Information Data Modeling
Grand Sud Distribution,
S.A.
03/2005-5266
This case was written by Philippe Delquié, Associate Professor of Decision Sciences at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 2005 INSEAD, Fontainebleau, France.
INSEAD
1
5266
Introduction
The “Meats” division of Grand Sud Distribution, S.A., a food products company in southern
France, was created in 1989. Until recently, this division accounted for a stable 40% of the company sales. However, severe turmoil in the European meat industry, driven by consumers’ safety concerns, is dramatically affecting this contribution. Recurrent media coverage of the “Mad Cow Disease” had taken a toll on consumer sales of meat products; and although public fears would eventually subside; sales recoveries seem neither consistent or predictable. The Meats division of Grand Sud Distribution (GSD) comprises three production centers in
Avignon, Marseille and Perpignan, and four distribution centers located in Nîmes, Nice,
Marseille and Lyon. GSD’s profit margins have been shrinking in recent years due to both intensified competition, and a lack of ability to react to turbulent market conditions. The company has become very concerned about this situation and is struggling to more tightly control its costs.
Until now, management had paid little attention to the influence of logistics on their costs: distribution was organized according to a routine dating back to the inception of the division’s operations. Indeed, logistical decisions tended to follow a logic of geographical proximity of the production and distribution centers, with occasional reliance on outsourcing to “fill the gaps.” This decisional pattern was heavily anchored on a practice that may have made sense in the early days of the Meat division operations, but which had continued more or less
unquestioned
S.A.
03/2005-5266
This case was written by Philippe Delquié, Associate Professor of Decision Sciences at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 2005 INSEAD, Fontainebleau, France.
INSEAD
1
5266
Introduction
The “Meats” division of Grand Sud Distribution, S.A., a food products company in southern
France, was created in 1989. Until recently, this division accounted for a stable 40% of the company sales. However, severe turmoil in the European meat industry, driven by consumers’ safety concerns, is dramatically affecting this contribution. Recurrent media coverage of the “Mad Cow Disease” had taken a toll on consumer sales of meat products; and although public fears would eventually subside; sales recoveries seem neither consistent or predictable. The Meats division of Grand Sud Distribution (GSD) comprises three production centers in
Avignon, Marseille and Perpignan, and four distribution centers located in Nîmes, Nice,
Marseille and Lyon. GSD’s profit margins have been shrinking in recent years due to both intensified competition, and a lack of ability to react to turbulent market conditions. The company has become very concerned about this situation and is struggling to more tightly control its costs.
Until now, management had paid little attention to the influence of logistics on their costs: distribution was organized according to a routine dating back to the inception of the division’s operations. Indeed, logistical decisions tended to follow a logic of geographical proximity of the production and distribution centers, with occasional reliance on outsourcing to “fill the gaps.” This decisional pattern was heavily anchored on a practice that may have made sense in the early days of the Meat division operations, but which had continued more or less
unquestioned