MEUMET CASE Harvard Case Solution & Analysis

MEUMET Case Solution

Introduction

Meumet is a family owned business, which sells office furniture in five different categories such as coat stands, desks, dividing walls, cabinet, and rolling storage unit. The company is providing furniture in many colors however, 80% of the revenue is generated from sales of furniture of white and grey colors.

The company opened thirty agencies to facilitate the customers in order to provide greater convenience such as placing the new order or servicing the old furniture. Moreover, the customers can also place order directly to the company by-passing the agencies. The chain of command for agencies is depicted in figure 1.1.

Figure 1.1, Source case data

The unique selling proposition (USP) of the company was the “made to order” system; which offers the customers to order those products which satisfy their needs. The lead time of the order is around 15-17 days from transmission period to delivery period. It starts with the information processing, and then goes to the production department. Afterwards that product is delivered to customers either directly by the company or through agencies.

Figure 1.2, Delivery Cycle

For production process, there were two workshops in the company. One was solely dedicated for the desks and rolling storage units,and other was used for the production of the remaining products. In this process, the work of the painting and finishing was as per the choice of customers, for that input from customers is taken during the production process. The main issue, which the company was facing was regarding sales returns, which increased from 1% to 4% from the year 2004 to 2011.

Problem statement:

In the start of 2014, Meumet was experiencing a decline in sales and the reasons were unidentified. In addition to this, the products were not delivered on time, however now the board of directors has to make the strategy to cope-up with these issues.

Case Analysis

Current Business Situation

From table 1 it can be seen that the revenue of the company has been decreasing. Earlier in between 1996-2001, CAGR-5 years’ revenue was 21.67%. Afterwards, it declined to 2.71% per an num from 2008-2013. There could be many reasons behind the decline in growth rate, such as

• Decline in market share
• Decline in product quality
• Entrance of competitors
• Less focus on customer’s feedback.

Table 1 Revenue Analysis

Sales returns of company are increasing year over year (YOY) because of ineffective monitoring of compliance/quality department. Apart from this, another problem was of extension in the delivery time because of following probable reasons,

• Too much orders
• Lack of skilled labors
• Poor supply chain
• Inefficient machinery

The company was getting orders in bulk quantity from the customers and agencies, however their production capacity was not able to meet that growing need, which is why they were focusing on quantity rather than quality so that all orders can be fulfilled.

Organization’s Internal review (Audit)

The business of Meumet was growing at 2.71% per year since last 5 years. This disappointed growth rate could be due to increase in sales returns, and orders cancellation. Moreover, the company’s warehouses were filled with stocks which were either returned or rejected by customers. Furthermore, in the start of year 2014, the sales of company were declining and supply chain efficiency was deteriorating. All of these factors were as a result of limited production capacity and increasing customers demand for furniture.....................

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