Bruynzeel Keukens Mastering Complexity Case Solution
Bruynzeel Keukens (BK) is specialized in carpentry, shipbuilding, and wooden floors. It was founded in the Netherlands in 1897. However, the company has faced many challenges in the market, and went bankrupt in 1982, afterwhich the company expanded its operations, and began competing in the kitchen market in the Netherlands.
The company has two markets, where one is construction market, and the second is the retail market. However, the company is themarket leader in the construction segment with a market share of 23%. Similarly, the company has 3%-4% market share of the retail market. Moreover, The BK is successful in the market; it has excellent brand recognition in the market. It is well trusted by the construction industry for its proven track record of the quality, reliability, and performance of the products.
Beyond all the success of the company, the management of BK has been changing their objectives to uplift their retail market share. The objectives of the management were to double the retail market share of the company while maintaining the market share of the construction segment and that it should not exceed the 60%. The reason is that the company has been considering moving the retail due to high profitability in the segment.
The important reason behind that move was that the company was mainly dependent on one segment of construction, hence it wanted to diversify its operations, because, if one or two of its construction companies changed the vendor, it would have negative impact on the company’s financial standing.Secondly, the selling products in the retail market were more profitable than selling products in the construction market
The problem arises as to how would BK manage restructuring its procurement process, and logistics management to achieve higher customer satisfaction, and lower inventory in order to diversify its operations and to double the market share of the retail segment while maintaining construction market share.
Retail Market’s New Priorities
The market has become very complex for the BK to manage its operations, therefore it needs a strategic plan that could address all key issues and identify the new priorities that new market segment requires to follow. Therefore, the situation of the company was becoming very complex since it had planned to diversify its operations to avoid any future shocks due to its dependency on the construction market.
Furthermore, given the situation, there is one problem for the logistics management. The market’s new priorities are lead time, inbound logistics, outbound logistics, and to avoid the inventory stockpile, caring cost, and risk of theshort life cycle of the product.The situation for the companyis worsening day by dayas well as it is becoming more complex to do something fast.
The lead time is very important for the company to manage with the help of proper logistics management in the company from upstream to downstream to maintain the customer relations. Meanwhile, customers are requiring delivery on time and customized products as well, which further creates complexity for the company to manage the things.
On the other hand, inbound logistics include the flow of material from the vendor on the company’s production unit, whereas outbound logistics management includes the flow of finished goods from the company to the end user. The process between the inbound logistics and outbound logistics is one of important priorities for the company as to how could it make it better.
The construction segment model of the business was simple, because, the construction companies used to order the particular products to the company to produce, whereas the lead time was not also very important for the construction company, and for theproduceras well in B2B business where thecompany has 56% of market share.Therefore, it was not much complex as the retail market segment.
However, the retail market segment can fit that previous organizational model. Meanwhile, the retail segment is compatible with the model, whereas, the complexity of the production and product innovation differs. For example, customers ask for more customized products, and there is less lead time for delivery, which is themain problem for the company.Hence, from the organizational point of view, the model is compatible but needs some improvements on the logistics grounds to get better upstream and downstream operations.
In addition to this, the company needs more improved logistics solutions to meet the objective of doubling the market share of the retail segment. This would be only possible, if the company better plans for the procurement processes, and purchasing plan as well. However, again the logistics management needs to be very strong in this situation when thecompany is moving to theretail segment. Meanwhile, it would need raw materials on time through applying just-in-time. Similarly, the outbound logistic would then play an important role in delivering products on time.......................