A mature and saturated market relying on continual
investment in new product development (NPD) and
marketing to ensure growth, while rising energy and
raw material costs since the middle of this decade
has forced manufacturers and retailers to implement
Larger companies have continued to place a high
emphasis on branding and marketing in an effort to
differentiate their products from those of their
Team Leader :
Kapil Sharma (0904615)
AmitVivek Singh Parmar (0903733)
Jisha Banerjee (0905657)
VaijayanthiRajagopalan ( 0905698 )
McGhee’s Bakery was founded by Dugald McGhee
in1935 at the original bake house in Oran Street,
With an extensive range of bakery and confectionery
products, they continue to supply major catering
groups, local authorities, independent retailers and
cash & carry groups.
All the products are delivered daily across Central
Scotland and as far afield as Edinburgh,
Dunfermline, Stirling & Perth, via afleet of 70
wholesale delivery vans.
Facts and figures
3 production sites (1 in Glasgow and 2 in
Kilmarnock) and a distribution centre in Dundee
A total fleet of over and around 70 vehicles.
Offers premium rolls currently selling over 1.4
million per week, of which over 1/2 million are the
famous crispy rolls.
Monthly operating cost per route, including driver
The top four companies are estimated to only account
for 11.7% of the market.
Recent trend towards consolidation and economies of
Businesses compete on price, quality , differentiation
and relationship with key suppliers.
Morton’s Bakery is a key competitor but there is
absence of intense competitive rivalry since they
compete with a different product range.
Barriers to Entry
Low barriers to entry.
Economies of scale is beneficial but not required for
industry success so small businesses can enter with
a relatively small capital.
The first determinant of a new company’s success is
the leader’s ability to acquire sufficient distribution
channels (grocery stores, supermarkets etc.)to
cover operating costs.
The second is the ability to build up the brand
recognition and loyalty.
Power of Buyers
High buyer’s power.
They are able to command low prices and volume
discounts since there is a large number of small
bakeries that are all vying to find outlets for their
Only large players such as McGhee’s ,Morton’s and
Greggs have the power to level the playing field and
achieve a more balanced share of the profits.
bargaining power of
Suppliers do not have much negotiating power in the
bakery business due to the well developed markets
and the commoditized nature of their products.
Bakeries can be affected by price swings of raw
inputs, but the changes are the result of global supply
and demand determinants rather than supplier’s
Many substitutes exist for bakery products.
Breakfast cereals, rice and potatoes are all viable
alternatives and individuals can also make all the
baked goods at home.
Bakeries rely upon price and convenience to keep
individuals from switching to a substitute or baking at
Complexities of the production and the distribution
processes due to ‘ last minute change’.
Actual problem identified after the client meeting:
Client clarified that the issues were only related to the
‘delivery process’ and were not ‘production’ related as
perceived from the given problematic situation.
Our team then recognised and focussed on the
Difficulties in monitoring the vehicles and the
Reducing the ‘Cross Over Time’ to lower the
OBJECTIVES OF THE
To find a solution through a Vehicle Tracking System
(VTS) to respond efficiently to customer needs.
To monitor the Delivery and Sales vans through VTS
in order to avoid duplication (cross-over).
Types of Customers
Office Accounts (Glasgow City Council, University of
Glasgow, Schools etc.).
8 Delivery vans serve office accounts (Glasgow
32 Sales vans serve Credit and Cash Customers
Sales vans outnumber the delivery vans across all the
A Vehicle Tracking System (VTS) combines the
installation of electronic devices in a vehicle with purpose
design computer software that enable the owner to track
the vehicles location and collecting the necessary data in
Modern VTS uses Global Positioning System(GPS) and
electronic maps through the internet to track and monitor
VTS is typically classified as Active and Passive. Many
modern vehicles combine both the tracking abilities. The
two categories differ in the approach they follow
regarding the real time transfer of data.
Advantages of VTS
Improvement in operational efficiencies and costs
through saving time on collections and reducing
calls made to the driver’s mobile phones.
Removal of guess work in regards to Payroll
procedures and better streamlining of processes.
Enhanced driver and vehicle monitoring.
Increased safety and security of the driver and the
Timely and superior customer service.
Enhances the brand equity by improved CSR
activities such as reducing the carbon foot print.
Can create resentment among staff and drivers.
Over dependence on VTS leads to chaos in a
situation of breakdown.
VTS can be expensive to install due to high
Inaccuracy in GPS signals due to atmospheric
Applications of VTS
Van security and recovery
Corporate Fleet Management
Travel and tour operators
Logistics and courier companies
Consumer market for personal tracking, car tracking,
child/elderly person tracking
Government Municipal transport
Police and defence market
Day with Driver
(4:30- 1 pm)
A day was spent with the delivery drivers to
understand the current delivery system and the
discrepancies associated with it.
It brought forth issues related to the driver
behaviour, last minute order changes and the
inefficiency regarding cross over.
It provided an insight into the cultural web of the
A day was spent with the Telesales team (5
members) to understand the process of getting
orders(addition/deletion of products) from the
Telesales team serves as a backend, providing
customer & product information to the
production and dispatch lines.
A survey was conducted within the Telesales
team to understand their comfort level with the
current system and their expectations of VTS.
Cost/vehicle/week - £5.76
(based on a 36 month contract)
Revelation Smart Vehicle Tracking
Lease(2 year contract) :
Monthly charge: £18.00/vehicle (60p/day)
Unlimited use &features
Full Remote Access – track from any computer with an
internet connection, software not required.
Purchase Option: £350 per vehicle
Monthly airtime charge: £9.00 (or 30p per day)
Free installation, Unlimited use & features
Prices exclude VAT
3 Year lease £28.75 per month
5 Year Lease £25.75 Per month
Roughly its about 80p per vehicle per day
We also have a purchase option £395 per unit
Based on the empirical evidences the SFAS analysis
was conducted as follows:
VTS makes economic sense because it will reduce
the operating cost by 20-25% out of which 12-15%
will be saved through fuel costs and the reduction in
cross over time of vehicles.
VTS can be incorporated in several ways. It can be
bought, leased or it can be used as ‘pay as you go’.
VTS addresses the uncertain circumstances
due to ‘last minute order changes’ and also
better monitors the driver and the delivery van.
It is in sync with the market trend of
implementing VTS as done by the market leader
Implementing VTS will provide a competitive
advantage over their close competitor
MORTONS by improving service and quality of
the delivery system
As per the various vender quotations, McGee's is
financially sound to implement the VTS system with
a budget of £150,000 -200,000
McGee's has dedicated staff to handle the delivery
operations which is adaptable to technology
The market research and the employee survey
revealed that VTS Bar Code system and digital
signature will reduce the customer complaints and
enhance the cash flow since there will be real time
It will fulfil the stakeholder expectations(owners,
telesales staff, customers) and may result in drivers’
VTS will help McGhees achieve ‘sustainable growth’
by reducing the carbon footprint.
Reduces fuel expenditure through lesser cross-over
time of vans.
Controls the ‘Idle time’ of vans through real-time
Strengthens McGhees ‘CSR image’.
Results in better employee engagement and
heightened motivational levels.
Leads to innovation and controls staff turnover in the
Implementation of VTS will approximately increase
productivity by 20% on the operating cost of £2550
per month. Eventually there will be a potential saving
of £510 per month
Savings on fuel will normally average 12-15%. So
the monthly cost of £800 should give a saving of
about £120 per month, as quoted by different
Appropriate technical and motivational Training to
the staff ( telesales and drivers ) will result in a
smooth transition to VTS.
The inclusion of the delivery signatures and bar
code system reader along with in-cab
communication as it will provide a supportive
framework to handle ‘last minute orders’.
It is evident that the Vehicle Tracking system is
financial viable as it is within McGhees’ estimated
budget of £150,000 - £200,000. Also, the user-
friendly interface of VTS accompanied with essential
training makes it a technically viable option
A live demonstration can be arranged with the
vendors to gain an insight of the actual working of
A good strategy for McGhees would be to
implement VTS for 20 vans initially as a pilot project.
Based on the results from the pilot project, decision
should then be made to buy the Vehicle Tracking
System rather than leasing it.