Leitax Case
How did the rapid maturing of the digital camera marketplace affect Leitax's supply chain challenges and opportunities?
Improved technology and reduction in price made the digital camera industry grow rapidly and inject life into a very stagnant sector. Worldwide sales growth rate for the digital cameras had double digit growth for almost 15 years. However that growth was slowing and was starting to reverse from a strong 25% in 2005 to a weak 5.2% in 2006 and into negative territory 2007 and beyond. This growth masked the problems in Leitax's supply chain.
Other external factors magnifying Leitax's supply chain challenges was that digital camera technology over the last 15 years had grown dramatically to the point where the lifecycle of a camera became so short many people waited for the next model to come out.
Internally, Leitax had processes in place that would extend products beyond their lifecycle and end-of-life (EOL) dates based on deals that the sales team would arrange with various resellers. These problems came to a head when at the end of 2002, there were three camera models that suffered because of poor planning.
What happened to its product portfolio mix and different trajectories of products within the portfolio/ and what happened to its supply chain as the industry lifecycle surged and contracted in an accelerated manner?
According to the case "Leitax maintained eight camera models in its product portfolio offering a broad optical zoom range, mega pixel resolution and internal memory capacity." On top of that it "each model could have multiple SKU's based on such variables as bundled accessories and geographic and promotional packages". This made for a massive combination of product choices in which to manage especially when consumer choice is fickle and the product lifecycle was shortening all the time. In fact, the average life of a digital camera product was about 17-22 months and high-end products were shorter than that and it
Improved technology and reduction in price made the digital camera industry grow rapidly and inject life into a very stagnant sector. Worldwide sales growth rate for the digital cameras had double digit growth for almost 15 years. However that growth was slowing and was starting to reverse from a strong 25% in 2005 to a weak 5.2% in 2006 and into negative territory 2007 and beyond. This growth masked the problems in Leitax's supply chain.
Other external factors magnifying Leitax's supply chain challenges was that digital camera technology over the last 15 years had grown dramatically to the point where the lifecycle of a camera became so short many people waited for the next model to come out.
Internally, Leitax had processes in place that would extend products beyond their lifecycle and end-of-life (EOL) dates based on deals that the sales team would arrange with various resellers. These problems came to a head when at the end of 2002, there were three camera models that suffered because of poor planning.
What happened to its product portfolio mix and different trajectories of products within the portfolio/ and what happened to its supply chain as the industry lifecycle surged and contracted in an accelerated manner?
According to the case "Leitax maintained eight camera models in its product portfolio offering a broad optical zoom range, mega pixel resolution and internal memory capacity." On top of that it "each model could have multiple SKU's based on such variables as bundled accessories and geographic and promotional packages". This made for a massive combination of product choices in which to manage especially when consumer choice is fickle and the product lifecycle was shortening all the time. In fact, the average life of a digital camera product was about 17-22 months and high-end products were shorter than that and it