Henkel Iberica Case Study

1863 Words8 Pages
Overview Henkel Iberica is leading manufacturer in Spain and Portugal for Laundry & Home Care, Cosmetic/Toiletries, Adhesives, and Technologies headquartered in Barcelona. Household care products such as laundry detergents Wipp, Dixan, and Micolor accounted for over 58% of its sales. To maintain operations, there are six production plants, three distributions centers, and Henkel maintains a fleet of 150 leased trucks. Price is a major factor for sales of household products as it is a heavily competitive market with rivals such as P&G, Unilever, and Reckitt. Prior to polices established by Law of Commerce Henkel Iberica participated in aggressive pricing to increase market share. The consequences of this were a negative effect on margins, contribution margins, and profits on sales. To contend with its competitors, Henkel invested in promotions and additional product mix to increase sales, but due to lack of accuracy in long range forecast it was often left with either over stock that is difficult to reallocate or loss of sales due to out of stock products which eventually led to a decrease of net earnings in sales year before. Accurately forecasting demand is the key to every strategic, tactical, and operational decision designed to keep our business competitive. Obviously it is evident that Henkel Iberica current process isn’t working due to challenges of forecast exactness and demand variability for all the products it offers. The evidence is clear in the data from 2000 to 2001 as overall sales increased 2.2% but net earnings decreased by 5.7%. For a company to be profitable, focus should be on net earnings and not sales and providing a wide range of products to satisfy every customer. The loss of earnings is most likely due to not having the right product mix and volume at the right time as well as lack of communication between sales and
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