00:06 Assess the implications of automating parts of the grocery distribution process. 02:26 Assessing investment in new technology for a large distribution grocery company. 05:14 Assess three main things: economic considerations, product considerations, and potential risks. 08:01 Assessing the economic viability of the investment 10:20 The main cost drivers in grocery distribution are equipment, labor, raw material costs, and shipping. 12:57 The total number of employees required in each function is 50 for receiving, 250 for holding and packaging, and 75 for shipping. 15:39 The total cost for implementing the new technology is estimated to be around $12.2 million per year. 18:18 The net savings in holding and packaging is 47.5% and in shipping is 100% 20:48 The cost savings from reducing the workforce and automation is 2.015 million on an annual basis. 23:20 The break-even period for the investment is approximately 3.9 years. 25:38 Investing in new technology is recommended due to good return, cost savings, and process automation potential. 28:01 Stakeholders management ----From Notta's video summarizer
Maybe, from my point of view the candidate could be more structured in the brainstorming question "Which technology could the CEO fall into love in the next couple of years)": Here, the candiate could have stick again to the 3 steps in the value chain and sort ideas to the steps accordingly e.g. comissioner tools (Sorting); AI/ML for optimized trucks (Packaging) or Drones (Deliery) etc. Otherwise, thank you very much for the case!
With this case study as I’m looking into supply chain management after many years in the manufacturing, I’m a people first consultant and when she mentioned firing people. I would ask financially can we train those people to work on the automation and knowing the cost savings potential revenue could be generated by automation could be anywhere between 10% and 15% increase in the first year alone. But you have to think of the significant cost that adding a new machine can take weeks to get it up and running. machine working. Now let’s think about how much is that going to cost the company in that waiting period. so within the initial investment of 4 million and the million per year can the company adjust to the cost of the weeks waiting for this machine finalize its operation. Catherine
I think the breakeven formula is not correct. She said the formula is savings divided by initial investment cost. This is wrong and it should be the other way around. That is initial investment cost divided by the annual net savings (4 million / 1.015 million) . That is how you get 3.9 years. I sometimes wonder whether interviewee gets to see the questions and answers before the mock interview, because I don't know how she came up with 3.9 years by dividing 1.015 million to 4 million.....
She failed to inquire about the company operations model or the customer's primary objectives. Her structure was not MECE compliant, as she merely discussed costs. It is possible that the CEO is attempting to boost revenue or increase profitability rather than bear this cost over an extended period of time.
Yes same thoughts I had, (OPERATIONS: How would it impact current operations and output?) , (INVESTMENT : Would it cost more to re-educate staff if the new technology is slightly different, which may lead to a slow down in product?), (What’s the goal behind the switch , will it drive revenues and output or no?) those are the 3 areas I would be most concerned for this case. I’m a new pm so I would appreciate your feedback. Thanks
Reduction in employee headcount can have poor PR implications for any company. It's also adds a humanizing element to the case - ie CEO should not be happy about layoffs. The CEO should factor that it may be profitable for the company, but it will impact some employees negatively
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00:06 Assess the implications of automating parts of the grocery distribution process.
02:26 Assessing investment in new technology for a large distribution grocery company.
05:14 Assess three main things: economic considerations, product considerations, and potential risks.
08:01 Assessing the economic viability of the investment
10:20 The main cost drivers in grocery distribution are equipment, labor, raw material costs, and shipping.
12:57 The total number of employees required in each function is 50 for receiving, 250 for holding and packaging, and 75 for shipping.
15:39 The total cost for implementing the new technology is estimated to be around $12.2 million per year.
18:18 The net savings in holding and packaging is 47.5% and in shipping is 100%
20:48 The cost savings from reducing the workforce and automation is 2.015 million on an annual basis.
23:20 The break-even period for the investment is approximately 3.9 years.
25:38 Investing in new technology is recommended due to good return, cost savings, and process automation potential.
28:01 Stakeholders management
----From Notta's video summarizer
Can you explain me the calculcation to find the break-even period ?
Maybe, from my point of view the candidate could be more structured in the brainstorming question "Which technology could the CEO fall into love in the next couple of years)": Here, the candiate could have stick again to the 3 steps in the value chain and sort ideas to the steps accordingly e.g. comissioner tools (Sorting); AI/ML for optimized trucks (Packaging) or Drones (Deliery) etc.
Otherwise, thank you very much for the case!
With this case study as I’m looking into supply chain management after many years in the manufacturing, I’m a people first consultant and when she mentioned firing people. I would ask financially can we train those people to work on the automation and knowing the cost savings potential revenue could be generated by automation could be anywhere between 10% and 15% increase in the first year alone. But you have to think of the significant cost that adding a new machine can take weeks to get it up and running. machine working. Now let’s think about how much is that going to cost the company in that waiting period. so within the initial investment of 4 million and the million per year can the company adjust to the cost of the weeks waiting for this machine finalize its operation. Catherine
How common is this type of case during an interview for a BA
can someone clarify how did we get the break even years as 3.9, I am a little confused as I got a different number
I think the breakeven formula is not correct. She said the formula is savings divided by initial investment cost. This is wrong and it should be the other way around. That is initial investment cost divided by the annual net savings (4 million / 1.015 million) . That is how you get 3.9 years. I sometimes wonder whether interviewee gets to see the questions and answers before the mock interview, because I don't know how she came up with 3.9 years by dividing 1.015 million to 4 million.....
She failed to inquire about the company operations model or the customer's primary objectives. Her structure was not MECE compliant, as she merely discussed costs. It is possible that the CEO is attempting to boost revenue or increase profitability rather than bear this cost over an extended period of time.
I thought exactly the same. What does the client want ??
Yes same thoughts I had, (OPERATIONS: How would it impact current operations and output?) , (INVESTMENT : Would it cost more to re-educate staff if the new technology is slightly different, which may lead to a slow down in product?), (What’s the goal behind the switch , will it drive revenues and output or no?) those are the 3 areas I would be most concerned for this case.
I’m a new pm so I would appreciate your feedback. Thanks
I think increased revenue could be considered under expected cost savings?
Why was the reduction in employee headcount relevant here? Shouldn't the cost saving in terms of labor hours suffice here?
Reduction in employee headcount can have poor PR implications for any company. It's also adds a humanizing element to the case - ie CEO should not be happy about layoffs. The CEO should factor that it may be profitable for the company, but it will impact some employees negatively
@@hasmo42 Well said