive analysis of the Nigerian telecoms industry

Competitive analysis of the Nigerian telecoms industry I shall discuss the Nigerian Telecoms industry with particular reference to mobile telephony and data transmission via handhelds. My emphasis would be on the period post liberalization of the industry from the monopoly of the state owned carrier , Nitel. I focus on the structure, the key players in it and the competitive forces at play in the industry, leading to a discussion on how best a new entrant can come into this industry and a summary of recommendations. Structure of the Market Since the mid 80s, M-Tel, a subsidiary of Nitel the national carrier has enjoyed a monopoly of the Nigeria Mobile telephony industry, providing just 40,000 connected lines to subscribers nationwide (Doyle McShane, 2001, p. 10). The establishment of the sectors independent regulator, the Nigerian Communications Commission (NCC) in 1999 (Corporate Nigeria, 2010, p. 152)and the award in January 2001, via an auction, of three GSM spectrum licenses to MTN, CIL ( aka GLO) and Econet Wireless Nigeria Ltd liberalized the market. Today the market is made of primarily the five GSM companies, GLO, M-Tel, MTN, Airtel ( formerly Zain), Etisalat and 4 key CDMA companies, Visafone, Starcomms, Multilinks and Zoom. Last week, Visafone announced the takeover of Multilinks and have commenced their post-merger integration exercise. There are indications that further consolidation especially within the fringe CDMA companies is imminent. Fig 1 below highlights the relative market share within the key pl ayers. PESTLE Analysis of the Market; Political: Nigeria is in the middle of an election that has attracted so much interest (Mordi Versi, 2011, p. 24) initial signs indicate the process will be fairest in the history of the country (Asante, 2011)and could lead to emergence of a more stable, progressive democracy (Obayiuwana, 2011). An active and free media continues to challenge the politicians to higher standards of governance. Economic The local currency the naira has held steady against the dollar at N150 to USD 1, curbing inflationary tendencies (Corporate Nigeria, 2010, p. 34). However, inflation continue to be in double digits. GDP is estimated at $357.2 billion PPP , no. 32 in the Global table of PPP. Listed on Goldman Sachs Next Eleven world economies in 21st Century, Nigeria is a country with huge growth potentials. (Corporate Nigeria, 2010). Debt relieve through the Paris Club significantly increases the countries ability to invest in much needed infrastructure e.g power, roads, education and health (BMI, Q1-2011, p. 9) Socio-Cultural At 923,000 sq km of land, 250 ethnic groups, 521 languages, approximately 150million people (Corporate Nigeria, 2010, p. 12), Nigeria is huge and diversed and this diversity comes with its challenges with ethnic violence and sectional unrest. The country is also struggling with a poor reputation with corruption and internet fraud. The country has taken steps towards laundering her image with the set up of the Economic and Financial Crimes Commission (EFCC) which has arraigned 18 fraud syndicates, shut down 800 fraudulent websites, and over 5000 emails working in collaboration with Microsoft. (Corporate Nigeria, 2010) . With over 80% of the population below 40 years and 40% below 15 years, Nigeria is a young market. However, official unemployment rate is quoted as 19.7% , arguably, the real unemployment figures are much higher. Technology; With the arrival in Nigeria of MainOne, and Glo 1, two submarine fiber-optic high bandwidth cables linking Nigeria to Europe, complimenting the already existent SAT-1, data transmission becomes more affordable and easily accessible (BMI, Q1-2011, p. 23). The recent issue of four WiMAX licenses by NCC and existing 2.5G, 3G, CDMA2000, GPRS and UMTS technologies, wireless access will grow dramatically in the next 2-3 years. (Hosn, 2011) Legal and Regulatory The main law governing the Nigerian telecoms industry is the Nigerian Communications Act of July 2003 amending the Act of 1992 (Hosn, 2011, p. 7), this act ended the monopoly enjoyed by Nitel, created the regulatory body National Communications Commission ( NCC) and enabled the entry of more players into the market, leading to increased competition and a downward pressure on prices for mobile telephony services (Hosn, 2011, p. 17) Respect for Intellectual property (IP) rights is low and Legal protection is weak (BMI, Q1-2011, p. 10) Porter 5 Forces Model Analysis : The barriers to entry into this market are medium, with the key consideration being the liscense fees to be paid and potential investment in buildout of the network , depending on the model the entrant adopts, The Buyer Power is high, as intense competition and the choices now available to the customers lowers prices. The Regulators very aggressive drive to drive these prices even lower gives the customer more power. There are very few substitutes to mobile telephony in Nigeria, as the fixed lines are few and not widely adopted. Supplier power is as potential buyers of their goods is few and most of the telcos already have their prefered suppliers and its hard to unseat an incumbent. Competitive Intensity: The SIM Registration regulation passed by Nigerian perliament and the number portability planned for later in the years will significantly increase competition and increase churn, as it eases customers flight to quality service without the inconvinience of lossing your number (BMI, Q1-2011, p. 61) The table above highlights the fact that the Telecoms market in Nigeria is quite concentrated with HH Index of 2904.90 and a Concentration Ration of the top four player (CR4 )exceeding 90% which suggest that industry is susceptible to collusion and price fixing. In reality, this is not the case as the competition is intense and in fact there is an ongoing tarrif war in the Nigeria Telecoms market (Adebayo, 2011, p. 36) (Daniels, 2011, p. 64) however this predominately in the voice services (Ammar, 2011, p. 38). This competitive intensity has resulted in significant drop in cost of services and a corresponding drop in Average Revenue Per User ( ARPU), a key indicator of market profitability even as the customer base has grown dramatically as indicated in Figure 4. below. However, the downward trend of ARPU matches the upwards trend of growth in subscriber base for both voice and data services as shown in Figure 5 below. Although the penetration fo the voice service is very high, data service penetration is still in its infancy and growing much faster than voice services as evidenced by the growth of 3G phone and internet subscriptions. This trend is collaborated by Figure 5 in the trending up of data ARPS. Figure 6 also highlights the trending up of churn, which is likely to continue with the implementation of number portability planned for 2012 by the regulator. Number portability will significantly increase both incidental churn e.g. due financial contingencies, location or life style changes and deliberate churn e.g due pricing, poor customer service or network problems (Jahanzeb Jabeen, 2007, p. 122). Strengths and Weaknesses typically characterize internal situations of a business, but I shall discuss them from an industry structure perspective here. Strengths The mobile telecoms industry has continued to grow even with the introduction of compulsory SIM registration. By liberalizing the licensing scheme, NCC has made it easy for new fixed-wireless operators to enter the market even as it continues to keenly invest to achieve widespread connectivity in rural areas. An active and fairly free media is playing a key role in the transition to democracy, contributing to the ongoing peaceful election which has also been adjudged as the freest and fairest so far in the history of the country. With the country virtually debt free having benefited from the Paris Club debt relief initiative, there is real hope that with the right leadership, the countries infrastructure challenges will be addressed. A large, young population means a huge telecoms market and an abundant supply of cheap (albeit unskilled) labour, Weaknesses Poor state of infrastructure in the country increases the cost of building out networks and achieving optimum spread with resultant poor network quality and negative impact on customer growth and service usage, thus rural communities are poorly served. Price wars from intense competition have put downward pressure on ARPU rates. Country image is negative and corruption levels are high as Nigeria is placed at 134th out of 180 countries worldwide. Respect for Intellectual property rights is also low. Couple with this is the recent physical security risk to foreign workers in some regions of the country. Opportunities With no heavy debt servicing costs, Nigeria has the capacity to invest heavily in crucial infrastructure which will significantly lower the cost of doing business and eventually lower the cost of goods produced in country. A free and fair election and dividends from the ongoing efforts to tackle fraud and corruption will gradually improve the attractiveness of the Nigerian market and attract foreign investments even as the major operators continue to invest in developing the quality and reach of their network infrastructures, thus addressing service quality problems. The landing of several new submarine cables will make international bandwidth much cheaper enabling lower priced broadband services. New WiMAX licences and other technologies will make it easier to access the rural communities and unlock that market. Despite stepped up investment, the broadband penetration level is low. Mobile Telephony penetration at 50% still leaves significant growth potentials available to new entrants. The launch of mobile number portability will ease the ability of customers to change their service provider. Threats The introduction of compulsory mobile SIM registration for new customers in October 2010 will slow the growth experienced today in the sector. Probable removal of tax breaks for cellular operators will remove the incentives enjoyed by early-movers. Competition and regulatory measures are bringing down prices even as institutional invest continue to invest in the Nigerian market (e.g. South-Africas MTN, Indias Bharti Airtel and Etisalat of the UAE.) High levels of unemployment of a very young population presents a high risk of civil unrest which could be triggers by the current tension in the country as a result of the political wrangling and electioneering going on even as industrial action remains commonplace, and can disrupt normal business activity. Recommendations to potential new entrants Take a long term view Entrant into the Nigerian telecoms market at this time is a late-mover and would be exposed to a more informed and stronger regulator, tough competition from the early-movers and other late-movers, and a high cost of entry into the market (Ramamurti, 2000, p. 168) and as such should be cautious and not tempted to be too optimistic by the huge returns the early-movers made in Nigeria. Seek Alliances and Coopetition Opportunities. An entry strategy that seeks to create asset-light-virtual-operators (Turner, 2009, p. 449) by reducing significant investment in passive infrastructure e.g. towers, air-conditioning, generators and instead focuses on sharing these infrastructure with competition and shifts differentiation to quality of service and reach has been proven by Bharti Airtel (Prahalad Mashelkar, 2010, p. 136)to be quite a unique business model for developing economies, enabling cheaper cost of services and thus greater reach. Intensity of competition in the voice services will significantly reduce ARPU, however, the ongoing conversations around infrastructure sharing, the new licenses for the WiMAX technologies , the landing of MainOne and Glo1 submarine cables (BMI, Q1-2011, p. 49) all point to data, mobile broadband and value-added services being the next frontier of high growth in this market. MTN and Western Union have joined forces to introduce international remittances services to 21 countries in Africa excluding Nigeria (African Business, 2010, p. 6). The importance of this service in developing Africa is emphasized by Prof. Ophelia Mascarenhas et al quoted in (African Business, 2011, p. 6)as saying mobile phone firms should take a more serious approach to mobile banking servicesà ¢Ã¢â€š ¬Ã‚ ¦there is great potential for banking the unbankedà ¢Ã¢â€š ¬Ã‚ ¦it is of no use to the poor if the remittance of cash cannot be made because the services is still not available in both the urban and rural areas . The Central Bank of Nigeria is also churning out several policies and regulations to steer Nigerian banks towards inclusion of the unbanked population through electronic payment system. (Chima, 2011) Differentiate and Price Creatively Mobile applications with potential for social economic growth e.g. social networking applications, mobile banking, m-healthcare, m-education, m-policing, can help operators diversify their product base, generate extra revenue, attract new subscribers and lower churn rates (Kechiche, 2010). NCCs wire Nigeria (WiN) and State Accelerated Broadband Initiative (SABI) when completed will high bandwith broadband network throughout Nigeria, accelerating growth and ease of deployment of these mobile applications (Corporate Nigeria, 2010, p. 39). Value added services via mobile phones, e.g traffic policing in india (The Economist, 2009, p. 73)remain a huge opportunity in Nigeria (Nkanga, 2011) Prices will not fall as quickly with additional entry if customers value the differences enough to pay more to the firm that more closely serves their particular needs (Greenstein Mazzeo, 2006, p. 327) Make Pricing flexible and Price according to zones in Nigeria and ability to pay, offering combination of services and better matching prices and goods to the needs of the customers (Greenstein Mazzeo, 2006, p. 328). Look for opportunity to partner with equipment manufacturers to offer after sale services on user-end equipments, provide packages solutions that is viewed as a value added service and differentiates you from competition (Lal Strachan, 2007, p. 23) and possibly rental of infrastructure for transmission. Competing on price alone is not sustainable, there is often scope for differentiation based on quality of service, brand and support services and the inevitable flight to quality creates opportunity for premium pricing (Turner, 2009, p. 442). These are all benefits that come directly from a concentrated focus and deep understanding of a target market and response to their needs. Focus and Innovate Technology is one of the major determinants of change in the telecoms industry, along with the iterative liberalization in emerging markets that fuels aggressive competition, there is a need for key players in the industry to continual review their strategy for market and customer relevance (Lal Strachan, 2007, p. 22). This strategic adaptation is crucial in an emerging market characterized by environmental discontinuities, rapid changes and unpredictability. (Eunni, Post, Berger, 2005, p. 88) (Ramamurti, 2000) Late movers may quickly use newly available advanced technologies to their advantage (Kam, 2006, p. 502), not having the burden of sunk cost in built up network infrastructure, however the pace of changes in technologies in the telecom industry emphasizes the fact that these sort of advantages are short term and that enduring advantage would truly come from differentiation on quality of service.

pipes and cigars :: essays research papers

Pipes and Cigars   Ã‚  Ã‚  Ã‚  Ã‚   The 1991 edition of The World Book Encyclopedia defines a cigar exactly as follows â€Å"Cigar is a tight roll of dried tobacco used for smoking. Cigars range in size from short, slim cigarillos to long, slender panetelas and large, fat coronas. The majority of cigars are made by machines, but the more expensive ones are hand-rolled.   Ã‚  Ã‚  Ã‚  Ã‚  Most cigars consist of three parts and three types of tobaccos. Folded filler tobacco leaves make up most of the body of a cigar. The filler is held together and surrounded by a binder leaf. A wrapper leaf is wound around the binder. Some inexpensive cigars have as their binders or wrappers reconstituted tobacco sheets. These sheets are made of coarse or damaged tobacco leaves that have been ground up and mixed with adhesive.†   Ã‚  Ã‚  Ã‚  Ã‚   And in the definition of pipes it says in a short summary that a pipe is used for smoking tobacco. It has been around for over 2,000 years they were brought to Europe in the 1500’s. Indians smoked pipes during celebrations and religious ceremonies and used it as a symbol of peace. Pipes are made of briar, which is a hard wood. Meerschaum is a white clay used to make pipes. Porcelain is also used to make pipes. In the Middle East the hookah or water pipe is popular. Pipes have been collected and smoked for many years and there are clubs that meet to buy sell and trade old and new pipes.   Ã‚  Ã‚  Ã‚  Ã‚  These articles inform you but not well. Other articles on drugs or even cigarettes contain dangers and health risks, and as I looked for more information on the internet I found only shops and clubs. Then I realized that the dangers of pipes and cigars aren’t very well known and the only places that had them were health organizations and what they had surprised me because I didn’t know much about it either.   Ã‚  Ã‚  Ã‚  Ã‚  When compared to non-smokers, cigar smokers have about four times greater risk of dying of lung cancer.

Racism in Strange Love :: Racism Media Television TV

Racism in Strange Love Do you like having racist jokes made about you right in front of you face and have no idea what the person is saying? In an episode of the Strange Love this situation is demonstrated. Racism is wide spread through out the world and an issue that is brought to our eyes in the show. The issue of interracial dating is also a main topic in the show. Strange Love is a show that most people would watch to get a laugh out of a crazy relationship that came out of another show, but when watching the show I see another part of it and that is racism. The show also to tries to get the thought of interracial relationships more wide spread. -Strange Love was created by the same group of people that had made the show Surreal Life, during the first season a strange relationship came about between Flavor Flav and Brigitte Nielsen. One of the first episodes is showing Flavor Flav leaving the United States and goes to visit Brigitte in Italy and go to a very high class dinner and Flavor does not get the introduction that Brigitte is hoping for him to receive, most of the people are appalled to see the two in a relationship. The episode following that has Brigitte coming with Flavor Flav back to the United States and she accompanies Flavor on stage with Public Enemy. Flavor comments before they go on that his band has no idea that she will be on stage, and she will be the first white woman to ever be on stage with the band. After the band has finished there performance they are backstage and make comments to Flavor about bringing a white woman onstage with him, this leads to Flavor becoming outraged and destroying the backstage area for the band. The episode doesn’t necessarily comment on the topic of racism but just the reaction or the crown and the comments that they make about Flavor are very racist and suggest that they don’t approve of and interracial relationship. Much of the crowd did not even give the couple the time of day and eluded the couple if they were approached.

Harry Elmer Barnes :: essays research papers

In 1952, Harry Elmer Barnes wrote a timely article, "How 'Nineteen Eighty-Four' Trends Threaten American Peace, Freedom, and Prosperity" as the final chapter of the classic revisionist anthology, Perpetual War for Perpetual Peace. Barnes analyzed George Orwell's classic novel as a work of prophecy and sounded the alarm to reverse the "1984" trends prevalent in the America of his day. Barnes argued that propagandists and "court historians" were fashioning a present, based on a falsified and inaccurate telling of the past, that was designed to meet Establishment desires to participate in world wars. Ironically,Barnes' article was omitted from the first edition the collection.(1) Barnes may be best remembered as the author of the generally accepted definition of "revisionism," "Revisionism means nothing more or less than the effort to correct the historical record in the light of a more complete collection of historical facts, a more calm political atmosphere, and a more objective attitude." (2) Barnes had discovered that a more nearly accurate version of the history of the First World War was only possible after the fighting had ended and the emotional excesses had lessened. He was unable to predict that similar corrections of Allied propaganda and popularized conceptions of the methods of warfare in the Second World War would meet even sterner resistance. Today - half a century after the conclusion of the Second World War - it would be fair to expect a less emotional environment, one in which historians, researchers and writers were free to examine the actual causes of the war as well as the atrocities committed by both sides in the conflict. However, those and other topics are more forbidden than ever with the greatest taboo surrounding analysis of the fate of Europe's Jews and others in what has come to be known as the Holocaust. In 1950, three years prior to Barnes' article concerning "1984" trends another author, Ray Bradbury, set out a foreboding vision of the future in a short story titled, "The Fireman." Later, Bradbury's story would be renamed Fahrenheit 451 after the temperature at which paper burns. Fahrenheit 451 describes a horrific future in which millions of books are banned and firemen set fires instead of extinguishing them. In order to maintain a society of brainwashed, "happy" people, the firemen kick down doors and burn the hated volumes along with the homes that housed them. Barnes would never have suspected how fast the world would progress from the "1984" trends he identified to the trends Bradbury identified in Fahrenheit 451(3).

Music LessonBrandenburg

Write a brief definition of: Tonality Modulation Harmony Chord Root First Inversion Seventh Chord Oh no it's a Theory Byte Technical Name for the notes of the scale. As LIMIT ACID Key Relationships Key Signatures F C G DAD B Order of sharps C] Semitone above = name of key. BEAD G CB order of flats Name of PENULTIMATE flat = key signature All major keys have related minor – same key signature. Minor 3rd below key note e. G. G major relative minor is E Minor. Circle of Fifths Tonality and Harmony Class work – Discuss: 0 TonalPlan and Key Relationships CLC Modulations L] Analysis of Chords and Cadences C] Circle of Fifths. Private Study Tasks Continue working on your composition using the feedback/targets we discussed. Don't forget Deadline One is 1 9th October. Make sure that your Brandenburg score notes are fully complete as we will be working on questions next week in preparation for an assessment in the final week. Listen to the piece a number of times – use you r annotated score to follow the music.Create a glossary of the key musical terms which link to the Brandenburg Concerto. Add musical examples where appropriate. (Retooling, Basso Continuo, Figured Bass, Flute a beck, Natural Trumpet, Arpeggio, Sequence (rising, falling), Ripen, Concertina, Counterpoint, Tutu, Unison, Trill, Dominant Seventh, Dominant Pedal, Syncopation, Homophobic, Diminished Seventh Chord, Circle of Fifths) Extra help Extra support with composition -? please book a slot of time with me. Period 5 on Friday. Theory Support. Mr. Reed is available on Friday periods 3 and 4.

Renowned Jamaican Scientist Dr. Manley West

Renowned Jamaican scientist Dr. Manley West Dr West was a scientist. He taught pharmaco-logy at the University of the West Indies, Mona. Significantly, with Dr Albert Lockhart, he developed Canasol, a drug for the treatment of the eye disease, glaucoma, from cannabis, or ganja. Born in Portland, West attended the Titchfield High School. He graduated from the University of London, England, in 1967 with a Doctor of Philosophy in pharmacology.His career at the UWI began as assistant lecturer in pharmacology in 1964, from which position he was promoted to lecturer and internal examiner in pharmacology in 1968. Thereafter, in 1975, West served as acting head of the Department of Pharmacology and in that same year was appointed head of the Department of Pharmacology and chief internal examiner. He was appointed professor of pharmacology in 1981.West has received national and international acclaim for his development of the drug Canasol, as a treatment for glaucoma, for which achievement he was awarded the Order of Merit from the Government. In 1985, Professor West along with Dr. Albert Lockhart received national and international acclaim, for their development of   Canasol. Both were awarded the Order of   Merit from the Jamaican Government in 1987. Professor West was also awarded the Gold Musgrave medal from the Institute of   Jamaica for his pioneering work with the drug.In 2001, Professor  West, and Dr. Lockhart introduced a cannabis-derived medication called Cantimol to treat the potentially debilitating condition of glaucoma. It was the world's first combination of an alpha agonist and a bet blocker (two types of drugs) in one bottle for the treatment of this disease. The Food and Agriculture Organization (FAO) also conferred on him the Bio-Diversity Gold medal for the conversion of  a plant compound to medicine, and he was awarded the Legacy of  Honor, for the Caribbean for his contribution to mankind.

Barilla Case Study: Operational Ineffeciencies

Case Presentation Barilla SpA Introduction Company & Industry background †¢ World’s largest pasta producer in 1990 †¢ Pasta Share – 35% in Italy and 22% in Europe Channels of Distribution †¢ Products divided in 2 categories – â€Å"Fresh† and â€Å"Dry† †¢ Fresh Products had 21 day Shelf Lives †¢ Dry Products had Long ( 18 to 24 Months) or Medium(10 to 12 weeks) Shelf Lives †¢ Retail Outlets – Small independent The Issue During the late 1980s, Barilla suffered increasing operational inefficiencies and cost penalties that resulted from large week-to-week variations in its distributors’ order patterns Distribution Procedure †¢ Original flow of goods and information PLANT CDC’s Barilla run depots GD’s Chain supermarkets DO’s Independent supermarkets â€Å"Signora Maria† Shops Customers Customers Customers *CDC = Central Distribution Centre GD = Grand Distributors DO = Organize d Distributors Sales and Marketing Advertising – Heavy, Brand Positioned as the Highest Quality †¢ Trade promotions – Frequent †¢ Canvass period, 10 to 12 in a year, typical duration of 4 to 5 weeks †¢ Distributor could buy as much product as desired to meet present and future needs at the offered discount †¢ Volume Discounts also given †¢ Sales representatives used more at DO’s than GD’s – Merchandise Barilla Products – Set up In-Store Promotion – Take note of competitor’s prices, stockouts, new product launches – Work out ordering strategies for the retailer etc Demand Fluctuations †¢ Just in Time Distribution Variability in Demand †¢ Reasons – – – – Transportation discounts Volume discount Promotional activity No minimum or maximum order quantities – Product proliferation – Long order lead times – Lack of forecasting systems or sophist icated analytical tools at Distributer’s end Exhibit 12: Demand Fluctuations Variability in Demand †¢ Methods employed to counter variability – Holding buffer FGs to meet Distributor requirements – Asking Distributors/Retailers to carry additional inventory Impact – Strained Manufacturing and Logistics operations* – Poor Product delivery management – Thinning retailer/distributor margins – Increased Inventory Holding costs – Impossible to anticipate Demand swings – Changing customers due to lack of storage space Bullwhip effect †¢ Amplified Variation in demand as one moves up the Supply Chain (away from the order order customer) order Factory Distributor Wholesaler Retailer Order Variation The Causes of Bullwhip Effect Demand Forecast †¢ Long lead times †¢ Order Batching †¢ Price fluctuation (Promotional sales) †¢ Inflated orders in high estimated demand scenarios Counteracting the Bullwhip Effect †¢ Reduce Uncertainty – POS – Sharing Information – Centralizing demand information †¢ Reduce Variability – Year round or Everyday low pricing †¢ Reduce Lead Times – Information lead times: EDI – Order lead times: Cross Docking †¢ Strategic Partnerships – – – – Quick Response Continuous Replenishment Advanced Continuous Replenishment Vendor managed Inventory (VMI) Just-In-Time Distribution (JITD) †¢ Vendor-Managed Inventory Concept †¢ Treats end-customer as the Input †¢ Aims at managing the Input filter that Produces the Orders †¢ Decision-making authority for determining shipments in hands of Barilla SpA †¢ Barilla would monitor the flow of its products through the distributor’s warehouse, and then decide what to ship to the distributor and when to ship it †¢ Distributor provides Data on the shipment and current stock levels for Expected Benefits of JITD †¢ Manufacturer – Reduced manufacturing costs – Better Relationship with Distributors †¢ Increased supply chain visibility †¢ Increase Distributor’s dependence on Barilla – Improvement in manufacturing planning using objective data – Reduced inventory levels †¢ Distributors – Improved fill rates to Retail stores – Additional service without any extra cost – Reduced Inventory Holding costs JITD – Internal Resistance Sales Representatives feared reduction in responsibilities †¢ Flattened sales levels †¢ Risk of Inability to adjust shipments quickly to stock-outs †¢ Lack of infrastructure to handle JITD †¢ Increased competitor shelf space at distributor †¢ Inability to run Trade promotions †¢ Unsure about the cost benefits JITD – External Resistance †¢ Unconvinced Distributors †¢ Not willing to share warehouse data †¢ Perceived power transfer to Barilla †¢ Lack of faith in Barilla’s inventory management Possible methods to counter Resistance †¢ Demonstrate that JITD benefits the distributors – Run experiment at one or more of the distributor sites †¢ Maggiali needs to look at JITD not as a logistics program, but as a company-wide effort – Get Top management closely involved Experiments at Dryproduct depots †¢ Barilla spa ran first JITD experiment at its Florence depot †¢ During the very first month of the program – Inventory dropped from 10. 1 days to 3. 6 days – Service level to retail stores increased from 98. 9% to 99. % †¢ Depot’s staff was not comfortable working with such low inventory levels – Inventory levels finally allowed to increase to 5 days †¢ One of the arguments against JITD was that it will lead to waste empty spaces in the ware houses Experiments at Dryproduct depots †¢ In Florence case – Barilla growing at rapid rate in the region – Plans to expand warehouse – Existin g warehouse able to accommodate the increased requirement – Substantial investment on expansion was avoided †¢ JITD next tried at Milan Depot – Similar performance improvement as Florence †¢ These experiments established the credibility of JITD system Implementation at D. O. Cortese †¢ The decision to implement JITD in Marchese DC of Cortese involved – Barilla: Director of Logistics, Executive vice president of sales and Manager in charge of JITD implementation – Cortese: Nine managers including Managing director, new services manager, logistics manager and logistics, purchasing, marketing and sales personnel from Cortese’s Marchese DC †¢ Consultant Claudio Ferrozzi was roped in – Neutral party trusted by both the groups Implementation at D. O. Cortese †¢ For six months, Barilla team analyzed daily shipment data of the DC – Created the data base of DC’s historical demand pattern – Simulated shipments with JITD in place †¢ The implementation yielded phenomenal results – Prior to JITD †¢ Stock out rate : 2 to 5% ( Occasionally as high as 10 to 13%) – After JITD †¢ Negligible stock out rate of less than. 25%(Never exceeded 1%) †¢ Average inventory level also dropped Adaptation to different distributors With new confidence they approached other customers †¢ Customers apprehensive about JITD repeating the same success as Cortese for them as they had varied systems †¢ Barilla’s team developed capacity to translate customer’s standard’s into internal standards Adaptation to different distributors †¢ Developed a protocol which could be used to communicate with all customers †¢ Each SKU identified with three d ifferent product codes – Barilla’s code – Customer’s code – EAN (European article numbering system) barcode – Most common barcode standard in Europe †¢ Advantages of the coding system Information can be received through any code – Reduce impact of internal changes in product or code on client’s system Communication with consumers Customer each day sent following information to Barilla via EDI:1. Customer code number to identify itself 2. Inventory for each SKU carried by DC 3. Previous day’s â€Å"sell through†-All shipments of Barilla products out of DC to consumers on the previous day 4. Stock outs on previous day for every Barilla SKU carried by DC 5. An advance order for any promotions that the customer planned to run in the future 6. Preferred delivery carton size Lessons learnt One needs to prove credibility of any new performance initiative for others to buy his/her idea †¢ Best place to experimen t with an idea is within the organization †¢ To succeed in a new initiative, involvement of top management is imperative †¢ Market is ever growing. If performance measures seem to create spare time/capacity instead of chucking them, look out for ways to increase the – Barrilla could finally succeed in implementing JITD with Cortese. Whole of top management from both sides was involved in the decision making. Which never happened earlier – Sometimes roping a consultant helps THANK YOU