ICS - Final Business Plan Documentation PDF

Integrated Case Study- Zeit Haus GmbH Business Plan Presented By IBC 2023-24 Semester 2 MBA-IBC Supervisors Prof. Dr. rer. pol. Rainer Fischer Prof...

Integrated Case Study- Zeit Haus GmbH Business Plan Presented By IBC 2023-24 Semester 2 MBA-IBC Supervisors Prof. Dr. rer. pol. Rainer Fischer Prof. Dr. -Ing. Friedel, Andreas Prof. Dr. rer. pol. Greschuchna, Larissa Date of presentation ---- 16th June 2024 1 Table of Content Teams........................................................................................................................................ 6 Executive Summary................................................................................................................. 7 Section 1: Product Program.................................................................................................... 9 1.1 Problem Statement...................................................................................................... 9 1.2 Solution....................................................................................................................... 9 1.3 Product Portfolio......................................................................................................... 9 1.4 Consumers Benefit...................................................................................................... 9 Section 2: Marketing Plan..................................................................................................... 11 2.1 Target Market: Germany........................................................................................... 11 2.2 Competition & Marketing Strategy........................................................................... 11 2.3 How do our Customers Benefit?............................................................................... 11 2.4 Market Segmentation................................................................................................ 12 2.6 Competitors, Substitutes and their Impact on Profitability...................................... 12 2.6 Will the defined market secure the company’s growth and profitability?................ 14 2.7 Marketing Mix........................................................................................................... 14 Section 3: Production Plan.................................................................................................... 17 3.1 Production Objectives............................................................................................... 17 3.2 Production Strategies................................................................................................. 17 3.3 Production Premises.................................................................................................. 18 3.4 Production Plan......................................................................................................... 18 3.5 Breakdown................................................................................................................ 19 3.6 Resource Requirement.............................................................................................. 20 3.7 Outsourced Parts Buying Decision........................................................................... 20 3.8 Production KPIs........................................................................................................ 20 3.9 Bills of Materials (BOM).......................................................................................... 21 3.10 Functional scheme..................................................................................................... 21 3.11 Coherence with Marketing Targets........................................................................... 22 Section 4: Materials Management and Supply Chain Management................................. 24 4.1 Vendor Selection Parameters.................................................................................... 24 4.2 Vendor Selection Process.......................................................................................... 24 4.3 Warehouse Management........................................................................................... 26 4.4 Logistics Channels.................................................................................................... 27 2  4.5 Logistics Price Assumption....................................................................................... 28 4.6 Amazon Partner/Seller Commission Forecast........................................................... 28 4.7 Supply Chain Key Performance Indicators (KPIs)................................................... 28 Section 5: Costing................................................................................................................... 29 5.1 Costing Objectives.................................................................................................... 29 5.2 Department Wise Cost.............................................................................................. 29 5.3 Product Costing......................................................................................................... 30 5.4 Product-wise Contribution Margin Analysis............................................................. 31 5.5 Channel-wise Contribution Margin Analysis............................................................ 34 5.6 Break-Even Analysis and Safety Distance................................................................ 39 5.7 Safety Distance.......................................................................................................... 39 Section 6: Financial Plan....................................................................................................... 40 6.1 Income Statements.................................................................................................... 40 6.2 Balance Sheet............................................................................................................ 41 6.3 Cash Flow Statement................................................................................................. 42 6.4 Ratio Analysis........................................................................................................... 43 6.5 Cash Conversion Cycle............................................................................................. 44 6.6 Dupont Analysis........................................................................................................ 44 6.7 Financing the Company............................................................................................ 46 6.8 Credit Institute Information:...................................................................................... 46 6.9 Divident Payoff......................................................................................................... 46 6.10 Future Plans & recommendations............................................................................. 46 Section 7 Risks and Problems for Zeit Haus GmBH........................................................ 47 3 List of Tables Table 1 Business Model Canvas.............................................................................................. 10 Table 2 Competitors................................................................................................................. 13 Table 3 Product Portfolio (3 SKU’s)....................................................................................... 15 Table 4 Price development over time...................................................................................... 16 Table 5 Breakdown of Annual Production and Wastages....................................................... 19 Table 6 Bills of Materials........................................................................................................ 21 Table 7 Process Flow............................................................................................................... 22 Table 8 Price Quotes from Selected Suppliers........................................................................ 24 Table 9 Number of Raw Materials Ordered............................................................................ 25 Table 10 Cost of Raw Materials Ordered................................................................................ 26 Table 11 Warehouse Space Requirements............................................................................... 26 Table 12 Inventory Storage...................................................................................................... 27 Table 13 Department-wise Cost.............................................................................................. 30 Table 14 Product Cost per Unit............................................................................................... 30 Table 15 Product Wise Contribution Margin Analysis – Year 1............................................. 31 Table 16 Product Wise Contribution Margin Analysis – Year 2............................................. 31 Table 17 Product Wise Contribution Margin Analysis – Year 3............................................ 32 Table 18 Product Wise Contribution Margin Analysis – Year 4............................................ 32 Table 19 Product Wise Contribution Margin Analysis – Year 5............................................ 33 Table 20 Channel-wise contribution margin for year 1.......................................................... 34 Table 21 Channel wise contribution margin for year 2........................................................... 35 Table 22 Channel wise contribution margin for year 3........................................................... 36 Table 23 Channel wise contribution margin for year 4........................................................... 37 Table 24 Channel wise contribution margin for year 5........................................................... 38 Table 25 Safety Distance......................................................................................................... 39 Table 26 Income Statements.................................................................................................... 40 Table 27 Balance Sheet............................................................................................................ 41 Table 28 Cash Flow Statement................................................................................................ 42 Table 29 Ratios Overview....................................................................................................... 43 Table 30 Dupont Analysis...................................................................................................... 45 4 List of Figures Figure 1 Functional scheme..................................................................................................... 22 Figure 2 Warehouse design...................................................................................................... 27 Figure 3 Break Even Analysis................................................................................................. 39 5 Teams Material Marketing Production Management and Costing Finance Supply Chain Bhagyashree Dalvi Neeraj Pandey Farhan Deepthi Tyagi Ana Garcia Sanooj S Mridula Sarkar Vimal Saini Revathi Sajeevaraj Pallab Ghosh Yahia Hassan Esther Santhosh Gullay 6 Executive Summary Zeit Haus GmbH is a new entrant in the cuckoo clock industry with the concept of modernizing the traditional time-piece to match the taste of the new generation. The company's mission is to honor the Black Forest heritage while appealing to modern sensibilities, targeting a niche segment of young homeowners in Germany. With three distinctive models—Contemporary Charm, Modern Elegance, and Smart Cuckoo—Zeit Haus integrates timeless craftsmanship with smart technology and eco-friendly materials. Our business model leverages direct-to- consumer e-commerce channels and strategic partnerships with niche retailers, bolstered by digital marketing strategies and influencer collaborations. Projected to grow from an initial market size of €1.15 million to €2.64 million by Year 5, Zeit Haus is strategically positioned for expansion. The company's production facility in Baden - Baden emphasizes high efficiency and quality control, aiming for a defect rate below 0.70% and manufacturing efficiency exceeding 90%. Employing lean production principles and advanced technology, they utilize a First In, First Out (FIFO) inventory strategy and outsourced components to streamline operations and ensure product consistency. Cost management is integral, with detailed analysis across departments highlighting production as the highest contributor (44% of total costs), followed by supply chain and marketing (35% collectively). The marketing budget is aligned at 20% of total sales, underscoring our strategic investment in brand awareness and customer acquisition. Product costing per unit decreases annually as sales volumes increase, with Smart Cuckoo showing the highest contribution margin, crucial for covering fixed costs from Year 4 onwards. The company achieves breakeven between the 2nd and 3rd years, with profitability starting from Year 3. The safety distance, indicating sales buffer above breakeven, grows impressively from 12% in Year 3 to 36% in Year 5, signifying improved financial stability and resilience. Initially challenged by a negative return on equity (ROE) of -44%, Zeit Haus demonstrates a remarkable turnaround, reaching positive ROE figures from Year 3 onwards, peaking at 72% by Year 5. This improvement underscores successful market acceptance and operational efficiencies, though careful debt management remains crucial due to an increasing equity multiplier indicating heightened debt usage. 7 Financially, the company initially benefited from high liquidity, easing short-term obligations, but with a decreasing current ratio indicating evolving asset utilization strategies over the years. Inventory and accounts receivable management strategies highlight ongoing efforts to optimize working capital efficiency. The DuPont analysis reveals consistent improvements in profitability, asset turnover, and financial leverage, validating Zeit Haus's strategic initiatives. Moving forward, the company plans to enhance cost of goods sold (COGS) through optimized supply chain management, increase net profit margins via strategic pricing and sales growth, and manage cash flows by renegotiating supplier terms and evaluating capital structure. In conclusion, Zeit Haus GmbH's innovative approach to combining heritage with modernity in cuckoo clock craftsmanship has positioned it strongly in the artisanal home decor market. With sustainable growth strategies and robust financial planning, the company is poised to maintain leadership, capitalize on market opportunities, and deliver meticulously crafted, eco- friendly timepieces that enrich homes. 8 Section 1: Product Program 1.1 Problem Statement Classical Mechanical Cuckoo Clocks struggles to appeal to modern aesthetics, the industry still relies on handcrafted designs which result in higher product costs and limited scalability. The industry is in a declining path YoY, and a gap is developed in the market to address the changing needs. Customer tastes are evolving, demanding innovative and functional time- keeping solutions to meet the changing lifestyle of the new generation. 1.2 Solution Blending the charm of the cuckoo call with contemporary aesthetics, high-quality yet competitively priced timepieces incorporating features desired by today’s consumers will revitalize the industry. 1.3 Product Portfolio Our Company offers 2 products in the launching year, Contemporary Charm at a price of 60Euros and Modern Elegance for 100 Euros and in the fourth year the signature product of the company is launched for 150 Euros named Smart Cuckoo incorporating the most modern features of a connected space living. Sustainability is the core mantra of Zeit Haus’s product development. LED Lighting, Digital display, Soft glow in dark, sound customization, camera Bluetooth connectivity and app connectivity are our unique features. 1.4 Consumers Benefit Consumers can rediscover the nostalgic charm of Cuckoo calls with their most desired modern touch which can complement their modern living spaces. Customizable features allow our customers to personalize their product experience, and features of the product will become an integral part of their daily lives. 9  Table 1 Business Model Canvas Business Model Designed for: Zeit Haus Designed by: IBC2024 Date: 13/06 Version: 1.0 Canvas Key Partners Key Activities Value Propositions Customer Relationships Customer Segments Skilled designers Product design and Modern design cuckoo Engaging Social Media Young homeowners in the Sustainable material development clocks Presence age group of 25-40 years suppliers Assembling Sustainable Materials Customer Service who prefer modern décor Partnership with social Online marketing and sales Asset Light Production Feedback program and sustainable product media influencers Relationship management model development in Germany Retail partners with partners and Unique features matching Online platforms influencers the taste of the target Customer service group Key Resources Channels Skilled workforce Retail Store Sustainable material Online Stores suppliers Social Media Marketing Strong online and social Interior designers media marketing expertise Partnership with retailers Cost Structure Revenue Streams Components sourcing Cost Sales to retail chains Manufacturing Cost Direct sales through the online platform(amazon) Marketing and advertising cost Sales through online platforms of retail stores Logistics Cost Employee salary and benefits Rent, energy & administration cost Finance Cost 10 Section 2: Marketing Plan 2.1 Target Market: Germany For over 300 years the cuckoo clock industry in the southwestern part of Germany has relied on tradition. Neither the evolution of the timepiece based on the change of taste of customers nor the new production technologies are adapted this made the industry dying YoY. This formulated a gap in the market and Zeit Haus is poised to address this gap. Germany is a fertile ground for launching Zeit Haus GmbH. Germans are renowned for their appreciation of design and craftsmanship, they value tradition. Our target demographic of 25-40 year olds home owners enjoy a higher disposable income and prefers a modern outlook in their lifestyle. Germany's growing environmental consciousness of sustainable materials and manufacturing practices resonates with a growing segment of environmentally conscious consumers. This aligns seamlessly with our company’s strategy. Our company is taking a bold step in modernizing an industry to meet the lifestyle of younger generation. 2.2 Competition & Marketing Strategy Competition is expected from the established legacy brands in the medium term , however the growth will attract new entrants as well. Existing players from the far-east will put pressure on the margins in the near term. As a new entrant into the segment with unique product features our company is launching products with commercially competitive pricing which is impacting our margins in the initial years, as soon as we start capturing the market our new ranges will improve the margins. 2.3 How do our Customers Benefit? Our customers benefit from the value proposition offered by Zeit Haus GmbH, tradition is valued with a modern touch. Our product features makes the life of our target consumers at ease. Our advanced model incorporates the possibilities of a connected space through the product. The new generation values to live in such a connected space due to the easiness it offers in such a life style. Our consumers benefit from the perfect blend of tradition with a modern outlook. 11 2.4 Market Segmentation Market Size The market size of the cuckoo clock for the current fiscal year is projected to be 11.8Mn Euros with a sale of 55482 Units Total Achievable Market (TAM) Our Company targets young homeowners in the age bracket of 25-40 years with a high disposable income. This target audience has a modern outlook on their life. TAM is 3.04Mn people. Serviceable Achievable Market (SAM) As per the market research report 70% of our target customers prefer modern home decor for their abodes this leads to 2.128Mn people, and as per the sustainability index of the country, 68% prefer sustainable product, which narrow down our target audience to 1.447Mn people. Serviceable Obtainable Market (SOM) The traditional Cuckoo clock industry is declining YoY and is expected a penetration rate of 0.5%, however M/s.Zeit Haus is anticipating a higher penetration rate (1%) due to the adaptability and growth rate of digital technologies in the society. Our Target Market Group (1.447Mn) x Penetration rate of 1% at an Average price of 80Euros derives a SOM of 1.15Mn Euros Market Share Our Company is expecting accelerated growth due to the USP of our portfolio and is expected to capture a market share of 10% in year 1. Gradually our company is anticipated to capture a much higher market by introducing newer product line. 2.6 Competitors, Substitutes and their Impact on Profitability Our company is entering into a niche space in the home ground as major players in the industry still follow traditional methods of production techniques and the base technology followed is still mechanical type, this will give our company time until stiff competition from home ground arises. However, there are similar products in the market from Far East countries predominantly China, the perceived low quality of such products and the inability of such products to connect 12 the mindset of our target customers preferring locally sourced sustainable components offers a major advantage to Zeit Haus. Economies of Scale is a key factor for very competitive pricing for these products which is a threat to our company. This may impact our profitability when products with exact similar features are launched in market by these external players. Brand building by penetration pricing in initial years and improving profitability with our higher range of products. Quick adaptation to the change in market needs will be the way forward for our company. Table 2 Competitors Competitors Strengths Weakness - Established reputation for traditional - Limited focus on modern designs and craftsmanship and heritage. innovative features. Rombach & Haas - Diverse range of clock designs - Potentially higher pricing compared to catering to various preferences. competitors in certain segments. - May face challenges in appealing to - Long-standing heritage and family- the modern minimalist segment due to owned business. Anton traditional brand image. Schneider - Wide range of clock styles from - Competition with other established traditional to modern. brands for market share. - Focus on authenticity and Black - Limited product range compared to Forest craftsmanship. competitors like Anton Schneider. Hubert Herr - Unique hand-carved designs - Potential niche appeal may limit appealing to collectors. market reach. - Reputation for exquisite - Higher pricing may deter price- craftsmanship and luxury designs. sensitive customers. August Schwer - High-end segment focus appealing to - Limited focus on modern features and affluent customers. designs compared to Zeit Haus. - Focus on authentic Black Forest - Potential limited appeal to high-end cuckoo clocks. and modern minimalist segments. Hones - Targeting travelers and expats with - Limited online presence compared to miniature versions. competitors. 13 2.6 Will the defined market secure the company’s growth and profitability? The target market is identified predominantly considering the age group, disposable income, modern outlook in life-style, and strong inclination towards sustainability. Targeting a niche group increases the chance of building brand loyalty. Within the projected market size sales grow from 1.15Mn Euros to 2.64Mn Euros at a CAGR of 18.08% annually. Even though in a niche market Zeit Haus finds room for sustainable growth. Profitability is affected in the initial years. By consistently monitoring the market trend and exploring possibilities to expand the reach within the niche segment our Company’s Profitability is improved with new product offerings from Year 4 onwards. 2.7 Marketing Mix Product Zeit Haus offers a focused product portfolio of modern cuckoo clocks meticulously crafted. The product line encompasses: 14  Table 3 Product Portfolio (3 SKU’s) Size (cm) Price Product Features (H x W x D) In € 1 Contemporary -Wooden panel , Cuckoo made of recycled 30 x 18 x 15cm 60 Charm plastic (CC) - Silent Movement - LED Lighting - Customizable 4 types of Cuckoo Sound - Battery-Powered - Digital Display of Date & Day -Light Sensor for night time silencing. 2 Modern Above features Plus 40 x 24 x 16 cm 100 Elegance -Linden Wood Panel (ME) - USB charging - Digital Dial with recycled plastic needles - Projection of time on the wall. -Glow in dark and night time softglow LED. -BT beacon to save energy 3 Smart Cuckoo - All above features plus 48 x 26 x 20cm 150 (SC) -App Controlled - Multiple Digital Dials -Multiple Sound Customization -Reminder and Alarm setting using app. - Mini Camera and Video Surveillance - Digital Radio - Weather announcement. -Accurate Network Time. 15 Place Zeit Haus adopts an omnichannel distribution approach to ensure widespread availability and accessibility of its products: Retail Store Partners : XXXLutz, Operates 350 Stores: Otto.de - 6 Retail stores Online Partners Amazon.de, XXX Lutz, Otto.de Price Zeit Haus targets homeowners aged 25-40 years and implements a value-based pricing strategy. The pricing strategy includes two tiers to accommodate different budget preferences within the target demographic. 1. Price parity is maintained across retail stores and online platforms to ensure fairness and transparency for customers. 2. Volume-based discounts are offered to retailers to incentivize stocking and promotion of Zeit Haus products. In Year 3, Zeit Haus plans to execute a penetration strategy to expand its market reach. Table 4 Price development over time CC ME SC Year 1 60 100 - Year 2 60 100 - Year 3 58 (3% discount) 97 (3% discount) - Year 4 58 (3% discount) 97 (3% discount) 150 Year 5 57 (5% discount) 95 (5% discount) 150 Promotion Digital Amplification: Search Engine Optimization, Social Media Marketing. Influencer Collaborations: Strategic partnerships with prominent interior design influencers and lifestyle bloggers to showcase Zeit Haus's craftsmanship and aspirational lifestyle imagery. Content Creation: Compelling storytelling through blog posts, videos, and social media content, unraveling the legacy of German craftsmanship of cuckoo clocks. Digital Billboards- Reaching out to target group via ads in Digital Billboards at Train, Bus & Gas Stations. 16 Section 3: Production Plan 3.1 Production Objectives Objective Summary Quality Assurance: Aim to maintain a defect rate of less than 0,70% and continuously reduce it. Efficiency in Manufacturing: Achieve a minimum efficiency of 85%, with a target to increase to over 90% through process optimization. Sustainability: Keep waste generation minimum by using eco-friendly and recycled materials. Innovation: Combine modern technology with the traditional Black Forest cuckoo clock heritage and introduce an innovative model in the fourth year. 3.2 Production Strategies Lean Production Strategy Focus on minimizing waste and maximizing efficiency. Streamline production processes to reduce costs and improve quality. Sustainable Focus Identify and eliminate waste in production, including overproduction, waiting times, unnecessary processing, and defects. Emphasize sustainability by reducing waste and using recycled materials. Quality First Implement quality control measures such as error-proofing, visual management, and statistical process control to address issues early. Modern Innovation Integrate advanced materials and precision engineering with traditional craftsmanship to maintain efficiency and quality. 17 3.3 Production Premises Key Areas Production in Bulk: Manufacturing capacity planned yearly. Inventory Strategy: Use the First In, First Out (FIFO) method. Production Location: Based in Baden Baden. Raw Materials and Safety: Ensure materials are ready a quarter before production starts. Quality Checks: Conduct final inspections before packaging. Materials: Use recycled plastic to enhance sustainability. Waste Elimination: Employ lean methods to minimize waste. 3.4 Production Plan Capacity Planning Establish demand through sales forecasts and market research. Determine available resources for assembly based on demand. Plan production capacity considering lean methods to reduce waste and learning curve theory 18 3.5 Breakdown Annual production and wastage rates are calculated as below Detailed planning includes working time per day, availability in minutes, and the number of employees required Table 5 Breakdown of Annual Production and Wastages Working Availability Inventory Total Number of Finished Per Day Required time per in minutes Left at the Model Qty/ Year Production Wastage Employees Goods Production Minutes day in considering end of Per Year Required Minutes 90% Year Year 1 CC 11578 12154.8 85.04 12069.72 48.23 1447 480 432 3.35 493.72 ME 4630 4861.5 34.03 4827.46 19.2 578.75 480 432 1.34 197.4 Year 2 CC 12650 12788.78 89.52 12699.26 50.75 1319.48 480 432 3.05 49.26 ME 6210 6323.03 44.26 6278.77 25.09 652.38 480 432 1.51 68.27 Year 3 CC 14107 14763.09 88.58 14674.51 58.58 1464.59 480 432 3.39 567.51 ME 9169 9558.68 57.35 9501.3 37.93 948.28 480 432 2.20 332.33 Year 4 CC 13401 13503.54 67.52 13436.02 53.59 1286.05 480 432 2.98 35.02 ME 11003 11220.82 56.10 11164.72 44.53 1068.65 480 432 2.47 161.72 SC 1270 1333.5 6.67 1326.83 5.29 127.00 480 432 0.29 56.83 CC 14574 15267.68 76.34 15191.34 60.59 1454.06 480 432 3.37 617.34 Year 5 ME 14003 14541.43 72.71 14468.73 57.70 1384.90 480 432 3.21 465.73 SC 3174 3275.87 16.38 3259.49 13.00 311.99 480 432 0.72 85.49 19 3.6 Resource Requirement Resources Needed Labor: Skilled workers for assembly, inspection, and packaging. Materials: Sustainable and high-quality materials sourced from reliable suppliers. Equipment and Tools : Modern equipment and tools for process optimization and quality control. Facilities: Adequate workspace and storage for raw materials and finished goods. 3.7 Outsourced Parts Buying Decision Decision to buy specific components to ensure quality and reduce manufacturing complexity. Manufacturing all required parts requires huge initial investment, buying decision will help us to penetrate in the market with less risk on investment. Focus on maintaining strong relationships with suppliers to secure reliable and timely delivery of parts. 3.8 Production KPIs Overall Equipment Effectiveness (OEE): Target of 85% OEE, considered world- class. Daily and Annual Targets: Set specific daily and annual production 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%. 20 3.9 Bills of Materials (BOM) Our production approach is Make to Stock based on demand analysis, due to which we have chosen Invariant BOM. An invariant bill of materials (BOM) refers to a bill of materials that remains unchanged or consistent over time, regardless of variations in factors such as production volume, product configurations, or manufacturing processes. Table 6 Bills of Materials Contemporary Charm (CC) Modern Elegance (ME) Smart Cuckoo (SC) Component Quantity Component Quantity Component Quantity Wooden Clock Case 1 Wooden Clock Case 1 Wooden Clock Case 1 Clock Movement 1 Clock Movement 1 Clock Movement 1 Cuckoo Bird 1 Cuckoo Bird 1 Cuckoo Bird 1 Clock Hands 3 Clock Hands 3 Clock Hands 3 Clock Face 1 Clock Face 1 Clock Face 1 LED 1 pack LED 1 pack LED 1 pack Digital Display Panel 1 Digital Display Panel 1 Digital Display Panel 1 Light Sensor 1 Light Sensor 1 Light Sensor 1 Battery Holder 1 Lithium Ion Battery 1 Lithium Ion Battery 1 Packaging Material 1 Packaging Material 1 Packaging Material 1 USB Port 1 USB Port 1 USB Cable 1 USB Cable 1 Projection Module 1 Projection Module 1 Bluetooth Beacon 1 Bluetooth Beacon 1 Radium 1 pack Radium 1 pack Camera 1 Radio Receiver 1 Speaker 1 Microcontrollers 1 pack Digital Dials 1 pack 3.10 Functional scheme Functional scheme starts with getting demand as per market research, based on which parts are procured from suppliers. Once all of the parts are in Inventory, process of assembling the cuckoo clocks start. After completing the assembly, clocks go through quality inspection and then packed and stored in warehouse being ready to be shipped. 21  Figure 1 Functional scheme Procureme Demand Inventory nt of parts Quality Assembly Warehouse Shipment Inspection Table 7 Process Flow Operation Cuckoo Clock Parts Finished Good Shop Packaging Shop Quality Inspection Shop Assembling Point Raw Material center 3.11 Coherence with Marketing Targets Marketing Alignment Demand Forecasting: Production plans are based on data provided by the marketing team to meet expected demand. Quality Assurance: High-quality standards ensure customer satisfaction, aligning with marketing promises. 22  Efficiency and Cost-Effectiveness: Lean production strategies help in maintaining competitive pricing, a key marketing point. Sustainability: Use of eco-friendly materials aligns with the brand’s marketing focus on sustainability. Innovation: Continuous innovation supports marketing campaigns highlighting modern features and traditional craftsmanship. By aligning the production strategies with the marketing objectives, the company ensures a coherent approach to meet market demands, maintain quality, and uphold sustainability and innovation promises. This integrated approach supports the overall business goals and enhances the company's market position. 23 Section 4: Materials Management and Supply Chain Management 4.1 Vendor Selection Parameters 1) Price of the Product: Minimum cost for bulk orders. 2) Service & Support: Prompt service. 3) Lead Time: Short lead time, within 30 days. 4) Financial Security: High credit period. 5) Quality Certificate: High and sustainable quality products. 4.2 Vendor Selection Process 1) Identify Business Requirements and 2) Identify Potential Vendors 3) Ask for Quotations 4) Evaluate Vendors 5) Negotiate Terms 6) Finalize Agreements Table 8 Price Quotes from Selected Suppliers Price Lead Lead Lead Vendor Origin Vendor Price (€) Origin Vendor Price Origin (€) Time Time Time IndiaMart IndiaMart € 10 38 India Alibaba €8 30 China € 12 40 Bangladesh BD IndiaMart IndiaMart €5 27 India Alibaba €2 28 China €4 29 Bangladesh BD IndiaMart IndiaMart €8 32 India Alibaba €4 25 China €6 31 Bangladesh BD IndiaMart IndiaMart 2 28 India Alibaba € 0,5 20 China € 0,5 28 Bangladesh BD IndiaMart IndiaMart €5 33 India Alibaba €3 29 China €6 30 Bangladesh BD €0.50 €0.50 €1 IndiaMart IndiaMart (pack 37 India Alibaba (pack of 28 China (pack 33 Bangladesh BD of 5) 10) of 10) IndiaMart IndiaMart €4 42 India Alibaba €3 30 China €6 37 Bangladesh BD IndiaMart IndiaMart 2 35 India Alibaba € 0.50 28 China € 0,50 30 Bangladesh BD IndiaMart IndiaMart 2 35 India Alibaba € 0,12 25 China € 0,50 30 Bangladesh BD IndiaMart IndiaMart €5 27 India Alibaba €2 25 China €3 35 Bangladesh BD IndiaMart IndiaMart € 0,50 31 India Alibaba € 0,20 24 China € 0,40 28 Bangladesh BD IndiaMart €1 30 India Alibaba € 0,50 27 China IndiaMart €2 29 Bangladesh 24  Price Lead Lead Lead Vendor Origin Vendor Price (€) Origin Vendor Price Origin (€) Time Time Time €4 €2 €2 (pack IndiaMart IndiaMart (pack 33 India Alibaba 30 China (pack 39 Bangladesh of 20) BD of 20) of 15) IndiaMart IndiaMart € 16 28 India Alibaba €3 23 China € 12 26 Bangladesh BD IndiaMart IndiaMart €2 39 India Alibaba €1 22 China €2 33 Bangladesh BD IndiaMart IndiaMart € 16 26 India Alibaba €3 21 China € 13 26 Bangladesh BD IndiaMart IndiaMart €8 31 India Alibaba €1 23 China €4 27 Bangladesh BD IndiaMart IndiaMart €7 33 India Alibaba €1 20 China €7 30 Bangladesh BD IndiaMart IndiaMart €9 28 India Alibaba €5 25 China €7 27 Bangladesh BD IndiaMart IndiaMart €5 34 India Alibaba €3 25 China €5 29 Bangladesh BD Table 9 Number of Raw Materials Ordered Weight Parts Name Year 1 Year 2 Year 3 Year 4 Year 5 (gm) Wooden Clock Case 150 1821 2390 3041 3259 4137 Clock Movement 100 1821 2390 3041 3259 4137 Cuckoo Bird 50 1821 2390 3041 3259 4137 Clock Hands 20 1821 2390 3041 3259 4137 Clock Face 30 1821 2390 3041 3259 4137 Battery Holder 50 1518 1599 1845 1689 1909 LED 10 1821 2390 3041 3259 4137 Digital Display Panel 50 1821 2390 3041 3259 4137 Light Sensor 5 1821 2390 3041 3259 4137 Packaging Material 10 1821 2390 3041 3259 4137 Lithium Ion Battery 5 303 791 1196 1570 2228 USB Port 20 303 791 1196 1570 2228 USB Cable 150 303 791 1196 1570 2228 Projection Module 5 303 791 1196 1570 2228 Bluetooth Beacon 10 303 791 1196 1570 2228 Radium 100 303 791 1196 1570 2228 Camera 20 167 410 Radio Receiver 50 167 410 Speaker 30 167 410 Microcontroller 10 167 410 Digital Dial 10 167 410 Total Raw Material 19725 27855 1196 2405 4278 25  Table 10 Cost of Raw Materials Ordered Total Raw Cost Total Raw No of Raw Material of Order Material No of Each Component Material (Clock Cost component Wise) Year 1 Monthly Yearly Monthly Yearly CC 10 21,67 1518 15180 121440 328950 2631604 ME 15 30,25 303 4545 36360 137486,25 1099890 SC NA NA NA NA NA NA NA Year 2 CC 10 21,67 1599 15990 127920 346503 2772026 ME 15 30,25 791 11865 94920 358916,25 2871330 SC NA NA NA NA NA NA NA Year 3 CC 10 21,67 1845 18450 147600 399811 3198492 ME 15 30,25 1196 17940 143520 542685 4341480 SC NA NA NA NA NA NA NA Year 4 CC 10 21,67 1689 16890 135120 366006 2928050 ME 15 30,25 1403 21045 168360 636611 5092890 SC 20 43,25 167 3340 26720 144455 1155640 Year 5 CC 10 21,67 1909 19090 152720 413680 3309442 ME 15 30,25 1818 27270 218160 824917 6599340 SC 20 43,25 410 8200 65600 354650 2837200 4.3 Warehouse Management Our warehouse will be strategically divided for optimal efficiency. Stores raw material and finished goods after quality check. Table 11 Warehouse Space Requirements Size of 1 Cuckoo Clock (Packed ) 35X23 (CC) 45X29 (ME) 53X29 (SC) Number of maximum units produced (in 5 years) 1909 1818 410 Product shipped to retailer 1 Week Buffer 1 Week Storage capacity for 2 Weeks Product produced in 2 weeks 2068,5 Roundoff 2100 Height Length Width No of units 21 10 10 Dimension of 1 unit (in cm) 20 60 30 Total Dimension (in cm) 420 600 300 Total Area (in meter sq.) 18 meter sq. Roundoff 25 meter sq. 26  Table 12 Inventory Storage For Inventory 25-meter sq. For Finished Goods 25 meter sq. For Administrative Purpose 25 meter sq. Extra Space (Miscellaneous) 25 meter sq. Total Space of Warehouse 100 meter sq. Figure 2 Warehouse design 4.4 Logistics Channels We will start by focusing on the German market, scaling to the European Union later. Initially, we will partner with third-party logistics firms and use Amazon for broad reach. German Market: Supply chain originates from Baden Baden to retailers, with exchanges only for returns. European Union: Utilize retailers' warehouses and Amazon’s distribution services. 27 4.5 Logistics Price Assumption Transporting goods (up to 1kg) costs between 1€ and 1.40€ per packet, based on Mr.Oackstar.de's information. This helps in accurate estimation of road transportation expenses. 4.6 Amazon Partner/Seller Commission Forecast Amazon charges commission rates between 5% and 45%, depending on product type and distance. For home decor, a 5% referral fee plus fulfilment and inventory fees apply (Amazon Seller Services DE, 2024) 4.7 Supply Chain Key Performance Indicators (KPIs) On-time Delivery: Aim for 90% initially, improving to 95%. This reflects our ability to meet customer demand promptly. Order Cycle Time: Crucial for customer satisfaction and inventory management. Monitor each stage of the order fulfilment journey. Inventory Turnover: Aim for a turnover rate of 46 yearly, calculated as COGS / Average Inventory. Perfect Order Rate: Aim for 90% or higher, ensuring orders are delivered on time, complete, accurate, and undamaged 28 Section 5: Costing 5.1 Costing Objectives Costing objective is to comprehensively address various aspects of cost management. Identify and classify all relevant costs (fixed, variable, direct, indirect) associated with Zeit Haus GmBH. This report analyses the cost price, department-wise costing, variable and fixed cost, direct and indirect cost, contribution margin analysis, breakeven sales, and safety margin. 5.2 Department Wise Cost Production Department Cost Production department cost comprises the salaries and wages and facility rent (warm rent). 86% of total rent is allocated to the production department as out of 700 m2 only 600 m2 is used by production. Supply Chain Department Cost The costs incurred by the supply chain department encompass salaries and wages, warehouse rent, delivery charges, and logistics fees. The warehouse cost allocation is determined by the area utilized. Specifically, the supply chain department occupies 100 square meters out of the total 700 square meters in the production facility, resulting in 14% of the total rent being attributed to this department. For Amazon, the logistics cost from the Zeit Haus facility to the channel partner’s warehouse is non-existent, as Zeit Haus manages its inventory internally. However, the delivery charges associated with Amazon include a platform fee of €39.99 per month and a fulfilment fee of € 2.99 per unit. Marketing Cost The marketing budget is 20% of total sales. Cost and Finance Department Cost Major costs include the salary of the employees which contributes 11% to the total cost. 29  Table 13 Department-wise Cost Year 1 in € Year 2 in € Year 3 in € Year 4 in € Year 5 in € Marketing 214419 244408 266359 263601 324236 Production 302313 309222 351984 385080 450991 Supply Chain 120059 123043 130287 131189 167272 Costing 48000 48000 48000 48000 48000 Finance 48000 48000 48000 48000 48000 5.3 Product Costing Product costing is calculated based on Full costing method. Full product cost, also known as absorption cost, is a managerial accounting method that encompasses all costs involved in manufacturing a product. This method includes direct costs such as raw materials and direct labour, as well as indirect costs like both variable and fixed factory overhead. The variable overhead per unit and fixed overhead per unit are determined by dividing the total variable overhead and total fixed overhead by the total number of units produced. Table 14 Product Cost per Unit In € per unit Year 1 Year 2 Year 3 Year 4 Year 5 CC 65.8 61.9 57.0 54.4 52.9 ME 76.7 72.39 67.1 64.8 63.3 SC - - - 80.0 76.92 30 5.4 Product-wise Contribution Margin Analysis Table 15 Product Wise Contribution Margin Analysis – Year 1 Year 1 CC ME SC Total Sales Quantity 11,575 4,631 - 16,206 Quantity to amazon 4,630 2,084 Sales value 6,94,524 4,63,050 - 11,57,574 Discounts - - - - Commision 76,396 48,623 - 1,25,019 Net Sales 6,18,128 4,14,428 - 10,32,555 RM and production wages 3,33,780 1,83,453 - 5,17,233 Logistics Cost 8,334 3,056 - 11,390 Distribution Cost 14,176 6,379 - 20,555 Supply Chain wages 20,571 8,229 28,800 CMI 2,41,267 2,13,310 - 4,54,577 CMI % 39% 51% 44% Fixed production fixed cost 1,73,790 CMII - 2,80,787 CMII% 27% Overheads 3,69,634 CMIII -88,847 Table 16 Product Wise Contribution Margin Analysis – Year 2 Year 2 CC ME SC Total Sales Quantity 12,650 6,211 18,861 Quantity to amazon 4,428 2,174 Sales value 7,58,982 6,21,100 13,80,082 Discounts Commision 87,282 71,430 1,58,712 Net Sales 6,71,700 5,49,670 12,21,370 RM and production wages 3,51,115 2,39,673 5,90,789 Logistics Cost 9,867 4,845 14,712 Distribution Cost 13,560 6,657 20,217 Supply Chain wages 19,316 9,484 28,800 CMI 2,77,842 2,89,011 5,66,852 CMI % 41% 53% 46% Fixed production fixed cost 1,78,110 CMII 3,88,742 CMII% 32% Overheads 3,99,703 CMIII -10,961 31 Table 17 Product Wise Contribution Margin Analysis – Year 3 Year 3 CC ME SC Total Sales Quantity 14,107 9,169 23,276 Quantity to amazon 4,937 2,751 Sales value 8,46,432 9,16,850 17,63,282 Discounts 25,393 27,506 52,898 Commision 94,420 1,06,720 2,01,140 Net Sales 7,26,619 7,82,625 15,09,244 RM and production wages 3,96,205 3,52,026 7,48,231 Logistics Cost 11,004 7,701 18,705 Distribution Cost 15,071 8,396 23,468 Supply Chain wages 17,455 11,345 28,800 CMI 2,86,884 4,03,156 6,90,040 CMI % 39% 52% 46% Fixed production fixed cost 1,82,659 CMII 5,07,382 CMII% 34% Overheads 4,22,223 CMIII 85,159 Table 18 Product Wise Contribution Margin Analysis – Year 4 Year 4 CC ME SC Total Sales Quantity 13,401 11,003 1,270 25,673 Quantity to amazon 3,350 2,751 254 Sales value 8,04,030 11,00,250 1,90,500 20,94,780 Discounts 24,121 33,008 57,128 Commision 97,488 1,33,404 24,765 2,55,657 Net Sales 6,82,421 9,33,838 1,65,735 17,81,995 RM and production wages 3,76,354 4,23,460 68,313 8,68,127 Logistics Cost 12,060 9,902 1,219 23,182 Distribution Cost 10,270 8,433 779 19,481 Supply Chain wages 15,033 12,343 1,425 28,800 CMI 2,68,704 4,79,701 94,000 8,42,405 CMI % 39% 51% 57% 47% Fixed production fixed cost 1,90,122 CMII 6,52,283 CMII% 37% Overheads 4,20,403 CMIII 2,31,881 32 Table 19 Product Wise Contribution Margin Analysis – Year 5 Year 5 CC ME SC Total Sales Quantity 14,573 14,003 3,174 31,749 Quantity to amazon 2,915 2,801 635 Sales value 8,74,380 14,00,250 4,76,070 27,50,700 Discounts 43,719 70,013 1,13,732 Commision 1,07,985 1,72,930 61,889 3,42,803 Net Sales 7,22,676 11,57,308 4,14,182 22,94,165 RM and production wages 4,14,672 5,43,770 1,66,356 11,24,797 Logistics Cost 13,990 13,442 3,809 31,241 Distribution Cost 8,936 8,585 1,946 19,467 Supply Chain wages 26,439 25,404 5,758 57,600 CMI 2,58,641 5,66,106 2,36,313 10,61,060 CMI % 36% 49% 57% 46% Fixed production fixed cost 1,94,951 CMII 8,66,109 CMII% 38% Overheads 4,81,852 CMIII 3,84,257 33 5.5 Channel-wise Contribution Margin Analysis Contribution Margin I per channel is below. Sales through Amazon provides highest contribution margin every year as the commission is only 5% compared to the other channel where the commission is 15%. Table 20 Channel-wise contribution margin for year 1 Year 1 Amazon XXXLutz Otto XXXL.de CC ME SC CC ME SC CC ME SC CC ME SC Quantity 4630 2084 0 4688 1667 0 1562 626 0 521 185 0 Sales in € 277824.00 208350.00 0.00 281286.00 166680.00 0.00 93744.00 62550.00 0.00 31254.00 18520.00 0.00 Discounts in € 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Commision fee in € 13891.20 10417.50 0.00 42192.90 25002.00 0.00 14061.60 9382.50 0.00 4688.10 2778.00 0.00 Net Sales 263932.80 197932.50 0.00 239093.10 141678.00 0.00 79682.40 53167.50 0.00 26565.90 15742.00 0.00 RM and Production wages 133518.85 82545.10 0.00 135182.65 66036.08 0.00 45052.23 24781.36 0.00 15020.29 7337.34 0.00 Logistics Cost No logistics cost 0.00 5625.72 2000.16 0.00 1874.88 750.60 0.00 625.08 222.24 0.00 Delivery Charges 14175.94 6378.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Supply Chain 8228.83 3702.65 0.00 8331.37 2962.12 0.00 2776.59 1111.60 0.00 925.71 329.12 0.00 CMI 108009.18 105306.13 0.00 89953.36 70679.64 0.00 29978.70 26523.95 0.00 9994.82 7853.29 0.00 CMI % 40.9% 53.2% 37.6% 49.9% 37.6% 49.9% 37.6% 49.9% Otto.de Total CC ME SC Quantity 173.60 69.50 0.00 16205.90 Sales in € 10416.00 6950.00 0.00 1157574.00 Discounts in € 0.00 0.00 0.00 0.00 Commision fee in € 1562.40 1042.50 0.00 125018.70 Net Sales 8853.60 5907.50 0.00 1032555.30 RM and Production wages 5005.80 2753.48 0.00 517233.19 Logistics Cost 208.32 83.40 0.00 11390.40 Delivery Charges 0.00 0.00 0.00 20554.56 Supply Chain 308.51 123.51 0.00 28800.00 CMI 3330.97 2947.11 0.00 454577.15 CMI % 37.6% 49.9% 44.0% FC 173790 CMII 280787.15 CMII % 27.19% Overheads 369634 Profit/Loss -88847.3 BEP 1234369 34  Table 21 Channel wise contribution margin for year 2 Year 2 Amazon XXXLutz Otto XXXL.de CC ME SC CC ME SC CC ME SC CC ME SC Quantity 4428 2174 0 5124 2516 0 1708 839 0 568 280 0 Sales in € 265650.00 217350.00 0.00 307422.00 251550.00 0.00 102492.00 83880.00 0.00 34080.00 27950.00 0.00 Discounts in € 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Commision fee in € 13282.50 10867.50 0.00 46113.30 37732.50 0.00 15373.80 12582.00 0.00 5112.00 4192.50 0.00 Net Sales 252367.50 206482.50 0.00 261308.70 213817.50 0.00 87118.20 71298.00 0.00 28968.00 23757.50 0.00 RM and Production wages 122893.27 83872.16 0.00 142217.56 97069.43 0.00 47414.18 32368.05 0.00 15765.87 10785.49 0.00 Logistics Cost 0.00 6148.44 3018.60 0.00 2049.84 1006.56 0.00 681.60 335.40 0.00 Delivery Charges 13560.18 6656.81 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Supply Chain 6760.72 3318.90 0.00 7823.81 3841.13 0.00 2608.40 1280.83 0.00 867.33 426.79 0.00 CMI 109153.33 112634.63 0.00 105118.89 109888.34 0.00 35045.78 36642.55 0.00 11653.21 12209.82 0.00 CMI % 43.25% 54.55% 40.23% 51.39% 40.23% 51.39% 40.23% 51.39% Otto.de Home24 Total CC ME SC CC ME SC Quantity 190 93 0 633 311 0 18861 Sales in € 11388.0 9320.0 0.0 37950.0 31050.0 0.0 1380082.0 Discounts in € 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Commision fee in € 1708.2 1398.0 0.0 5692.5 4657.5 0.0 158712.3 Net Sales 9679.8 7922.0 0.0 32257.5 26392.5 0.0 1221369.7 RM and Production wages 5268.2 3596.5 0.0 17556.2 11981.7 0.0 590788.6 Logistics Cost 227.8 111.8 0.0 759.0 372.6 0.0 14711.6 Delivery Charges 0.0 0.0 0.0 0.0 0.0 0.0 20217.0 Supply Chain wage 289.8 142.3 0.0 965.8 474.1 0.0 28800.0 CMI 3894.0 4071.4 0.0 12976.5 13564.0 0.0 566852.4 CMI % 40.2% 51.4% 40.2% 51.4% 46.4% FC 178110.0 CMII 388742.4 CMII % 31.8% Overheads 399703.1 Profi t/Loss -10960.6 BEP 1244986.0 35  Table 22 Channel wise contribution margin for year 3 Year 3 Amazon XXXLutz Otto XXXL.de CC ME SC CC ME SC CC ME SC CC ME SC Quantity 4937 2751 0 3809 2888 0 1270 1238 0 423 321 0 Sales in € 296247.00 275070.00 0.00 228528.00 288810.00 0.00 76194.00 123750.00 0.00 25392.00 32090.00 0.00 Discounts in € 8887.41 8252.10 0.00 6855.84 8664.30 0.00 2285.82 3712.50 0.00 761.76 962.70 0.00 Commision fee in € 14367.98 13340.90 0.00 33250.82 42021.86 0.00 11086.23 18005.63 0.00 3694.54 4669.10 0.00 Net Sales 272991.61 253477.01 0.00 188421.34 238123.85 0.00 62821.95 102031.88 0.00 20935.70 26458.21 0.00 RM and Production wages 138669.73 105613.56 0.00 106971.26 110889.06 0.00 35665.51 47514.01 0.00 11885.70 12321.01 0.00 Logistics Cost 0.00 4570.56 3465.72 0.00 1523.88 1485.00 0.00 507.84 385.08 0.00 Delivery Charges 15071.24 8396.33 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Supply Chain 6109.31 3403.56 0.00 4712.79 3573.57 0.00 1571.30 1531.21 0.00 523.64 397.06 0.00 CMI 113141.33 136063.56 0.00 72166.73 120195.50 0.00 24061.26 51501.66 0.00 8018.53 13355.06 0.00 CMI % 41.44% 53.68% 38.30% 50.48% 38.30% 50.48% 38.30% 50.48% Otto.de Home24 Home24.de Total CC ME SC CC ME SC CC ME SC Quanti ty 141 138 0 705 458 0 2821 1375 0 23276 Sal es i n € 8466.0 13750.0 0.0 42321.0 45845.0 0.0 169284.0 137535.0 0.0 1763282.0 Discounts i n € 254.0 412.5 0.0 1269.6 1375.4 0.0 5078.5 4126.1 0.0 52898.5 Commi si on fee i n € 1231.8 2000.6 0.0 6157.7 6670.4 0.0 24630.8 20011.3 0.0 201139.8 Net Sal es 6980.2 11336.9 0.0 34893.7 37799.2 0.0 139574.7 113397.6 0.0 1509243.8 RM and Producti on wages 3962.8 5279.3 0.0 19810.0 17602.3 0.0 79239.8 52806.8 0.0 748230.8 Logi sti cs Cost 169.3 165.0 0.0 846.4 550.1 0.0 3385.7 1650.4 0.0 18705.1 Del i very Charges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23467.6 Suppl y Chai n wage 174.6 170.1 0.0 872.8 567.3 0.0 3491.0 1701.8 0.0 28800.0 CMI 2673.5 5722.4 0.0 13364.5 19079.5 0.0 53458.1 57238.6 0.0 690040.3 CMI % 38.3% 50.5% 38.3% 50.5% 38.3% 50.5% 45.7% FC 182658.6 CMII 507381.7 CMII % 33.6% Overheads 422223.1 Profi t/Loss 85158.6 BEP 1322986.3 36  Table 23 Channel wise contribution margin for year 4 Year 4 Amazon XXXLutz Otto XXXL.de CC ME SC CC ME SC CC ME SC CC ME SC Quanti ty 3350 2751 254 3618 2971 343 1206 990 114 402 330 38 Sal es i n € 201015.0 275075.0 38100.0 217080.0 297090.0 51435.0 72360.0 99000.0 17145.0 24120.0 33010.0 5715.0 Di scounts i n € 6030.5 8252.3 0.0 6512.4 8912.7 0.0 2170.8 2970.0 0.0 723.6 990.3 0.0 Commi si on fee i n € 9749.2 13341.1 1905.0 31585.1 43226.6 7715.3 10528.4 14404.5 2571.8 3509.5 4803.0 857.3 Net Sal es 185235.3 253481.6 36195.0 178982.5 244950.7 43719.8 59660.8 81625.5 14573.3 19886.9 27216.7 4857.8 RM and Producti on wages 94092.1 105869.7 13662.5 101611.9 114342.8 18444.4 33870.6 38102.7 6148.1 11290.2 12704.8 2049.4 Logi sti cs Cost 304.8 4341.6 3565.1 411.5 1447.2 1188.0 137.2 482.4 396.1 45.7 Del i very Charges 10270.3 8432.5 778.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Suppl y Chai n wage 3758.3 3085.8 284.9 4058.7 3332.8 384.7 1352.9 1110.6 128.2 451.0 370.3 42.7 CMI 77114.6 136093.6 21164.1 68970.3 123710.1 24479.2 22990.1 41224.2 8159.7 7663.4 13745.6 2719.9 CMI % 41.6% 53.7% 58.5% 38.5% 50.5% 56.0% 38.5% 50.5% 56.0% 38.5% 50.5% 56.0% Otto.de Home24 Home24.de Ikea Total CC ME SC CC ME SC CC ME SC CC ME SC Quantity 134 110 13 1206 825 114 134 275 13 3350 2751 381 25673 Sales in € 8040.0 11000.0 1905.0 72360.0 82500.0 17145.0 8040.0 27500.0 1905.0 201015.0 275075.0 57150.0 2094780.0 Discounts in € 241.2 330.0 0.0 2170.8 2475.0 0.0 241.2 825.0 0.0 6030.5 8252.3 0.0 57128.4 Commision fee in € 1169.8 1600.5 285.8 10528.4 12003.8 2571.8 1169.8 4001.3 285.8 29247.7 40023.4 8572.5 255657.0 Net Sales 6629.0 9069.5 1619.3 59660.8 68021.3 14573.3 6629.0 22673.8 1619.3 165736.9 226799.3 48577.5 1781994.6 RM and Production wages 3763.4 4233.6 683.1 33870.6 31752.3 6148.1 3763.4 10584.1 683.1 94092.1 105869.7 20493.8 868126.6 Logistics Cost 160.8 132.0 15.2 1447.2 990.0 137.2 160.8 330.0 15.2 4020.3 3300.9 457.2 23486.4 Delivery Charges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19481.5 Supply Chain wage 150.3 123.4 14.2 1352.9 925.5 128.2 150.3 308.5 14.2 3758.3 3085.8 427.4 28800.0 CMI 2554.5 4580.5 906.6 22990.1 34353.5 8159.7 2554.5 11451.2 906.6 63866.2 114542.9 27199.1 842100.1 CMI % 38.5% 50.5% 56.0% 38.5% 50.5% 56.0% 38.5% 50.5% 56.0% 38.5% 50.5% 56.0% 47.3% FC 190121.7 CMII 651978.4 CMII % 36.6% Overheads 420402.6 Profit/Loss 231575.9 BEP 1291949.6 37  Table 24 Channel wise contribution margin for year 5 Year 5 Amazon XXXLutz Otto XXXL.de CC ME SC CC ME SC CC ME SC CC ME SC Quanti ty 2915 2801 635 3935 3361 762 1311 1120 254 437 840 190 Sal es i n € 174888.0 280060.0 95220.0 236088.0 336080.0 114240.0 78678.0 112000.0 38040.0 26232.0 84020.0 28560.0 Di scounts i n € 8744.4 14003.0 0.0 11804.4 16804.0 0.0 3933.9 5600.0 0.0 1311.6 4201.0 0.0 Commi si on fee i n € 8307.2 13302.9 4761.0 33642.5 47891.4 17136.0 11211.6 15960.0 5706.0 3738.1 11972.9 4284.0 Net Sal es 157836.4 252754.2 90459.0 190641.1 271384.6 97104.0 63532.5 90440.0 32334.0 21182.3 67846.2 24276.0 RM and Producti on wages 82940.0 108757.9 33273.2 111963.9 130512.5 39919.5 37312.8 43493.8 13292.5 12440.4 32628.1 9979.9 Logi sti cs Cost 761.8 4721.8 4033.0 913.9 1573.6 1344.0 304.3 524.6 1008.2 228.5 Del i very Charges 8935.6 8585.5 1946.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Suppl y Chai n wage 5288.1 5080.9 1151.7 7138.6 6097.2 1381.7 2379.0 2031.9 460.1 793.2 1524.3 345.4 CMI 60672.8 130329.9 53326.3 66816.9 130741.9 54888.9 22267.2 43570.3 18277.1 7424.1 32685.5 13722.2 CMI % 38.4% 51.6% 59.0% 35.0% 48.2% 56.5% 35.0% 48.2% 56.5% 35.0% 48.2% 56.5% Otto.de Home24 Home24.de Ikea Total CC ME SC CC ME SC CC ME SC CC ME SC Quantity 146 280 63 1311 1050 238 146 350 79 4372 4201 953 31749 Sales in € 8742.0 28000.0 9510.0 78678.0 105000.0 35662.5 8742.0 35000.0 11887.5 262332.0 420090.0 142950.0 2750700.0 Discounts in € 437.1 1400.0 0.0 3933.9 5250.0 0.0 437.1 1750.0 0.0 13116.6 21004.5 0.0 113731.5 Commision fee in € 1245.7 3990.0 1426.5 11211.6 14962.5 5349.4 1245.7 4987.5 1783.1 37382.3 59862.8 21442.5 342803.2 Net Sales 7059.2 22610.0 8083.5 63532.5 84787.5 30313.1 7059.2 28262.5 10104.4 211833.1 339222.7 121507.5 2294165.3 RM and Production wages 4145.9 10873.5 3323.1 37312.8 40775.5 12461.7 4145.9 13591.8 4153.9 124410.0 163136.8 49951.8 1124797.2 Logistics Cost 174.8 336.0 76.1 1573.6 1260.0 285.3 174.8 420.0 95.1 5246.6 5041.1 1143.6 38099.2 Delivery Charges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19467.1 Supply Chain wage 264.3 508.0 115.0 2379.0 1904.9 431.3 264.3 635.0 143.8 7932.1 7621.3 1728.9 57600.0 CMI 2474.1 10892.6 4569.3 22267.2 40847.1 17134.8 2474.1 13615.7 5711.6 74244.4 163423.5 68683.2 1054201.8 CMI % 35.0% 48.2% 56.5% 35.0% 48.2% 56.5% 35.0% 48.2% 56.5% 35.0% 48.2% 56.5% 46.0% FC 194951.2 CMII 859250.7 CMII % 37.5% Overheads 481851.7 Profit/Loss 377399.0 BEP 1472865.5 38 5.6 Break-Even Analysis and Safety Distance Break-even analysis is a financial calculation used to determine the level of sales needed to cover total costs (both fixed and variable costs). It identifies the point at which total revenue equals total costs, resulting in neither profit nor loss. This point is known as the Break-even point. In initial 2 year, sales is lower then cost, so, unable to achieve break-even point Figure 3 Break Even Analysis 5.7 Safety Distance Safety distance is a financial metric that measures the difference between actual sales and break-even sales. It indicates how much sales can drop before the business reaches its break- even point. No safety distance in initial 2 year but increased from year 3. Table 25 Safety Distance Year Break Even Sales in Million euros Safety Distance 1 1.24 2 1.24 3 1.32 12.34% 4 1.29 27.53% 5 1.46 36.21% 39 Section 6: Financial Plan 6.1 Income Statements Table 26 Income Statements FY1 FY2 FY3 FY4 FY5 Sales Revenues 1157574 1380082 1710383.5 2037651.6 2636968.5 (-) Commission -125018.7 -158712.3 -201139.78 -255657.01 -342803.22 (-) Sales Returns 0 0 0 0 0 Net Sales 1032555 1221370 1509244 1781995 2294165 COGS / Direct Cost -517233.19 -590788.62 -748230.85 -868126.63 -1124797.2 Gross Profit = Net Sales - Cost of good sold 515322.11 630581.08 761012.91 913867.96 1169368.1 Gross Profit Margin (Gross Profit/Net Sales) 50% 52% 50% 51% 51% Indirect Cost Selling & Distribution Marketing -161078.63 -190533.67 -211897.82 -208493.37 -268417.34 Distribution Expense -31945 -34928 -42173 -42663 -49946 Total Selling & Distribution -193023.63 -225461.67 -254070.82 -251156.37 -318363.34 General & Administration Vehicle Maintanance -300 -330 -363 -399.3 -439.23 Fuel -5040 -5544 -6098.4 -6708.24 -7379.064 Salaries & Wages -372000 -376320 -380769.6 -385352.69 -418873.27 Rent Expense -28800 -28800 -28800 -31680 -31680 Miscellaneous -990 -990 -1089 -1089 -1197.9 Stationaries -500 -500 -500 -500 -500 Waste Expense -3801.6455 -4192.8056 -4689.7962 -4414.1941 -5854.2138 Total General & Administration -411432 -416677 -422310 -430143 -465924 Total Indirect Cost -604455 -642138 -676381 -681300 -784287 EBITDA -89133.2 -11557.4 84632.29 232568.2 385081.1 EBITDA Margin -9% -1% 6% 13% 17% Depreciation -3468 -3468 -3468 -4190 -4190 EBIT -92601.164 -15025.403 81164.29 228378.17 380891.09 EBIT Margin -9% -1% 5% 13% 17% Intrest -39485.502 -41712.795 -44065.724 -46551.378 -49177.241 Earning Before Tax -132086.67 -56738.198 37098.566 181826.8 331713.85 Taxes (35%) Round down 0 0 -12984.498 -63639.379 -116099.85 Net Profit/Loss -132087 -56738.2 24114.07 118187.4 215614 40 6.2 Balance S