Mmfd Sales Forecast Case Solution
PROJECT REPORT Harmonizing Demand forecast and supply at Mahindra & Mahindra [pic 2] [pic 3] Mahindra & Mahindra is struggling with maintaining adequate stock of tractors, Irregular and short supply of tractors to the dealers from company stockyard during peak season, forced them to sell alternate model at discounted price to customers Dealers carry stock of 40 days of their annual sales and additional 20 days of the sales were held at company stockyard, for customers who are willing to wait for 515 days. [pic 4] Project Report Harmonizing Demand forecast and supply at Mahindra & Mahindra Mahindra & Mahindra Ltd. Was founded in 1945 and it had its headquarters in Mumbai. This multinational group is one of the largest vehicles manufacturers by production and largest manufacturer of tractors in India. In 2015 M&M manufactured 212237 tractors. It has business operations in 100 countries where it provides expertise in aerospace, automobile, farm equipment, finance, hospitality etc. MMFD provided tractor and agricultural equipment under the “Mahindra Tractor” brand. It had four manufacturing facilities in India, three in the US, one in Australia and two in china.
Mahindra & Mahindra Farm Division(MMFD) is struggling to maintain the adequate supply of Tractors to the dealers and the reason was absence of efficient demand forecasting. Dealers of MMFD carried tractor stock equal to 40days of their annual sales, and an additional stock was kept at the stockyard of company. Therefore, there were 60 days in buffer for customers ready to wait for 5 to 15 days. The production at MMFD was driven by consumer demand and material availability. [pic 5]Manager did not want to lose sales; therefore, to cater to market demand, they frequently did mid-month revisions in forecast plan and inter-stockyard transfer of tractors. But still dealers were not satisfied due to the supply of tractors, here in this report we’ll be discussing the methods of demand forecasting. Domestic Tractor Market in India Agriculture sector employed 58.2% of country’s workforce in 2011 and contributed 15.7% in the same year to the GDP, tractor is the most important equipment for agriculture production In 2011, the domestic demand of tractor in India was largest in the world 16 companies are present in the tractor market Primary demand of tractor is from Agriculture sector and secondary from areas like haulage, constructions etc. Increase in demand because of awareness and better quality seeds & irrigation facilities Only 10% of Indian farmer own tractor, but increased lending by banks has increased the demand of tractors MMFD’s Business Model MMFD has four manufacturing plants in India located at Mumbai, Jaipur, Rudrapur and Nagpur These manufactured tractors were then transported to company’s stockyard by road (these stockyards are present in every state) Presence of stockyards in every state helped them in avoiding the payment of central tax MMFD had 26 sales office Tractors were manufactured and supplied for the current month plus two months in advance MMFD fad approximately 197 tractor models, the top 50 models accounted for 89% percent of sales Current Business Process Area Office: Employees here forecast the demand from dealer inputs and the final report is prepared after allocating different weights to components affecting future demand. Their work is limited to a region or area Planning Marketing & Information System (PMIS): They analysis the reports submitted by Area office and prepare the final forecasting report for entire country [pic 6]After incorporating any last-minute changes if any required, the report is submitted to Supply Chain & Production Control department (SCPC). Monthly plans are made by assigning day-to-day tasks. Weather company will be using shared or limited capacity and accordingly lead time duration is decided Shop Floor will start working on the production plan given by SCPC, their work is mainly focused on production maximization Now, tractors are manufactured and ready for supply to the dealers, the only cost here involved is transportation cost MMFD delivers these tractors to the Area Stock Yard(ASY) based on the report/demand forecasted by Area office From ASY, dealer sells the product to final customer Data Given Time MMFD Sales Industry Sales Time MMFD Sales Industry Sales Time MMFD Sales Industry Sales 1 4698 10281 37 10905 24416 73 11282 27039 2 4605 11683 38 9842 24262 74 12870 31113 3 4859 14042 39 12259 29924 75 17811 39396 4 4136 10283 40 9285 21738 76 12128 27219 5 3872 9522 41 7950 20417 77 10161 24434 6 5938 14263 42 11482 33280 78 16359 41998 7 8790 20264 43 15817 35817 79 17796 43171 8 6825 15778 44 10288 26057 80 11604 27743 9 4858 12758 45 8743 23742 81 11517 27424 10 5907 14297 46 10419 26259 82 15925 35941 11 6386 17521 47 8801 23995 83 13532 32140 12 9085 24773 48 8631 28421 84 14648 43245 13 6492 15714 49 9682 22357 85 15411 38301 14 6832 17352 50 9052 23488 86 16653 40442 15 8867 20901 51 8242 29631 87 15411 38356 16 4998 12065 52 8242 20594 88 13534 31198 17 5305 13452 53 7674 20051 89 12454 29763 18 7618 22018 54 10339 27466 90 16300 42042 19 11443 27631 55 13919 34778 91 23378 55946 20 8716 21799 56 10531 25839 92 16975 37044 21 6119 16209 57 8435 23053 93 15135 35298 22 7408 16249 58 9750 23548 94 19430 42838 23 7493 18867 59 8477 22619 95 17534 41784 24 8541 23857 60 9814 28817 96 17822 45500 25 8029 16828 61 10684 24644 97 17740 42513 26 8650 19062 62 11693 27949 98 17952 41874 27 8650 22724 63 14439 32737 99 21552 48716 28 9960 15320 64 9081 21654 100 15699 38577 29 7152 16936 65 9781 22718 101 15059 36407 30 7322 21986 66 10307 28855 102 23508 56864 31 9239 30998 67 14800 33205 103 30519 67886 32 14123 22359 68 7960 20983 104 16175 39735 33 7341 20860 69 6858 17751 105 15315 36604 34 9404 24057 70 9438 22114 106 17950 42277 35 8613 23506 71 8487 20025 107 13534 36701 36 9425 27985 72 10609 31286 108 15054 43541