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[IT1004 Tutorial 6] Case C Presentation: Netafim

[IT1004 Tutorial 6] Case C Presentation: Netafim

Case presentation on Netafim, prepared by Muhammad Akbar Bin Mohd Yunus, Pham Minh Trang, Pham Thi Thu Huong, Pham Ngoc Ha Phuong and Louann Yeo. Uploaded with kind permissions from the abovementioned authors. I do not claim to own any rights to the document.

Kelvin Tay

March 13, 2013
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  1. PROBLEMS AND SOLUTIONS ON THE WAY TO AN AGILE GLOBAL

    SUPPLY CHAIN trang . phuong . huong . louann . akbar
  2. INTRODUCTION Helping the world grow more with less As the

    world’s population continues to rise and natural resources come under pressure, we would need to achieve greater efficiency. This is where Netafim helps customers produce more yields and better crops with less resources. They are the global leader in smart drip and micro-irrigation solutions for a sustainable future. Since introducing the world's first drip irrigation solutions in 1965, they have led the way by developing products that help their customers optimize results. In short, they are the pioneers of desert agriculture. Type Private Industry Irrigation, Drip irrigation, Greenhouses Founded 1965 Headquarters Israel Employees over 3,000 Website www.netafim.com trang . phuong . huong . louann . akbar
  3. INTRODUCTION The evolving story of Netafim Engineer Simcha Blass invents

    the world's first dripper aimed at serving growers located in desert climates. Netafim‘s breakthrough helps Israeli desert become an agricultural powerhouse. Continuing to expand, Netafim establishes its first subsidiary, Netafim USA, developing new solutions till 1998 where they merged into a single global corporation. Netafim continues to grow and unveils bioenergy engineering capabilities while carrying out mega greenhouse and sugarcane projects worldwide. It also introduces “Family Drip System” for smallholders. 1960s 1970s 1980s - 1990s 2000s - 2010s trang . phuong . huong . louann . akbar
  4. INTRODUCTION Netafim operations around the world trang . phuong .

    huong . louann . akbar
  5. WEB PRESENCE How do they fair across different platforms? Website

    Domain Name acquired on 17 April 1996 Global Rank (based on Alexa.com) 1,070,530 trang . phuong . huong . louann . akbar
  6. WEB PRESENCE How do they fair across different platforms? Facebook

    Joined on 27 July 2010 Likes 1,257 trang . phuong . huong . louann . akbar
  7. WEB PRESENCE How do they fair across different platforms? Twitter

    @NetafimCorp @NetafimUSA Joined on 28 March 2011 1 December 2009 Likes 370 672 trang . phuong . huong . louann . akbar
  8. WEB PRESENCE How do they fair across different platforms? YouTube

    Joined on 26 August 2010 Videos 84 Subscribers 123 Video views 55, 506 trang . phuong . huong . louann . akbar
  9. QUESTION .0 Identify the problems that Netafim was facing. trang

    . phuong . huong . louann . akbar
  10. QUESTION .0 Identify the problems that Netafim was facing. Expand

    globally while protecting trade secrets. In the 1990s, to deal with the demands of the increasingly large and complex global supply chain, Netafim decided to build extrusion plants in some of its key markets while keeping the production and assembly of the drippers themselves in Israel. trang . phuong . huong . louann . akbar
  11. QUESTION .0 Identify the problems that Netafim was facing. Missing

    on global supply chain efficiency Netafim only focused on developing its markets and its technologies but not on establishing an efficient and effective global supply chain, which was handled by manual and out-of- date methods. This began to affect both Netafim’s competitiveness and bottom line. trang . phuong . huong . louann . akbar
  12. QUESTION .0 Identify the problems that Netafim was facing. Fragmented,

    obsolete information accompanied by negligent planning Company’s information were also outdated, local and fragmentary. Thus, the company lacked any visibility of its total supply chain material flows. Planning, forecasting, procurement and distribution processes were inefficient and hence lead times were lengthy and variable. trang . phuong . huong . louann . akbar
  13. QUESTION .0 Identify the problems that Netafim was facing. Lack

    of inventory visibility raining a cloud of uncertainty down the line Each subsidiary placed orders separately with the outside vendors of irrigation system and related products leading to an environment of uncertainty. Subsidiary companies, manufacturing planets and the head office were forced to anticipate future needs by ordering a little extra in case they had noticed an upward trend and vice versa. trang . phuong . huong . louann . akbar
  14. QUESTION .0 Identify the problems that Netafim was facing. Keeping

    high ‘safety’ stocks to cushion against bullwhip effect This lead to a bullwhip effect (supply chain is characterized as infrequent, inappropriate and fluctuating), given that orders tend to be large and infrequent. Subsidiaries tended keep high ‘safety’ stocks to cushion themselves against the poorly performing supply chain system trang . phuong . huong . louann . akbar
  15. QUESTION .1 Describe the supply chain challenges the new CEO

    faced when he took over Netafim in 2002. trang . phuong . huong . louann . akbar
  16. trang . phuong . huong . louann . akbar NETAFIM’S

    GLOBALISATION PLAN LARGE MARKET SHARE 130 countries, 30 subsidiaries LEADING TECHNOLOGY Introducing new innovative solutions GLOBAL SUPPLY CHAIN Inefficient and ineffective
  17. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary
  18. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary
  19. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary
  20. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Inefficient planning Inefficient forecasting Inefficient procurement Inefficient distribution Lengthy and variable lead time
  21. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Inefficient planning Inefficient forecasting Inefficient procurement Inefficient distribution Lengthy and variable lead time
  22. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Inefficient planning Inefficient forecasting Inefficient procurement Inefficient distribution Lengthy and variable lead time
  23. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Inefficient planning Inefficient forecasting Inefficient procurement Inefficient distribution Lengthy and variable lead time
  24. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of coordination Inefficient planning Inefficient forecasting Inefficient procurement Inefficient distribution Lengthy and variable lead time
  25. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. The original Decentralised Management Structure of Netafim allowed it to quickly respond to local needs, in terms of designing solutions Lack of inventory visibility However an agile global supply chain was needed to deliver these solutions worldwide
  26. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. The original Decentralised Management Structure of Netafim allowed it to quickly respond to local needs, in terms of designing solutions Lack of inventory visibility However an agile global supply chain was needed to deliver these solutions worldwide
  27. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of inventory visibility Before 2000, the Internet was not widely used by businesses to handle supply chain management Hence the management was unfamiliar with making use of web applications to establish a globally integrated information system
  28. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of inventory visibility Before 2000, the Internet was not widely used by businesses to handle supply chain management Hence the management was unfamiliar with making use of web applications to establish a globally integrated information system
  29. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of inventory visibility Information system was outdated, local and fragmentary Global supply chain flow was not transparent, leading to inefficient management of global inventory
  30. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Lack of inventory visibility Global supply chain flow was not transparent, leading to inefficient management of global inventory Information system was outdated, local and fragmentary
  31. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Each subsidiary placed orders separately without knowledge about inventory status up the supply chain Bullwhip effect: Large and infrequent orders respond to fluctuating changes in demand forecasts
  32. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Bullwhip effect: Large and infrequent orders respond to fluctuating changes in demand forecasts Each subsidiary placed orders separately without knowledge about inventory status up the supply chain
  33. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Bullwhip effect: Customers (Demand) Manufacturer (Forecast) Stock level
  34. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Large inventory holding costs Out-of-stock instances continued to grow due to highly fluctuating demand Each subsidiary kept high “safety” stocks to cushion themselves against poorly performing supply chain system, in order to provide prompt order fulfillment to local customers
  35. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Large inventory holding costs Out-of-stock instances continued to grow due to highly fluctuating demand Each subsidiary kept high “safety” stocks to cushion themselves against poorly performing supply chain system, in order to provide prompt order fulfillment to local customers
  36. trang . phuong . huong . louann . akbar QUESTION

    .1 Describe the supply chain challenges the new CEO faced when he took over Netafim in 2002. Inefficiency resulting from separate operations of subsidiary Large inventory holding costs Out-of-stock instances continued to grow due to highly fluctuating demand Each subsidiary kept high “safety” stocks to cushion themselves against poorly performing supply chain system, in order to provide prompt order fulfillment to local customers
  37. • Threaten future performance and competitiveness of the company •

    Threaten bottom line and company’s reputation IMPLICATIONS trang . phuong . huong . louann . akbar
  38. QUESTION .2 Describe the strategic and structural changes made to

    improve supply chain management at Netafim. trang . phuong . huong . louann . akbar
  39. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Lack of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary
  40. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Lack of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary
  41. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created information visibility and information sharing- SAP ERP system Created uniform set of product codes
  42. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created information visibility and information sharing- SAP ERP system Created uniform set of product codes
  43. trang . phuong . huong . louann . akbar Lack

    of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary QUESTION .2 Describe the strategic and structural changes made to improve supply chain management at Netafim.
  44. trang . phuong . huong . louann . akbar Lack

    of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary QUESTION .2 Describe the strategic and structural changes made to improve supply chain management at Netafim.
  45. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Total inventory control • Inventory reduction Actual forward demand rather than forecasting SAP ERP system Dynamic real-time production management • Reduced order placement and confirmation time +
  46. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Total inventory control • Inventory reduction Actual forward demand rather than forecasting SAP ERP system Dynamic real-time production management • Reduced order placement and confirmation time +
  47. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Total inventory control • Inventory reduction Actual forward demand rather than forecasting SAP ERP system Dynamic real-time production management • Reduced order placement and confirmation time +
  48. trang . phuong . huong . louann . akbar Lack

    of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary QUESTION .2 Describe the strategic and structural changes made to improve supply chain management at Netafim.
  49. trang . phuong . huong . louann . akbar Lack

    of coordination Lack of inventory visibility Inefficiency resulting from separate operations of subsidiary QUESTION .2 Describe the strategic and structural changes made to improve supply chain management at Netafim.
  50. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Minimizing local inventory by storing them at the RLHs Created Regional Logistic Hubs (RLHs) Maintain customer service by reducing lead times +
  51. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Minimizing local inventory by storing them at the RLHs Created Regional Logistic Hubs (RLHs) Maintain customer service by reducing lead times +
  52. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Netafim Supply Chain
  53. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created Vendor Managed Inventory (VMI) Ensure inventories of external vendors’ products were reduced
  54. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created Vendor Managed Inventory (VMI) Ensure inventories of external vendors’ products were reduced
  55. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created a new planning department along with a new procurement department Viva Cadena Software Statistical forecasting and inventory control Makes suggestion to planners
  56. trang . phuong . huong . louann . akbar QUESTION

    .2 Describe the strategic and structural changes made to improve supply chain management at Netafim. Created a new planning department along with a new procurement department Viva Cadena Software Statistical forecasting and inventory control Makes suggestion to planners
  57. • Stock reduced • Customer service improved • General business

    competitiveness enhanced • Positive future because focus can be geared towards technology innovation CONCLUSION trang . phuong . huong . louann . akbar
  58. • Stock reduced • Customer service improved • General business

    competitiveness enhanced • Positive future because focus can be geared towards technology innovation CONCLUSION trang . phuong . huong . louann . akbar
  59. • Stock reduced • Customer service improved • General business

    competitiveness enhanced • Positive future because focus can be geared towards technology innovation CONCLUSION trang . phuong . huong . louann . akbar
  60. • Stock reduced • Customer service improved • General business

    competitiveness enhanced • Positive future because focus can be geared towards technology innovation CONCLUSION trang . phuong . huong . louann . akbar
  61. • Stock reduced • Customer service improved • General business

    competitiveness enhanced • Positive future because focus can be geared towards technology innovation CONCLUSION trang . phuong . huong . louann . akbar
  62. trang . phuong . huong . louann . akbar 1.

    How is this case study related to e-commerce? 2.Who are the direct and indirect competitors of Netafim? 3.What do you think of the potential of the new B2C business? DISCUSSION