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Chard Appliances

Chard Appliances has a significant opportunity to boost its annual revenue by 20%, raising it to $137 million. With an identified potential loss of $47.7 million in sales due to underselling and variabilities in pricing and order cycles, strategic changes are essential. By optimizing business process management and customer service levels, Chard can realistically increase revenue by 20%, adding $22.6 million to the bottom line. Recommendations include investing in forecasting methods and safety stock levels to leverage market potential effectively.

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Chard Appliances

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  1. Chard Appliances Becca Carlson Bethany Haefner Jack Lim Liang Wen

  2. Opportunity to increase annual revenue by 20% to $137M Chard’s Annual Revenue $137M Opportunity +$23M $114M

  3. Agenda • The Problem • The Root Cause • The Solution • Conclusion

  4. Problem: Underselling Market Potential • If Chard Appliance would have retained market share it had in 1981, sales would have grown to over $250 million in 1993 Expected Actual

  5. Chard’s identified potential reasons why have sales not increased

  6. Why does it matter?

  7. $47.7M sales opportunity was lost Appliance Units Demanded vs. Sold Units Demanded 256,821 181,173 Sold $47.7M Missed sales Week

  8. What affects how much we sell? Dependent Variable Independent Variables

  9. Price and Order Cycle Variability significantly impact the number of units sold

  10. SOLUTION: Integrate and strengthen business process management

  11. Ideally, eliminating variability would increase revenue 37%... “Perfect World” Solution • Decreased OCV by 100%, • Unit Sold: +37%; +67,173 units • Fill Rate: +26% • Revenue : +37%; +$42,298,829

  12. …Realistically, optimizing variability increases revenue 20% Optimized Solution • Minimum OCV – 2.82 (25%) and $560 (-11%) • Unit Sold - +35% (63,015 units) • Fill Rate - +25% • Revenue - +20% ($22,585,604)

  13. Recommendation: Invest money in increasing customer service levels $400,000 per week can be spent to improve customer service levels in order to maintain a 33% return on investment 25% Improve Forecasting Methods 75% Increase Safety Stock Levels

  14. CONCLUSION • Missed Sales - $47.7 Million • Problems - Price & Order Cycle Variability • Optimized Solution: 20% (+$23M)

  15. Back Slide

  16. Back Slide – OCV -100%

  17. Back Slide –Optimum

  18. Appendix: Add’l costs for new safety stock levels • Assume inventory carrying costs are 10% of price • Found inventory carrying costs are 25% of costs (http://bstocksolutions.com/blog/carrying-cost-of-excess-inventory/)

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