Leitax: Case Analysis

Group E7: Avik Das [250] Manish Chandra K N [263] Kashmir Thakur [265] Nishant Bagde [272] Shaikh Ashfaqhusain [285] Shifali Sashidharan [286] Shrinwanti Banerjee [287] Sudipta Samanta [291]

Case Facts: Digital Camera Market

By the fall of 2004, US digital camera market was $8 billion, up from $5.7 billion in 2003

Digital camera shipments in the US rose to 22 million units, a 36% increase over 2003.
In 2004, Kodak was the leader in the US digital market with a market share of 22% Leitax had a very less market share of 6% compared to the big players Sony-20%, Canon-16%, Olympus-10%

Case Facts: Digital Camera Market

Direct threat to Film cameras: Kodak announced halt of reloadable film cameras in 2005

Reduction in prices with introduction of CMOS image sensors

Worldwide growth rate began to decrease: 21% for 2005 and 5.2% for 2006 The estimated forecasts peaked in December 2006 when penetration rate was 63%. Growth in 2007 was expected to be negative.

Case Facts: Leitax

Established in 1997 as a separate company of Newplex group specifically for Digital Camera market.

Newplex: $22 billion print & imaging product company founded in late 1970s
LX280 Zoom Camera: The first point and shoot megapixel digital camera under $1000 2002: Became a global seller with $423 million revenues and a net income loss of $7.5 million

Case Facts: Leitax

Organized in three geographical areas: Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC) Distribution Centres located in Little Rock, Arkansas; Amsterdam, Holland; Hong Kong, China Little Rock DC sold directly to resellers; the other DCs sold to wholesalers who then shipped to resellers Production handled by two contract manufacturing plants in China, and one each in Mexico and Chile

Case Facts: Leitax

Contract manufacturers made either retail-ready units or viewer-ready units

Leitax maintained a product portfolio of eight camera products offering broad optical zoom range, megapixel resolution, etc

Average life cycles of 17-22 months and was getting shorter. High-end products: shorter product lives

Leitax in Crisis
Launch of one camera was delayed: Estimated cost of delay was $19.5 million

One of the digital camera outsold its inventory: Lost sales estimated to be $4.5 million

One of the camera reported sluggish sales: Excess and obsolescence costs were $2.5 million

Major Reforms in Leitax

In Late 2002, a new CEO and several new vice presidents were appointed. Luiz Cruz: Senior VP for Global Operations Kevin C. Fowler was hired and in May 2003 was promoted from head of DMS group to senior director of Planning & fulfillment Brian J. McMillan was made the head of Demand Management Services (DMS)

There was a need for the entire supply chain operation to be redesigned The Redesign Project

The Redesign Project

To reduce inventory levels across the supply chain To increase the velocity and the accuracy of planning information

To increase the supply upside and downside flexibility

To improve on-time performance to customers