Zeit Haus GmbH Operations Management Quiz

Business Plan: Zeit Haus GmbH

• Presented by IBC 2023-24, MBA-IBC, Semester 2, on June 16, 2024
• Supervisors: Prof. Dr. rer. pol. Rainer Fischer, Prof. Dr.-Ing. Andreas Friedel, and Prof. Dr. rer. pol. Larissa Greschuchna

Executive Summary

• Zeit Haus GmbH is a new entrant in the cuckoo clock industry, modernizing traditional timepieces to appeal to young homeowners in Germany
• Mission: Honor Black Forest heritage while appealing to modern sensibilities
• Three distinctive models: Contemporary Charm, Modern Elegance, and Smart Cuckoo
• Business model: direct-to-consumer e-commerce channels and strategic partnerships with niche retailers, supported by digital marketing and influencer collaborations
• Projected growth from €1.15 million to €2.64 million by Year 5

Product Program

Problem Statement

• Classical mechanical cuckoo clocks struggle to appeal to modern aesthetics
• Industry relies on handcrafted designs, resulting in higher product costs and limited scalability
• Industry is in decline, with a gap in the market for innovative and functional time-keeping solutions

Solution

• Blend traditional cuckoo clock charm with contemporary aesthetics, high-quality, and competitively priced timepieces
• Incorporate features desired by modern consumers to revitalize the industry

Product Portfolio

• Initial two products: Contemporary Charm (€60) and Modern Elegance (€100)
• Fourth year: launch of Smart Cuckoo (€150) with modern features, including LED lighting, digital display, soft glow in dark, sound customization, camera, Bluetooth connectivity, and app connectivity
• Sustainability is the core mantra of Zeit Haus's product development

Consumers Benefit

• Rediscover nostalgic charm of cuckoo clocks with modern touch
• Customizable features allow for personalized product experience
• Features integrate into daily life

Production Plan

• Production objectives: high efficiency, quality control, and defect rate below 0.70%
• Production strategies: lean production principles, advanced technology, First In, First Out (FIFO) inventory strategy, and outsourced components
• Production premises: Baden-Baden, Germany
• Resource requirement: detailed analysis across departments

Marketing Plan

• Target market: Germany
• Competition and marketing strategy: direct-to-consumer e-commerce channels and strategic partnerships with niche retailers
• Customer benefits: How do our customers benefit from our products?
• Market segmentation: detailed analysis of market segments

Financial Plan

• Costing objectives: detailed analysis of department-wise costs, product costing, and contribution margin analysis
• Break-even analysis: between the 2nd and 3rd years, with profitability starting from Year 3
• Safety distance: grows from 12% in Year 3 to 36% in Year 5, indicating improved financial stability and resilience
• Financial ratios: DuPont analysis reveals consistent improvements in profitability, asset turnover, and financial leverage### Business Model Canvas for Zeit Haus
• Designed for: Zeit Haus
• Designed by: IBC2024
• Date: 13/06
• Version: 1.0

Key Partners

• Skilled designers
• Sustainable material suppliers
• Partnership with social media influencers
• Retail partners
• Online platforms

Key Activities

• Product design and development
• Assembling
• Online marketing and sales
• Relationship management with partners and influencers
• Customer service

Value Propositions

• Modern design cuckoo clocks
• Sustainable materials
• Asset light production model
• Unique features matching the target group's taste

Customer Relationships

• Engaging social media presence
• Customer service
• Feedback program

Customer Segments

• Young homeowners in Germany aged 25-40
• High disposable income
• Modern outlook on life
• Preference for sustainable products

Key Resources

• Skilled workforce
• Sustainable material suppliers
• Strong online and social media marketing expertise
• Partnership with retailers

Channels

• Retail stores
• Online stores
• Social media marketing
• Interior designers

Cost Structure

• Components sourcing cost
• Manufacturing cost
• Marketing and advertising cost
• Logistics cost
• Employee salary and benefits
• Rent, energy, and administration cost
• Finance cost

Revenue Streams

• Sales to retail chains
• Direct sales through the online platform (Amazon)
• Sales through online platforms of retail stores

Marketing Plan

Target Market: Germany

• Germany is a fertile ground for launching Zeit Haus GmbH
• Germans appreciate design and craftsmanship
• Target demographic: 25-40 year olds with a high disposable income
• Preference for modern outlook and sustainable products

Competitors and Market Strategy

• Competition from established legacy brands
• Growth will attract new entrants
• Existing players from the Far East will put pressure on margins
• Launching products with commercially competitive pricing
• Improving margins with new ranges of products

Market Segmentation

• Market size: 11.8Mn Euros with a sale of 55482 Units
• Total achievable market (TAM): 3.04Mn people
• Serviceable achievable market (SAM): 2.128Mn people
• Serviceable obtainable market (SOM): 1.15Mn Euros

Competitors, Substitutes, and their Impact on Profitability

• Competitors: Rombach & Haas, Anton Schneider, Hubert Herr, August Schwer, Hones
• Strengths and weaknesses of each competitor
• Economies of scale as a key factor for competitive pricing
• Brand building through penetration pricing in initial years

Marketing Mix

• Product: Focused product portfolio of modern cuckoo clocks
• Place: Omnichannel distribution approach
• Price: Value-based pricing strategy
• Promotion: Digital amplification, influencer collaborations, content creation, digital billboards

Production Plan

• Production objectives: quality assurance, efficiency, sustainability, and innovation
• Lean production strategy
• Production premises: key areas, production location, raw materials, and safety
• Production plan: capacity planning, breakdown, and resource requirement
• Outsourced parts buying decision### Production KPIs
• Overall Equipment Effectiveness (OEE) target is 85%, considered world-class
• Daily and Annual Targets: Set specific targets to monitor efficiency and productivity
• Quality Metrics: Track defect rates, aiming to maintain them below 0.70%
• Efficiency Metrics: Monitor manufacturing efficiency with a target to increase to over 90%

Bills of Materials (BOM)

• Production approach is Make to Stock based on demand analysis
• Invariant BOM is chosen due to the Make to Stock approach
• Table 6 shows the components and quantities for each product type (CC, ME, SC)

Functional Scheme

• Functional scheme starts with demand analysis and procurement of parts from suppliers
• Assembly process begins after all parts are in inventory
• Quality inspection and packing follow assembly
• Finished products are stored in the warehouse and ready for shipment

Coherence with Marketing Targets

• Production plans are based on demand forecasting data from the marketing team
• High-quality standards ensure customer satisfaction, aligning with marketing promises
• Lean production strategies help maintain competitive pricing, a key marketing point
• Use of eco-friendly materials aligns with the brand's marketing focus on sustainability
• Continuous innovation supports marketing campaigns highlighting modern features and traditional craftsmanship

Materials Management and Supply Chain Management

Vendor Selection Parameters

• Price of the product: Minimum cost for bulk orders
• Service & Support: Prompt service
• Lead Time: Short lead time, within 30 days
• Financial Security: High credit period
• Quality Certificate: High and sustainable quality products

Vendor Selection Process

• Identify business requirements
• Identify potential vendors
• Ask for quotations
• Evaluate vendors
• Negotiate terms
• Finalize agreements

Warehouse Management

• Warehouse will be strategically divided for optimal efficiency
• Stores raw material and finished goods after quality check
• Table 11 shows the warehouse space requirements
• Total space of warehouse is 100 meter sq.

Logistics Channels

• Initial focus on the German market, scaling to the European Union later
• Initially partnering with third-party logistics firms and using Amazon for broad reach
• German Market: Supply chain originates from Baden Baden to retailers, with exchanges only for returns
• European Union: Utilizing retailers' warehouses and Amazon's distribution services

Logistics Price Assumption

• Transporting goods (up to 1kg) costs between 1€ and 1.40€ per packet, based on Mr.Oackstar.de's information

Amazon Partner/Seller Commission Forecast

• Amazon charges commission rates between 5% and 45%, depending on product type and distance

This quiz assesses your understanding of Zeit Haus GmbH's operations management, including its industry, manufacturing concepts, and vendor selection parameters.