Winnebago Case Study Summary

According to various performance metrics, Amphlett could report to Senior VP for Supply Chains that Thor Industries was managing inventory well compared with its competitors in the industry. If they implemented a more frequent production cycle, so to reduce the inventory level one step further, the company might eliminate waste and reduce costs.
Explanation
Benchmark the company’s profitability against other firms in the industry enlightens where it stands. Thor ranked first with a 5.33% net profit margin in 2006. It slipped to 4.72% and became second place in 2007, nevertheless, the difference between Thor and Winnebago was ignorable. All recreation vehicles manufacturers suffered a blow in 2008. Though Thor’s net profit margin drops to 3.51%, Winnebago slumped even further to a miserable 0.46%, which made Thor number one again (See Exhibit 1).
Differences in the area of inventory valuation could affect the interpretation, so I made appropriate adjustments to make an “apple-to-apple comparison”. Thor’s Days (Adjusted) Inventory Outstanding would be 28.4 and 28.6 days respectively for year 2007 and 2008, shorter than Winnebago, but longer than Skyline. The pattern for Cash Conversion Cycle behaved similarly (See Exhibit 2). For liquidity, Thor’s current ratio is above 2 in 2006-2008 and quick ratio is above