Fastgo Case Study: Made By:-Vikram Gupta E-04 Manas Chafekar E-12

FastGo
Case study
MADE BY:-
VIKRAM GUPTA E-04
MANAS CHAFEKAR E-12
SUMMARY
Case study talks about the problems faced by one of the major players in FMCG
indusry” FastGo”.Fastgo was performing exceptionally well in all its product lines
and thus was generating huge incomes. So, they decided to diversify into another
product line, which they did after getting a detailed study done from a reputed mana-
-gement consulting firm.. Fastgo was a household name in the industry but after
launching a new product line they have been constantly facing performance problems.
Company didn’t expected profits for first five years but the division continued to be in
red for 10 years.These problems emerged with time as a result of various factors. Thus
company’s board of directors finally decided to look into the matter. It didn’t took very
long to jot down the major problems faced by the division. Every deptt. was facing
one or the other problem which needs to be catered with immidiately to save the
product as it has been already very late after entering into the market.
FASTGO: BEFORE LAUNCH
1) House hold name in FMCG industry.
2) Competitive edgein the market: one of the reasons is its extremely low time to
market(sells goods in 9 days after manufacturing.) and avg competition is
between 9 months to 12 months.
3) Because of all success they enterd into India’s middle class segment and grew
reliably.
4) Was a favourite among its shareholders because of its reliable growth and div-
-idends which it provides year after year.
5) It is an unlisted public coompany.
6) Had built large cash reserves as they were doing extremely well and wanted to
use it to fuel the next stage of growth.
7) The market of the existing product line was shrinking.

FASTGO: AFTER LAUNCH
1) Had acquired a reputedfood product company, Southern foods.
2) Acquired state of the art machinery to enhance southern foods’ existing

manufacturing facilities.
3) Was not expecting any returns from the division for next 5 years.
4) However after all this division faced losses continuosly for 10 years(against
5years expected.)
5) Facing several problems in all the departments.
6) Loosing customer and shareholder faith.
7) Finding difficult to penetrate new markets and create a unform demand from
all over India.
PROBLEM
The problem faced by the firm is to turn a underperforming

division into a high performer.
UNDERLYING PROBLEMS OR PROBLEMS
FACED BY VARIOUS DEPARTMENTS
MANUFACTURING
1) Material is sent to regional warehouse from factory warehouse depending upon
the demand received.
2) It is not economical to send material unless full truckload is achieved.
3) Regional warehouses do not send request directly to the factory.
4) No formal method for inventory planning.
5) Regional warehouses are not uptodate about the stocks.

MARKETING
1) Existing stocks in the market are 3-4 monthss old.
2) Sales are not uniform throughout the month as well as there is high difference
in the sales figures in different regions.
3) Stocks on supermarket shelves are nearly six months old.
4) Customers are reluctant to buy products older than 2 months.
5) Most competitors are able to keep stocks that are just a month old.
6) If customer refuse to buy products older than 6mnths then fastgo has to replace
them which is a cost.
STARTEGIC PROBLEMS
1) The demand for products varies according to the regions.for eg.. Demand is high
in urban areas and metros.
2) Some are fast moving products whereas others are not.
3) Fastgo is deviating from ites ambition of emerging as a nationally recognised

food brand.
4) Most of the competitors are local playersadding further to the market complexity.
Recommended Solution:
 The produced stock should be kept in the
production plant.
 Forecasting for the stocks in the regional
warehouse should be accurately calculated,
i.e. for 20 days. These stocks should also
be replenished after the the calculated time
i.e. 3 days.
 Accuracy of forecast is of prime
importance.
 Due to the transportation constraint i.e. 4
days, we need to hold inventory to cover
the next weeks actual sales.
 We decided to hold each regional
warehouse the equivalent of 20days of
average sales for region. This is because
considering fluctuating consumption the
damage of not having stock is much bigger
than damage of holding inventory.
To decide the Quantity of Stock in Plant:
We have to consider,
a)Ability of plant to produce item from raw
material to finished goods.
b)The expected consumption from regional
warehouse & time to deliver.
Maximum level, Reorder level, Safety stock.
stock equal to 3 x LTC
 Thus shipment I decided on the actual
consumption of the goods in the shop.
 Thus no wrong product at wrong places.
 Thus replenishing regional stocks on a
constant basis, this enables to ship full
truckloads.
 This also negates the need to transport
small quantity to regional warehouse, and
no cross shipment.
 Transportation Cost is reduced.
Steps to be taken by Marketing
Dept.
We have to emphasis on the fact that shops
are of prime importance to the company.
Problems faced by shop keepers:-
 Discount on obsolete products.
 Unavailability of Goods in demand.
 Payment Issues.
 Forecasting is inaccurate.
 Order is being placed in bulk.
 Mismatch between shop inventory and
consumer demand.
 Non popularity of alternative products.
This affects the shelf space of the shops.
 Shortage of Products in the shop.
Recommended Solutions
 Discounts by the company based on
amount of orders per year.
 Popular items have to be replenished on a
daily basis.
 This may lead to loss of 1-2 months sales
but can be compensated by their order to
cover shortage and by attracting more
shops that we aren’t doing business with.
 We give our merchandise to shops on
consignment terms.
Steps to achieve this:
Concept of Consignments. No need of shops
to have any major cash investments.
Dedicated shelf space.
Thus the shops will carry our different
product lines due to this change, which is
beneficial for us.
 Replenishing the stock according to the
data of the sold products on a regular basis
i.e. daily, weekly, monthly.
 Another advantage of this system is that it
generate more cash than the traditional
way, as traditionally we use payment
terms(like 90days).
Conclusion
 Thus by this system we will implement a
formal method of inventory planning by
which factory will only produce which is
consumed and will only supply where it is
needed.
 We can easily analyze regional differences
and bring new product pertaining to
specific region.
 Due to merchandise methods more and
more rural market can be captured.
Thank You

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FastGo

5) It is an unlisted public coompany.

7) The market of the existing product line was shrinking.

2) Acquired state of the art machinery to enhance southern foods’ existing

5) Facing several problems in all the departments.

6) Loosing customer and shareholder faith.

The problem faced by the firm is to turn a underperforming

2) It is not economical to send material unless full truckload is achieved.

3) Regional warehouses do not send request directly to the factory.

4) No formal method for inventory planning.

5) Regional warehouses are not uptodate about the stocks.

1) Existing stocks in the market are 3-4 monthss old.

3) Stocks on supermarket shelves are nearly six months old.

4) Customers are reluctant to buy products older than 2 months.

2) Some are fast moving products whereas others are not.

3) Fastgo is deviating from ites ambition of emerging as a nationally recognised

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