Numico (B): Transforming the Supply Chain to Support New Realities SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Numico (B): Transforming the Supply Chain to Support New Realities
Numico, Europe's second largest infant food manufacturer, refocuses its strategy on its core markets. The key is strategic change -- including new product introduction and production rationalization. To improve customer satisfaction levels and reduce costs, the company initiates two large projects, the first is aimed at visibility to demand and inventory levels--and new supply chain practices to coordinate them, with improved reaction time. The second is complete overhaul of the production and distribution process that includes plant reduction, product rationalization and shifting of production to Eastern Europe. The case looks at the challenges for their implementation, the role of a key change manager, and the future of the company.
Authors :: Carlos Cordon, Thomas E. Vollmann, Luis Vivanco
Swot Analysis of "Numico (B): Transforming the Supply Chain to Support New Realities" written by Carlos Cordon, Thomas E. Vollmann, Luis Vivanco includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Numico Rationalization facing as an external strategic factors. Some of the topics covered in Numico (B): Transforming the Supply Chain to Support New Realities case study are - Strategic Management Strategies, Strategy execution, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Numico (B): Transforming the Supply Chain to Support New Realities casestudy better are - – cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, geopolitical disruptions, talent flight as more people leaving formal jobs, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Numico (B): Transforming the Supply Chain to Support New Realities
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Numico (B): Transforming the Supply Chain to Support New Realities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Numico Rationalization, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Numico Rationalization operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Numico (B): Transforming the Supply Chain to Support New Realities can be done for the following purposes –
1. Strategic planning using facts provided in Numico (B): Transforming the Supply Chain to Support New Realities case study
2. Improving business portfolio management of Numico Rationalization
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Numico Rationalization
Strengths Numico (B): Transforming the Supply Chain to Support New Realities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Numico Rationalization in Numico (B): Transforming the Supply Chain to Support New Realities Harvard Business Review case study are -
Diverse revenue streams
– Numico Rationalization is present in almost all the verticals within the industry. This has provided firm in Numico (B): Transforming the Supply Chain to Support New Realities case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Numico Rationalization is one of the leading recruiters in the industry. Managers in the Numico (B): Transforming the Supply Chain to Support New Realities are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Numico Rationalization has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Numico (B): Transforming the Supply Chain to Support New Realities Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Numico Rationalization digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Numico Rationalization has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Numico Rationalization is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Numico Rationalization is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Numico (B): Transforming the Supply Chain to Support New Realities Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Numico Rationalization has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Numico (B): Transforming the Supply Chain to Support New Realities - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Numico (B): Transforming the Supply Chain to Support New Realities Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Numico Rationalization is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Numico Rationalization is one of the most innovative firm in sector. Manager in Numico (B): Transforming the Supply Chain to Support New Realities Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Numico Rationalization has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Numico Rationalization
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Numico Rationalization does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Numico Rationalization has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Numico (B): Transforming the Supply Chain to Support New Realities HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Numico (B): Transforming the Supply Chain to Support New Realities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Numico (B): Transforming the Supply Chain to Support New Realities are -
High operating costs
– Compare to the competitors, firm in the HBR case study Numico (B): Transforming the Supply Chain to Support New Realities has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Numico Rationalization 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Numico Rationalization has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Carlos Cordon, Thomas E. Vollmann, Luis Vivanco suggests that, Numico Rationalization is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Numico Rationalization has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Numico (B): Transforming the Supply Chain to Support New Realities, is just above the industry average. Numico Rationalization needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Numico Rationalization has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Numico Rationalization is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Numico Rationalization needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Numico Rationalization to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Numico Rationalization needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Numico (B): Transforming the Supply Chain to Support New Realities HBR case study mentions - Numico Rationalization takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Numico (B): Transforming the Supply Chain to Support New Realities HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Numico Rationalization has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Numico (B): Transforming the Supply Chain to Support New Realities that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Numico (B): Transforming the Supply Chain to Support New Realities can leverage the sales team experience to cultivate customer relationships as Numico Rationalization is planning to shift buying processes online.
Opportunities Numico (B): Transforming the Supply Chain to Support New Realities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Numico (B): Transforming the Supply Chain to Support New Realities are -
Manufacturing automation
– Numico Rationalization can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Numico Rationalization has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Numico (B): Transforming the Supply Chain to Support New Realities - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Numico Rationalization to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Numico Rationalization in the consumer business. Now Numico Rationalization can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Numico Rationalization can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Numico Rationalization can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Numico Rationalization can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Numico Rationalization can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Numico Rationalization has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Numico Rationalization can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Learning at scale
– Online learning technologies has now opened space for Numico Rationalization to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Numico Rationalization to increase its market reach. Numico Rationalization will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Numico Rationalization can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Numico Rationalization is facing challenges because of the dominance of functional experts in the organization. Numico (B): Transforming the Supply Chain to Support New Realities case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Numico Rationalization to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats Numico (B): Transforming the Supply Chain to Support New Realities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Numico (B): Transforming the Supply Chain to Support New Realities are -
Technology acceleration in Forth Industrial Revolution
– Numico Rationalization has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Numico Rationalization needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Numico Rationalization.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Numico Rationalization can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Numico Rationalization with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Numico Rationalization in the Technology & Operations sector and impact the bottomline of the organization.
Regulatory challenges
– Numico Rationalization needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Environmental challenges
– Numico Rationalization needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Numico Rationalization can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Numico (B): Transforming the Supply Chain to Support New Realities, Numico Rationalization may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
High dependence on third party suppliers
– Numico Rationalization high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Numico Rationalization business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Numico Rationalization is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Numico Rationalization will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Numico Rationalization can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Numico (B): Transforming the Supply Chain to Support New Realities Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Numico (B): Transforming the Supply Chain to Support New Realities needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Numico (B): Transforming the Supply Chain to Support New Realities is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Numico (B): Transforming the Supply Chain to Support New Realities is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Numico (B): Transforming the Supply Chain to Support New Realities is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Numico Rationalization needs to make to build a sustainable competitive advantage.
