KURLON

LIMITED
Submitted To:
Prof. Rajendra Todalbagi

Submitted By:
Group No. A5
Akash Debnath (16004)
Manchit Mehta (16022)
Md Sarfaraz Alam (16024)
Naina Singh (16027)
Pratik Ghosh (16034)
Sweta Snigdha Sahu (16053)

INTRODUCTION
Kurlon Limited is the largest manufacturer of mattresses in India, with sales of Rs 110 crore.
Kurlon roughly had a 65% market share of the branded rubberised coir mattress market.
It had witnessed rapid growth in sales and market share in the mid-nineties, but from 1996

onwards sales and market share had stagnated and profitability was on the decline.
In 1998, Kurlon was worried about the increased competition, from other branded and un-

branded mattresses, and the challenges of providing higher variety to the customers.
In the wake of the already high number 126 configurations of mattresses and another 75

configurations that would come after Kurlon enters into a joint venture with DuPontthe
managing director of the firm is concerned that the current system of operations and supply
chain are inefficient to handle the load in an increasingly competitive market.

CASE OBJECTIVES:
o The Kurlon case is useful for an introductory purpose because it describes the

totality of a supply chain context that is simple to understand at the same time
case is comprehensive in nature.
o The case also covers a wide range of issues in supply chain management and

can be used to developing skills in supply chain diagnostics.

o Supply chain strategy and performance measures
o Supply chain planning practices
o IT and SCM
o Supply chain integration and Supply chain restructuring

ORGANIZATION STRUCTURE
Chairman
President & C.E.O
VP Production

VP Finance

VPMarketin
g
Manager

Deputy Works
Manager,Banglore
Asst.
Manager
Production

Asst.
Manager
Maintenance
Shift
Superintenden
t
workers

Manager,
Bhubaneswar
Asst.
Manager
Inspection

Assistant
Manager
Asst.
Manager
Despatch

Sales
Officer

PRODUCT VARITY IN KURLON

MATTRESSES

PRODUCTION & OPERATIONS:

o Coir mattress produced by kurlon consists of RC pad, foam (made in-house),covering

cloth and the fabrication is done inhouse.

o RC PAD MANUFACTURING: It is made by combining coconut fibre and latex with a

ratio of 3:2.Coir fibers are kept in rope form for 80 days further carried out by
untwisting, sheeting, sheet cutting, pressing,vulcanising ,cooling & pad cutting.
o Problem in the supply chain is the fluctuation in the coir production owing to seasonality

in coconut husk supply and fluctuation of the latex price as the price changes by
around 12% in 1 month.
o UNTWISTING: This is done when the moisture content of rope is less than 15% with 8

twisting machine and the average yield rate in operations being 85%.
o SHEETING: The coir fibre are fed continuously to a conveyor in a sheet form of specific

width(75,78 or 81 inch) with constant thickness.

o The sheet is flowed at a speed of 5.2 inches per second at around 100 degree C to

ensure proper bonding of the rubber and the coir.

PRODUCTION & OPERATIONS:

o SHEET CUTTING: The RC sheet are cut to 1 of the 12 specific widths ranging

from 62 to 86 inch and the output is referred to as fleeces.

o All the 3 operations being part of the continuous flow process does not includes

in-stage inventory and includes a total of 10 workers in a shift of 8 working

hours the whole process.
o PRESSING:A specific number of fleeces are pressed, at a temperature of

about 120 degree C and a pressure of 2.5 bars and the output is known as
semi-finished composite RC pad.
o This semi-finished composite pad consists of 3 length and 2 width and to

obtain a 2.5 inch thick RC pad , 5 fleeces are pressed and so on.
o The pressing time is 27 minutes for 2.5 inch pad,31 minutes for 3.5 inch pad

and the 3 presses requires 10 workers in each shift

PRODUCTION & OPERATIONS

o Vulcanizing: the purpose of vulcanizing is to make the pads elastic and springy. This

operation lasts for 30 minutes. It has the least capacity among the different RC pad
manufacturing operations.
o Cooling: The vulcanized pads are cooled before being sent to the pad cutting section using

overhead fans. This operation consumes minimal time and is never a bottleneck. The
vulcanizing and the cooling operations together involve five workers per shit.
o Pad Cutting: This is the final operation in the manufacturing of the RC pads. There are 2 pad

cutting machines. The cutting is done in a specific widths because it helps in better utilisation
of capacity in the pressing and vulcanizing operations. It also reduces trim loses. There is
excess capacity in this operation and hence no inventory pile up. Also the set up time is
negligible.
o Foam Making: This has two operations. After 24 hours of curing and foam edges are trimmed

to obtain the exact foam dimensions. About 30 workers are engaged in the foam making
operations. On an average there are 3 days stocks of raw materials as well as semi-finished
foams. It involves minimal set up time and also has never been a constraint in the past.

SUPPLY CHAIN PRACTICES

o Overhaul of supply chain practices.
o With this online portal Kurlon managed to streamline its ordering process and

achieve efficiency in terms of stock.

o Sufficient buffers were maintained for each SKU(stock keeping unit) in the

sales office.
o The online ordering system also reduced the manufacturing time, transit time,

and the frequency of the truck visits to the sales office.

o Other practices are as follows:
o Forecasting.
o Inventory management.
o Transportation management.

DISTRIBUTION
PROCESS:

RDC managers
fax/mails work
order to the HO
once a month

42 regional distribution center

Transportation is done by roadways

Dis
p
Se atch
ctio
n
Factory
Finishe
d goods

Bangalor
e
warehous
ecentral /
HO

North

South

Retail
Outlets

West
Bhubanesh
war
Warehouse

East
Zone

Retail
Outlets

PROBLEMS / THREATS FACED

o For work order placing, there is no formal forecasting process. Area sales

manager uses his experience and understanding of the market to finalize

work order.
o Kurlon does not have any system for measuring performance in terms of

customer service.
o No means to estimate lost sales and no monitoring to avoid excess

inventory.
o No retailer loyalty.
o Retail inventory space was less to stock up.
o No proper ordering system for the retailers.

ANALYSIS OF NORMAL TRUCK VERSUS

JUMBO
TRUCK FOR SHIPMENT TO DELHI:
There is a trade-off between transportation cost versus inventory-carrying
cost. Let us assume that mattress cost is Rs 2000 per unit and the inventorycarrying cost is 20%.
The breakeven volume would be:
Breakeven volume = (D/160) * 14000 + 80 * 2000 * 0.2
= (D/320) * 24000 + 160 * 2000 * 0.2
= 5200
If the volume to Delhi is less than 5200, Kurlon should use a normal truck;
when the volume is more than 5200, Kurlon should use a jumbo truck.

Q1.EVALUATE THE PERFORMANCE OF

KURLON
SUPPLY CHAIN AND THE CAUSESOF
THE
PROBLEM
FACED BY KURLON?
Firm performance In 1997, inventories and receivables were Rs 390.6 million out
o

of a total asset base of Rs 624.5 million and total income of 1.12 billion. The PAT,
Rs 40.1 million in that year, could be substantially improved by reducing the
current assets in inventories and receivables.
o Problem in the supply chain is the flucutuation in the coir production owing to

seasonality in coconut husk supply and fluctuation of the latex price as the price
changes by around 12% in 1 month.
o Competition in the Indian domestic market is heating up and the success of a

firm would be measured

low cost.

by how it was providing a high variety of products at

IMPORTANCE OF SCM
o Firm has to manage higher variety in future
o High inventory compared to European players
o High receivables (May be company is following the push strategy with its retailers leading to high

receivables)
o Supply chain related costs: SCM cost account for 10.6 % of sales
SCM cost = Inventory-carrying cost + Distribution cost
145. 8 * 0.2 + 8.95 = 118.6 million (assuming that inventory-carrying cost is 20%). This implies

that SCM cost is about 10.6% of sales compared to the net profitability of 4%

QUS 2.
Analysis for one specific SKU (72 * 35 * 4)
The sales data shows interesting pattern:
Week 28 represents Diwali
Skewed sales pattern: Last week accounts for about 62% of sales.
Unlikely that sales pattern at retailers show similar patterns (high skew at month

end). Very likely that Kurlon is dumping products with retailers at month end
resulting in high receivables and low sales in first week of the month

Analysis of supply chain planning

Forecasting capability at region is quite poor.
Inventory management is not proper and, in general, Delhi stock points keep

significantly higher stocks.

Analysis of data would shows that Kurlon needs to improve processes in the area of

production planning and dispatch planning.

Period

April

May

June

July

August

September

October

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Indent
210
90
90
30
330
480
300
150
150
0
0
0
450
300
330
150
60
330
300
0
48
480
300
0
36
2370
270
270

Weekly receipts (receipts from Bangalore CW) using the material flow balance
equation
SDL 72X35X4

Apsara 72X35X4

sales Operating stock Closing Stock

Receipt
Indent
sales Operating stock Closing Stock
0
404
404
0
90
0
0
0
68
404
666
330
60
6
0
108
180
666
594
108
60
24
108
150
402
594
270
78
30
126
150
84
56
270
520
306
90
60
84
216
235
520
1107
822
60
42
216
186
213
1107
1020
126
90
42
186
234
508
1020
806
294
0
192
234
78
6
806
650
150
30
0
78
204
55
650
895
0
78
18
204
186
249
895
646
0
30
60
186
186
646
646
0
0
60
66
186
120
24
0
294
318
90
0
120
180
73
294
551
330
30
54
180
210
140
551
993
582
30
42
210
174
569
993
424
0
60
72
174
162
12
424
886
474
60
0
162
168
28
886
1086
228
60
48
168
204
136
1086
950
0
0
50
204
184
631
950
325
6
90
126
184
148
0
325
653
328
36
0
148
172
18
653
845
210
120
12
172
316
150
845
1079
384
60
36
316
388
436
1079
649
6
60
196
388
192
0
649
889
240
60
0
192
408
294
889
1663
1068
252
126
408
342
544
1663
2781
1662
72
108
342
234
1198
2781

42
24
234

Receipt
0
114
66
60
192
12
90
36
126
0
60
0
60
84
6
60
6
84
30
90
24
156
108
0
216
60
0

3. WHAT IS YOUR EVALUATION OF

COMPANYS PLANNING PROCESSES?
Though this is not the focus of the case, one can identify vulcanizing or
quilting as the bottleneck processes, depending on the likely product mix
(Apsara brand does not need quilting).
o We can examine the impact of skewed sales pattern on production

planning.
o We can examine the role of annual planning to take care of peak sales

during Diwali.

4.

WHAT SPECIFIC ACTIONS DO YOU

RECOMMEND TO NARENDRA KUDVA TO ADDRESS
THE SUPPLY CHAIN PERFORMANCE PROBLEMS?
o

Improper forecasting mechanism at regions: Kurlon can explore possibility

of designing better forecasting models (use time series data).

o Kurlon should put in place supply chain performance management system.

o Ad-hoc inventory policies (excessive stocking) followed, owing to pressures

at the retailer end (competing with other brands), push strategy (sell what
can be produced), improper understanding of the demand (seasonality),
and various uncertainties at different stages.
o A substantial amount of skewness is caused internally owing to the push

strategy: Inventory norms to be defined. Focus on supply chain integration

with retailers.

o Order placements are through costly means such as telephone and fax. There

is lack of an integrated IT strategy. Design appropriate IT strategy.

o Purchase department orders raw materials in huge quantities owing to

anticipated price fluctuation. This leads to high stock-piling. Kurlon should keep
monitoring price trends and based on recent price trends use appropriate
sourcing strategy.
o Too much importance given to economies of scale in transportation. Focus on

total cost (transportation + inventory-carrying cost).

o Poor coordination between various functions.