Analysis Winkler A.G.'s Marketing and Manufacturing Strategies
Winkler A.G. is a manufacturer of packaging materials for the grocery chain stores, electronics, food processing industries, office products and house ware products. The company is headquartered is in Berlin and they have manufacturing plants in Hamburg and Stuttgart, Germany.
Manufacturing operations is broken down to 50% for 4 major customers and 50% for grocery chain and food products. Winkler has about 50% market share with an average of 25% contribution margin. Notably, Winkler leads in the fiber container used for packaging snack food products with a 52% market share
This case study analyzes Winkler's marketing and manufacturing strategies and how the two can be aligned for greater operational efficiencies.
Review of Winkler’s marketing initiatives
Winkler’s objectives are to increase their sales volume by 25% and to increase their total market share by 35% in the next 3 years, while maintaining contribution margins at 25%. To achieve these objectives and to retain their position as market leader in fiber container manufacturing business, they came up with 3 marketing initiatives – Just In Time (JIT), New product innovation and Competitive pricing.
i. Just In time (JIT) delivery program
• To provide better service to customers by cutting down on the delivery lead time to 1 to 1.5 days from order receipt.
• Hess represents critical and growing part of Winkler business and provides opportunity to outsource entire fiber container manufacturing.
• The existing lead time at Hamburg plant varies from 1 day to 6 days and at Stuttgart plant from 5.8 to 6.4 days. Hess operating on JIT strategy at Hamburg plant mainly with lead time of 3.9 days results in 38% lead time reduction to 1.5 days.
• Order quantity from Hess contributes to about 36% (41,455,000 units – Exhibit 2) based on the figures in the previous year. The next 3 year forecasted volume is also expected to be in the same region.
• The adoption of JIT strategy should be based on Hess outsourcing of their manufacturing facilities and the formulation of a long term partner relationship.
• The justification for JIT implementation is that orders supplied to Hess has higher margins than the other 3 customers.
• If JIT is implemented, it will improve on Winkler’s delivery lead time and give it a competitive advantage over their competitors.
• This strategy may work in favor of Hess and may not benefit Winkler as it requires changes in manufacturing strategy in terms of production system changes.
• Investment needed for the implementation of JIT program can derail their plans if Hess changes their strategy on outsourcing their manufacturing capability.
ii. New Product Introductions (NPI)
• Implementation of new packaging innovations to meet customer requirements will grow their market share in the fiber container business. Distinctive packaging and material differentiation...