Harvard Case - Polaroid Corp.: European Distribution System
"Polaroid Corp.: European Distribution System" Harvard business case study is written by Janice H. Hammond, Afroze Mohammed. It deals with the challenges in the field of Operations Management. The case study is 22 page(s) long and it was first published on : Jun 26, 1995
At Fern Fort University, we recommend Polaroid Corp. implement a comprehensive European distribution strategy that leverages technology, embraces lean principles, and prioritizes customer satisfaction. This strategy should focus on optimizing inventory management, streamlining logistics, and establishing a robust information system to support efficient decision-making and real-time visibility across the supply chain.
2. Background
Polaroid Corp., a pioneer in instant photography, faced challenges in its European distribution system. The company's decentralized structure, with independent distributors in each country, led to inconsistent service levels, high inventory costs, and difficulty in coordinating marketing efforts. This case study explores Polaroid's efforts to improve its European distribution system and achieve greater efficiency and effectiveness.
The main protagonists in this case are:
- Polaroid Corporation: The company striving to improve its European distribution system.
- Independent Distributors: The distributors responsible for selling Polaroid products in their respective countries.
- Polaroid Management: The team tasked with developing and implementing a new distribution strategy.
3. Analysis of the Case Study
This analysis utilizes a framework combining Operations Strategy and Supply Chain Management perspectives to understand Polaroid's challenges and identify solutions.
Operations Strategy:
- Manufacturing Processes: Polaroid's manufacturing processes were centralized in the United States, leading to long lead times and high transportation costs for European customers.
- Product Development: The company's focus on instant photography limited its ability to adapt to changing consumer preferences and compete with digital photography.
- Information Systems: Polaroid lacked a centralized information system to track inventory levels, sales data, and customer orders across its European distribution network.
Supply Chain Management:
- Inventory Management: The decentralized distribution system resulted in high inventory levels and significant carrying costs.
- Logistics: Inefficient logistics processes, including long delivery times and inconsistent service levels, hindered customer satisfaction.
- International Business: Managing a complex network of distributors across multiple countries presented challenges in coordination, communication, and cultural differences.
Key Issues:
- Lack of Centralized Control: The decentralized structure hindered efficient inventory management, logistics coordination, and marketing efforts.
- High Inventory Costs: Excess inventory due to poor forecasting and lack of real-time visibility led to significant carrying costs.
- Inconsistent Service Levels: Long delivery times and stockouts resulted in customer dissatisfaction and lost sales.
- Limited Information Sharing: Poor communication and lack of data sharing across the supply chain hindered informed decision-making.
4. Recommendations
1. Centralized Distribution Center:
- Establish a central distribution center (DC) in a strategically located European country. This DC will act as a hub for receiving, storing, and distributing Polaroid products to distributors across Europe.
- Implement a centralized inventory management system with real-time visibility. This system will allow for accurate forecasting, optimized stock levels, and efficient order fulfillment.
- Utilize advanced warehouse management systems (WMS) and technology for efficient inventory control, picking, packing, and shipping.
2. Streamlined Logistics:
- Partner with logistics providers specializing in international shipping and distribution. This will ensure efficient and cost-effective transportation of goods across Europe.
- Optimize delivery routes and transportation modes to minimize delivery times and costs.
- Implement a robust tracking system for shipments to provide real-time visibility to distributors and customers.
3. Enhanced Information Systems:
- Develop a comprehensive Enterprise Resource Planning (ERP) system to integrate all aspects of the supply chain. This system will facilitate data sharing, improve communication, and enable informed decision-making.
- Implement a Customer Relationship Management (CRM) system to manage customer interactions, track sales data, and provide personalized customer service.
- Leverage business intelligence tools for data analysis and reporting to identify trends, optimize operations, and improve forecasting accuracy.
4. Lean Manufacturing Principles:
- Adopt lean manufacturing principles to reduce waste, improve efficiency, and minimize inventory levels.
- Implement Just-in-Time (JIT) production to minimize lead times and reduce inventory carrying costs.
- Utilize Kaizen and continuous improvement initiatives to identify and eliminate inefficiencies in the production process.
5. Strategic Partnerships:
- Establish strategic partnerships with distributors to create a more collaborative and integrated distribution network.
- Develop joint marketing initiatives to leverage the collective reach and expertise of distributors.
- Provide distributors with training and support to enhance their operational capabilities and customer service skills.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: By centralizing distribution and leveraging technology, Polaroid can focus on its core competencies in product development and innovation.
- External Customers: The recommendations aim to improve customer satisfaction by reducing delivery times, minimizing stockouts, and providing better customer service.
- Internal Clients: Distributors will benefit from improved communication, streamlined logistics, and access to real-time information, leading to increased efficiency and profitability.
- Competitors: By adopting lean principles and utilizing technology, Polaroid can improve its operational efficiency and compete more effectively in the rapidly evolving market.
- Attractiveness: The proposed changes are expected to lead to significant cost savings through reduced inventory levels, improved logistics, and more efficient operations.
Assumptions:
- Polaroid is committed to investing in technology and infrastructure to support the new distribution strategy.
- Distributors are willing to collaborate with Polaroid and adopt new processes.
- The European market for instant photography will continue to grow, justifying the investment in a more efficient distribution system.
6. Conclusion
By implementing these recommendations, Polaroid can transform its European distribution system into a more efficient, responsive, and customer-centric operation. This will lead to improved service levels, reduced costs, and a stronger competitive position in the European market.
7. Discussion
Alternatives:
- Maintaining the decentralized distribution system: This option would be less costly in the short term but would continue to face the challenges of inefficiencies, high inventory costs, and inconsistent service levels.
- Acquiring existing distributors: This could provide Polaroid with greater control over its distribution network but would require significant investment and could lead to integration challenges.
Risks:
- Resistance to change: Distributors may resist adopting new processes and technologies.
- Implementation challenges: The implementation of the new distribution system may face unforeseen obstacles.
- Technological obsolescence: Rapid technological advancements could require ongoing investment in information systems and logistics capabilities.
Key Assumptions:
- The European market for instant photography will continue to grow.
- Polaroid is committed to investing in the necessary technology and infrastructure.
- Distributors will collaborate with Polaroid and adopt new processes.
8. Next Steps
Timeline:
- Phase 1 (Months 1-6): Conduct a feasibility study, select a central distribution center location, and develop a detailed implementation plan.
- Phase 2 (Months 7-12): Establish the central distribution center, implement the new information system, and train distributors on new processes.
- Phase 3 (Months 13-18): Monitor performance, refine processes, and continuously improve the distribution system.
Key Milestones:
- Month 3: Completion of feasibility study and selection of central distribution center location.
- Month 6: Development of detailed implementation plan and securing necessary resources.
- Month 12: Full implementation of the new distribution system.
- Month 18: Completion of initial performance evaluation and identification of areas for improvement.
By following these recommendations and implementing the proposed plan, Polaroid can achieve a more efficient and effective European distribution system, enabling the company to meet its strategic goals and compete effectively in the global market.
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Case Description
Describes distribution operations in Polaroid Europe. In the late 1980s, Polaroid senior management in the United States proposed moving from a system of 12 decentralized warehouses to a centralized distribution system in which all inventory for European retailers would be held in Polaroid's Dutch distribution center. Most subsidiary general managers opposed the proposal, as did Polaroid's European marketing organization. Describes several distribution alternatives Polaroid considered in 1990 including: 1) direct distribution to retailers through Europe from the Dutch distribution center, 2) hiring a third-party logistics organization to take over all of Polaroid's European distribution activities, and 3) establishing regional satellite distribution centers. Provides an overview of changes in the European retailing and distribution industries at the beginning of the 1990s, with a specific focus on the diverse service expectations of retailers in different European countries and of different retail segments.
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