Materials Management

Case Study

Balaji Rechargeable Fan Co.

Balaji Shreenivasan a young man in his early 20s, learned his trade as an employee from a home appliances manufacturing company. Unable to afford college full time, he continued his education at night taking courses with the goal of obtaining a bachelor degree.

Balaji Rechargeable Fan Co.

In 2006 he decided that his career path within the home appliance manufacturing company would take him nowhere. Balaji decided to use his experience & start a business of his own. He determined that while the major appliance manufacturing business seemed crowded, There was no one specialized in the manufacturing of rechargeable fans.

Balaji Rechargeable Fan Co.

There was need of rechargeable fans in the market because of load shedding & regular power cut. Balaji saw an expanding market for the product. He established the Balaji Rechargeable Fan company with the help of financers. 1st year of existence was a period of establishing business & period of slow growth.

Balaji Rechargeable Fan Co.

The largest investment was made in the advertising cost in announcing the business in local newspapers & media. Balaji also visited the major appliance retailers & local shops to introduce himself and make them aware of the rechargeable fan.

Balaji Rechargeable Fan Co

The turnover for the yr 2006 was only Rs.70 Lac, but the 4th quarter contribution was Rs.30 Lac, which indicated favorable growth rate. The level of business for the 1st quarter of yr 2007 increased to Rs.60 Lac, as Balaji rechargeable fans became popular.

Balaji Rechargeable Fan Co

Looking at the demand Balaji decided to go for an aggressive marketing, which led to a impressive business growth yr 2007. The turnover for a yr 2007 was 3.5 Crore. The progress graph was going upwards in the yr 2008 as well. Turnover for yr 2008 was 4.7 Crore.

Balaji Rechargeable Fan Co

But in the 1st quarter of the yr 2009, Balaji rechargeable fan co. could not do well. Company's sales were down by 40% with respect to the 1st quarter of 2008. Looking at the situation he called an urgent meeting of his key managers and tried to identify the reason for lower sales in the quarter. They identified two major reasons for fall of the sales. Failure of commitments made to key customers due to stock outs of materials. Entry of several competitors in rechargeable fan market.

Balaji Rechargeable Fan Co

Mr. Balaji recalls that one of his school friend is pursing MBA. He meets you & talks about his problems in business. After discussion you have reached to the conclusion that the problems are due to poor Materials Management.

Balaji Rechargeable Fan Co

Kindly explain your friend: 1.What is the objective of Materials Management? 2.What is the Scope of Materials Management? 3.What are the functions of Materials Management?