Operations cases reward candidates who can draw the process before they diagnose it. This short management consulting case study does exactly that with a music label that ran out of stock at the worst possible time of year.
Case Scenario
Today's client is a sizeable music company formed by the merger of an American and a European corporation. With a 25% market share and $75 billion in revenue, it is now the second-largest player in the industry. The firm experienced unusually severe stockouts over the previous holiday season, which prevented its retailers from replenishing the CDs on their shelves.
Question
What went wrong, and what should the firm do to stop it from happening again?
Solution
The music industry supply chain can be structured as follows: artists and content, physical production, distribution, and retailers. Time, communication and transportation costs must be factored into each "handoff" in the supply chain. There are no standard operating procedures for dealing with music content providers.
Analysis
We must show that we understand how front-end delays and excessive process variability can cause supply chain disruptions, which eventually result in product stockouts. When demand is high, such as during the holiday shopping season, these elements are more likely to cause issues. The peculiar conditions and variety of "the creative process" need to be considered in a thorough supply chain management procedure.
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