1.0 Leitax and its Market background
Leitax is a digital camera division of Newplex, a $22 billion print and imaging product
electronics firm. Leitax was set up in order to target the fast emerging market of digital
cameras. It has distribution centres in America, Europe, Middle East, Africa and APAC
regions and sold mainly through retailers such as Best Buy and Comp USA. Production
was handled by two contract manufacturers in China and Latin America. Leitax
manufactured eight camera models with varied life cycles and offered wide optical zoom
range, resolution and internal memory, and in turn these models can have several SKU’s
based on bundled accessories and promotions. Multiple SKU’s results in larger inventory
which require intelligent inventory management to reduce warehousing costs.
Although Leitax established itself in global market of digital cameras, and had a good
distribution network: a perk of its Parent firm, it could not maintain a good market share.
As seen in 2002 it suffered huge loss of about $19.5 million due to poor management of
production of three camera models. This was mainly due to lack of proper planning of
multiple demand scenarios.
2.0 Faults prior to the Redesign
2.1 Planning and goal misalignment
The planning process which included demand planning process and master planning
process at Leitax were very poorly managed and defined prior to 2002. The sales directors
primarily forecasted the demand which were based on sell-in sales and disseminated them
to the finance groups and the operations group; this was usually informal with no track
record or via discussions on the hallway. Informal distribution of such crucial data poses
potential risk to having no proof when the blame game begins when planning takes a
wrong turn, whether the right data was being used or being tampered with. Which is
precisely what was happening, the finance team mistrusted the judgement and forecast of
the sales team, same was the case with the operations team and often they discarded the
sales team forecast and came up with their own forecast which suited their respective
needs. All decisions within an organisation must be on a shared forecast, which was not the
case in Leitax where each team developed their own forecast; hence lack of trust and
misalignment in goals caused great performance backlogs for the firm.
Another reason for the process error was the varied understandings and orientations of the
company goals and objectives. The finance team was only worried about the cash flow,
