Candy has developed, over the years, strong partnership with third‐party logistics providers, that are in charge of managing the shipments from Candy’s plants to distribution centers. In recent years, the uncertainty of the market has increased, as the changes in mix and volumes of products have exploded. This causes constantly quite high error in the demand forecast for both volume and mix of products. In this case study we show 1. In which ways could the company better face the uncertainty in the demand and could prevent the demand forecast to worsen in the next years? 2. What other risks do you believe Candy could run into? (For instance, in relation to the large and global supply base?) 3. In which ways could the company face these risk

1. Yasser Elsedawy
Edoardo Cataldi
Marie Rose Egbreghts
Javier Higuera
Jianing Zhang
Management of Built Environment
Supply Chain Management

2. ´ Candy is a large family-owned Italian company that
manufactures domestic appliances. The Candy
group is among the European leaders in the field of
major domestic appliances including: washing
machines, dishwashers, washer-dryers, dryers,
refrigerators, freezers, cookers and ovens, built-in and
free standing.
´ There are over 2,000 service centers across Europe,
with over 80% of sales outside Italy. it grown partly
through acquisitions by including 12 brands: Iberna,
Jinling, Hoover-Otsein, Rosieres, Susler, Vyatka,
Zerowatt, Gasfire and Baumatic.
Overview

3. Nr. Employees: about 4.100
Nr. Plants: 6
Nr. Subsidiaries: 47
(commercial, manufacturing and other)
Timeline of
Acquisitions
2006
DORUK-
SUSLER

4. Supply
Chain
Model 6: "Concentration of Supply"
Industry: Domestic Appliances
Turnover: 900 million euros and shipped almost 23,000 containers in 2013. More than half
of the company’s revenue comes from sales of washing and flooring appliances
Market presence: selling products in 4 continents.

5. SUPPLY CHAIN
STRUCTURE 2° Tier
Suppliers
1° Tier
Suppliers
(Far East)
Focal Company
1° Tier
Customers
2° Tier
Customers
stainless steel Supplier 1° France Warehouse France
Big Scale retailers
France
Final Consumers
plastic Supplier 2° Italy Warehouse Italy Big Scale retailers Italy
rubber Supplier 3° Spain Warehouse Spain Big Scale retailers Spain
Metal
.
.
.
.
.
Czech Republic
Warehouse Czech
Republic
Big Scale retailers
Czech Republic
Petroleum based materials Russia Warehouse Russia
Big Scale retailers
Russia
Non- metallic materials Turkey Warehouse Turkey
Big Scale retailers
Turkey
other Supplier 900° China Warehouse China
Big Scale retailers
China

6. Plan: Quality, Innovation and Customer satisfaction is the rationale of every
product development by Candy Group.
Source (Stocked Product): Candy
purchase raw material from about 900
suppliers most of them located in the Far
East.
Make(MTS): Plans are developed based
on forecasting demand. Candy products
are made by own factories located in
many countries.
Deliver (Stocked Product): Candy is
outsourcing it’s logistics services that have
the role to manage shipments from plants to
distribution centers.
M.1.1: Issue products
M.1.2: Produce and test
M.1.3: Package products
M.1.4: Stage product
M.1.5: Release Product to deliver
M.1.6: Waste disposal
S.1.1: Schedule Materials deliveries
S.1.2: Receive Materials
S.1.3: Verify Materials
S.1.4: Transfer Materials
S.1.5: Authorize suppliers payment
D.1.1: Receive, Enter & Validate Order
D.1.2: Determine Delivery Date
D.1.3: Consolidate Orders
D.1.4: Route Shipments
D.1.5: Receive Product from Source or Make
D.1.6: Pick Product
D.1.7: Pack Product
D.1.8: Ship Product
D.1.9: Receive and verify Product
D.1.10: Install Product
D.1.11: Invoice
Deliver Return: Return of defective or
excess goods to seller
Source Return: Return of defective or
excess goods to Supplier
SCOR Model

7. ´ In recent years, the uncertainty of the
market has increased, as the changes
in mix and volumes of products have
exploded. This causes constantly quite
high error in the demand forecast for
both volume and mix of products.
ISSUE CRITICAL ISSUE:
High error in demand
forecast

8. 14%
17%
37%
32%
C O O L I N G C O O KI N G WA S H IN G FL OO R -C A R E
SELLING VOLUME FOR EACH PRODUCT
10%
40%
20%
30%
C O O L I N G C O O KI N G WAS HING FLOO R -C A R E
ACQUISITIONS VOLUME FOR EACH PRODUCT
Selling VS
Acquisitions
High error in demand forecast: Mix and Volumes

9. Forecasting Techniques:
MACHINE LEARNING is the FUTURE
´ The company should consider the
implementation of a demand forecast
system/model based on machine learning
capabilities which utilizes records of
historical data all around the industry,
different economic factors, and
socioeconomic factors in order to build a
customer-focused supply chain.
´ We recommend the usage of ToolsGroup
as a third party service in order to provide
demand analytics and inventory
optimization.
´ The aim is to overcome unpredictably
demand and challenging supply chains in
order to generate forecasts which are
accurate and provide outstanding
customer service levels which results in less
global inventory.

10. Source: https://www.toolsgroup.com/images/four_stage_forecasting.pdf

11. “ToolsGroup embeds technology into its forecasting solution to solve
problems that planners face every day. Rather than a “pick best”
approach, we utilize a far more accurate self-adaptive demand
forecasting algorithm that creates a reliable baseline. Machine learning
can adjust the baseline by identifying the effect of stimuli and demand
indicators at a detailed channel level. This “demand modeling” approach
analyses all the relevant variables and the complex interactions among
them in a highly automated fashion.”

12. Similar Company example
Source: https://www.toolsgroup.com/images/Lennox-Infographic.pdf

13. Lack of E-Commerce Platform
´ The company does not provide a direct service
for online shopping.
´ It redirects you to two different re-sellers which
could impact costumers confidence to buy
and does not provide the same experience
that Candy itself could provide.
PROBLEM
Source: http://www.candy.it/it_IT/elettrodomestici/dove-trovarci

14. Importance of E-Commerce
´ Worldwide E-commerce comprised a total of 2.3 trillion U.S. dollars in 2017 and
according to data from STATISTA a 246.15% increase is expected for 2021.
Source: https://www.shopify.com/enterprise/global-ecommerce-statistics

15. ´ In modern times, its of vital
importance the implementation of
online commerce since the vast
majority of consumers are not only
researching products online, but are
now interested in purchasing online
too.
´ In 2017, the share of total global
retail sales to E-commerce was of
10.2%
´ As for consumers according to
comScore, buyers are doing 51% of
their purchases online.
´ Opportunities, money, and
customer reach is lost because of
the lack of an online platform for
performing sales.
Source: https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/

16. Concentration of Suppliers
RISKS
´ Catastrophic risk: Natural disaster
(earthquakes, floods), war and
terrorism events can have a great
impact on the supply chain.

17. ´ SOLUTION: Taking into consideration the current situation, the company
should look for other options of suppliers available in the different markets it
operates, in case any catastrophic situation arises. This approach would
help to reduce the supply risks and the dependence the company
currently has on the Far East suppliers.

18. Smart Technology in Home Appliances
´ The market shows that the use of smart technology is becoming a big and
important part of todays life and customer demands. In home appliances,
there is no exception and therefore the implementation of these
technologies is necessary to meet customer requirements on future home
appliances.
CHALLENGE
Source: https://www.technewsworld.com/story/84751.html

19. Candy’s Technological
Approach
´ Simply-Fi is the first set of appliances that
come equipped with Wi-Fi technology
and are managed via an App. This
connection is no one direction, but bi-
directional, which means that users have
the power to operate appliances
remotely, and the machine can
communicate with the user via
messages. The App is just one for all
appliances, but each product can act
independently.
Source: http://www.candy-group.com/Candy-Group-Presentation-2016.pdf

20. Logistics improvement
´ Controlling the supply chain in a more effective way is needed in order to
maintain the competitive advantage.
´ Candy has 12 sourcing points across China and Turkey and 36 destinations
countries in Europe, including Russia, which translates in a complex supply
chain and unnecessary risk.
RISK
“With increased lead times, we
needed a new approach to
logistics without losing the
competitive advantage
gained by increased offshoring
to the Far East.”
Davide Guizzardi
Central Europe Logistics Manager & Director.
Source: https://www.kn-
portal.com/fileadmin/_public/documents/case_studies/KN_case_study_-_Candy-
Hoover_v1.0.pdf

21. Kuehne + Nagel Partnership
´ Candy developed a partnership with the Kuehne + Nagel (taking the role of “Integrator
Logistics Partner”) that established a series of innovative processes to deliver a more
flexible and efficient transport management:
• Interactive Delivery Planner
• Document management
• Carriers’ invoice auditing and payment
• Support in carrier negotiation
´ The results from the partnership were significant:
• Customer Productivity improved 4x
• Saving more than 600,000 euros per year in Central Planning
• Improved in on-time shipments
• Reduced lead times

22. SOURCES
´ Candy Group:
´ http://www.candy.it/it_IT/elettrodomestici/dove-trovarci
´ http://www.candy-group.com/Candy-Group-Presentation-2016.pdf
´ TechnewsWorld:
´ https://www.technewsworld.com/story/84751.html
´ TOOLSGROUP:
´ https://www.toolsgroup.com/solutions/demand-planning-and-forecasting/
´ https://www.toolsgroup.com/images/eb-demand-forecasting.pdf
´ https://www.toolsgroup.com/images/four_stage_forecasting.pdf
´ https://www.toolsgroup.com/images/The-Evolution-of-Forecasting.pdf
´ https://www.toolsgroup.com/images/Lennox-Infographic.pdf
´ Shopify: https://www.shopify.com/enterprise/global-ecommerce-statistics
´ STATISTA: https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/
´ COMSCORE: https://www.comscore.com/
´ https://www.politesi.polimi.it/bitstream/10589/70221/1/2012_12_Ghilardi.pdf
´ http://spendmatters.com/2013/02/28/evaluating-supply-chain-risks-with-single-vs-multiple-vendor-sourcing-strategies/
´ https://www.kn-portal.com/fileadmin/_public/documents/case_studies/KN_case_study_-_Candy-Hoover_v1.0.pdf