Leitax Case Analysis

Case Synopsis: 1

The case opens with two upper management employees, Kevin C. Fowler and Brian J. McMillan, discussing possible changes to their company’s forecasting process. They work for Leitax, a digital camera producer, who was the seventh-largest player in the business in 2004. Headquartered in Memphis, Tennessee, Leitax rode the booming wave of the digital camera market through the late 1990’s and into the early 2000’s after splitting off from Newplex, a $22 billion print and imaging product company founded in the late 1970’s.

In 2002 Luis Cruz was appointed as the new senior vice president for Global Operations of Newplex and he recruited Fowler to define and manage a “Redesign Project” which would respond to the crisis Leitax was in due to their poor supply chain management. In May of 2003, Fowler was promoted to senior director of planning and fulfillment while Brian J. McMillan was made the new head of Demand Management Services. Together, they decided on two methodological changes that would help to standardize and improve the accuracy of forecasts across the organization. First, they would switch the focus of their forecasting process from sell-in (sales to retailers) to sell-through (sales all the way to the final customer). Second, they decided that capacity constraints in estimating demand needed to be ignored. Fowler and McMillan also continued to make substantial investments in information technology which were used to support the improvement of demand planning.

Fowler then decided that he needed to create mechanisms that would ensure that a single forecast drove the organization’s decisions. To do this, he decided to implement consensus forecasting. The starting point for this process was creating a business assumptions package (BAP) that contained price plans, market intelligence, and information on their competitors. Once this information was agreed upon, it was used as the basis for forecasting by the three functional groups of the...