How to make Ajax profitable? With numeric solutions and charts

Ajax Manufacturing Company Case 1. Ajax manufacturers police uniforms. 3 products in 2 colors with many sizes (4,500 SKUS). 1529 2. Sells through 400 distributors to several thousand local police-supply retailers (no internet) 3. Mature, price-oriented business with 4 companies Company This year Last year Prior year Comments Ajax $30 "Full line S16 $20 520 Smaller full line $14 Gamma S13 "Sells to local uniform service S11 companies leasing clean uniform "Narrow product line Shark $65 S62 (sales-millions) Beta Overall $70 4. Ajax' profits turned to losses these 3 years. Losses Millions This year S3 Last year S2 Prior year S3 . 14on of bla Koir 29 million 5. Benchmark data suggests Shark is "Cherry-picking." oplan B. upplement Company Salesmen Distributors SKUS Scule Pandary Ajax 21 400 4,500 Beta 17 150 2,000 batch site Loge unplanned Gamma 6 NA 450 Shark 3 50 72 In Southy R Size batches o Dowwe production Current Cost Structure Ajax Shark Comments-Ajax Cot G & A $1.70 $0.60 'Family on payroll costs $500K; airplane costs S500k annually 410-15% Selling $1.40 $1.01 Far more salesmen & distributors Warehousing & $1.30 $0.31 4,500 vs. 72 1.70 Shipping Manufacturing $3.90 $2.40 "Why same labor rates & more scale Material $5.70 $5.99 "Higher purchase volume Overall cost $14.00 $10.31 Price to distributors $12.50 S11.50 14 3 6. Shark has already achieved efficient scale; both have efficient capacity utilization 170x7dte MEG Cost Unit Ajax Shark Shark Ajax 26. million 29 millan Capacity Utilization GNA170 match prun T4 I mot dishubte bu 7 1.70" Plant Scale - 3.5 mille T4 2.5 29 ml X (12%) made it wort, make it better Ajax Manufacturing Company Case 7. 80% of Ajax sales are in top 1,000 SKU: 90% in top 2,000 SKUS 8. Inventory is spread evenly across all 4,500 Ajax SKUs. 9. Short manufacturing runs (batches) cost 4 more. MPG Run Length 10. Ajax makes many short runs to keep inventory down. hero FOR 3c too: 3 100 500 S 200 300 400 MFO Run Length 200 400 90 11. Ajax added too many sales reps to gain market share. 1x300=300 X-400 5400 Last year Prior year This year 500 Sales reps Sales $30 1 500 1900 3119 12. Distributors need Ajax or Beta to have a full line of sizes, but are buying high-volume trouser sizes from Shark at a lower price and reselling them to retailers at Ajax price. 230 14 500 7 . What would you do if you are Ajax? Maleny Shankar 72 Incentras Litlk to Name quantity Lower prie, on protit Gave profit, How much polit Credit for Muanto 119 Ajax Manufacturing Company Case 1. Ajax manufacturers police uniforms. 3 products in 2 colors with many sizes (4,500 SKUS). 1529 2. Sells through 400 distributors to several thousand local police-supply retailers (no internet) 3. Mature, price-oriented business with 4 companies Company This year Last year Prior year Comments Ajax $30 "Full line S16 $20 520 Smaller full line $14 Gamma S13 "Sells to local uniform service S11 companies leasing clean uniform "Narrow product line Shark $65 S62 (sales-millions) Beta Overall $70 4. Ajax' profits turned to losses these 3 years. Losses Millions This year S3 Last year S2 Prior year S3 . 14on of bla Koir 29 million 5. Benchmark data suggests Shark is "Cherry-picking." oplan B. upplement Company Salesmen Distributors SKUS Scule Pandary Ajax 21 400 4,500 Beta 17 150 2,000 batch site Loge unplanned Gamma 6 NA 450 Shark 3 50 72 In Southy R Size batches o Dowwe production Current Cost Structure Ajax Shark Comments-Ajax Cot G & A $1.70 $0.60 'Family on payroll costs $500K; airplane costs S500k annually 410-15% Selling $1.40 $1.01 Far more salesmen & distributors Warehousing & $1.30 $0.31 4,500 vs. 72 1.70 Shipping Manufacturing $3.90 $2.40 "Why same labor rates & more scale Material $5.70 $5.99 "Higher purchase volume Overall cost $14.00 $10.31 Price to distributors $12.50 S11.50 14 3 6. Shark has already achieved efficient scale; both have efficient capacity utilization 170x7dte MEG Cost Unit Ajax Shark Shark Ajax 26. million 29 millan Capacity Utilization GNA170 match prun T4 I mot dishubte bu 7 1.70" Plant Scale - 3.5 mille T4 2.5 29 ml X (12%) made it wort, make it better Ajax Manufacturing Company Case 7. 80% of Ajax sales are in top 1,000 SKU: 90% in top 2,000 SKUS 8. Inventory is spread evenly across all 4,500 Ajax SKUs. 9. Short manufacturing runs (batches) cost 4 more. MPG Run Length 10. Ajax makes many short runs to keep inventory down. hero FOR 3c too: 3 100 500 S 200 300 400 MFO Run Length 200 400 90 11. Ajax added too many sales reps to gain market share. 1x300=300 X-400 5400 Last year Prior year This year 500 Sales reps Sales $30 1 500 1900 3119 12. Distributors need Ajax or Beta to have a full line of sizes, but are buying high-volume trouser sizes from Shark at a lower price and reselling them to retailers at Ajax price. 230 14 500 7 . What would you do if you are Ajax? Maleny Shankar 72 Incentras Litlk to Name quantity Lower prie, on protit Gave profit, How much polit Credit for Muanto 119