Leitax Case Analysis

Company Background

Leitax is the seventh largest camera producer with six percent market share. The camera industry is currently defined by low profit margins, high capital requirements, intense competition, and a dependence on technological innovation with quick inventory obsolescence risk. They have never made money for their stockholders yet the author of the Harvard Case defines their money losing operations as “moderately successful.” They have distribution centers and sales forces on three continents, with headquarters in the United States. The most recent sales land at about half a billion dollars with a small loss in net income. Recent operations have been plagued by a delayed camera model launch, inventory was outsold for another, and sluggish sales for a third product, resulting in substantial write-offs. Because of the underperformance of the company during a large boom in sales for their industry, the company enacted a management shake-up, hiring a new CEO and several new Vice Presidents. New management decided that a redesign of the supply chain system would be needed to turn Leitax around from being a poor company in a poor industry to a decent company in a poor industry. The new senior VP, Luis Cruz, put Kevin Fowler, a new recruit from a competing company, in charge of the redesign project, initiated in April 2003. Its objectives were to (1) reduce inventory levels across the supply chain, (2) increase velocity and accuracy of planning information, (3) increase supply upside and downside flexibility, and (4) improve on-time performance to customers. Another new recruit, Brian McMillan, was hired to lead the Demand Management Services (DMS) department, which was responsible for supply and demand planning and distribution and channel inventory teams.

Initial Company Changes and Results

Two major changes were implemented by Fowler and McMillan to improve their forecasting system, which they believed was important to solving the earlier...