Mmfd Sales Forecast Case Solution

1. PROJECT REPORT 

Harmonizing Demand forecast and supply at Mahindra & Mahindra 

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Mahindra & Mahindra is struggling with maintaining adequate stock of tractors, Irregular and short supply of tractors to the dealers from company stockyard during peak season, forced them to sell alternate model at discounted price to customers

Dealers carry stock of 40 days of their annual sales and additional 20 days of the sales were held at company stockyard, for customers who are willing to wait for 515 days.

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1. Project Report 

Harmonizing Demand forecast and supply at Mahindra & Mahindra 

Mahindra & Mahindra Ltd. Was founded in 1945 and it had its headquarters in Mumbai. This multinational group is one of the largest vehicles manufacturers by production and largest manufacturer of tractors in India. In 2015 M&M manufactured 212237 tractors. It has business operations in 100 countries where it provides expertise in aerospace, automobile, farm equipment, finance, hospitality etc.

MMFD provided tractor and agricultural equipment under the “Mahindra Tractor” brand. It had four manufacturing facilities in India, three in the US, one in Australia and two in china.

Mahindra & Mahindra Farm Division(MMFD) is struggling to maintain the adequate supply of Tractors to the dealers and the reason was absence of efficient demand forecasting. Dealers of MMFD carried tractor stock equal to 40days of their annual sales, and an additional stock was kept at the stockyard of company. Therefore, there were 60 days in buffer for customers ready to wait for 5 to 15 days. The production at MMFD was driven by consumer demand and material availability. [pic 5]

Manager did not want to lose sales; therefore, to cater to market demand, they frequently did mid-month revisions in forecast plan and inter-stockyard transfer of tractors. But still dealers were not satisfied due to the supply of tractors, here in this report we’ll be discussing the methods of demand forecasting.

1. Domestic Tractor Market in India 

• Agriculture sector employed 58.2% of country’s workforce in 2011 and contributed 15.7% in the same year to the GDP, tractor is the most important equipment for agriculture production
• In 2011, the domestic demand of tractor in India was largest in the world
• 16 companies are present in the tractor market
• Primary demand of tractor is from Agriculture sector and secondary from areas like haulage, constructions etc.
• Increase in demand because of awareness and better quality seeds & irrigation facilities  
• Only 10% of Indian farmer own tractor, but increased lending by banks has increased the demand of tractors

1. MMFD’s Business Model 

• MMFD has four manufacturing plants in India located at Mumbai, Jaipur, Rudrapur and Nagpur
• These manufactured tractors were then transported to company’s stockyard by road (these stockyards are present in every state)
• Presence of stockyards in every state helped them in avoiding the payment of central tax
• MMFD had 26 sales office
• Tractors were manufactured and supplied for the current month plus two months in advance
• MMFD fad approximately 197 tractor models, the top 50 models accounted for 89% percent of sales

1. Current Business Process 

• Area Office: Employees here forecast the demand from dealer inputs and the final report is prepared after allocating different weights to components affecting future demand. Their work is limited to a region or area
• Planning Marketing & Information System (PMIS): They analysis the reports submitted by

Area office and prepare the final forecasting report for entire country

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• After incorporating any last-minute changes if any required, the report is submitted to Supply Chain & Production Control department (SCPC). Monthly plans are made by assigning day-to-day tasks. Weather company will be using shared or limited capacity and accordingly lead time duration is decided
• Shop Floor will start working on the production plan given by SCPC, their work is mainly focused on production maximization
• Now, tractors are manufactured and ready for supply to the dealers, the only cost here involved is transportation cost
• MMFD delivers these tractors to the Area Stock Yard(ASY) based on the report/demand forecasted by Area office
• From ASY, dealer sells the product to final customer

1. Data Given