Club Med Case Essay

MRP starts with customer orders and forecast demand (see p.

439). Analyse how your case company gets data about (potential) future orders, and indicate which of the two sources above is more important. The “Early Booking” Bonus In recent years, Club Med has practiced a deliberate policy of “early booking”, an incentive well-received by customers which was stepped up in 2008. On the strength to this approach, bookings for winter 2009, like those for summer 2008, got off to a fast start initially.Although the economic crisis has created a certain “wait-and-see” attitude and a pronounced trend for late bookings, the positive effects of early-booking remain evident. Boosted by this policy, sales for summer 2009 are also off to an encouraging start. Because of the early booking bonus, which is specially introduced because of the economic crisis, Club Med can predict the amount of customers for the season in some way. When Club Med has an estimate they can predict future trends, although this is still hard to do.

One of Club Med’s next steps is optimizing the Growth Model by additional capacity. “The top priority is to develop capacity that is very upscale, flexible, prefinanced and highly profitable. Such is the new concept for our villas and chalets”, is what they say. In this way Club Med wants to become somewhat dynamic. The forecast command is the most important source to indicate future orders, because of the trends and knowledge the company already has. By predicting these trends, the company can adapt itself to the demand.

However, Club Med wants to improve dynamic. ————————————————- What are the possibilities for the use of ERP in the supply network of your case company? As told in the Book we know that ERP is the integration of all resource planning systems into one single organization. Some advantages of the use of ERP: * Visibility: By combining all the company’s systems into one and letting them interact you create visibility since all the information gathered throughout the whole company is visible for everybody. Efficiency: as said before all the data that is inputted in the ERP system is visible and useable for everyone within the company. This means that the data imputing is more efficient and time saving since nothing has to be inputted twice (in the case of Club Med you can think of customer data) Regarding the supply network ERP can be used to integrate supply chains. The benefits of this for Club Med as well as for the suppliers can be.

Faster communication: when data added in the ERP system of Club Med it immediately gets transferred to the suppliers ERP system.This means that when for instance suddenly a large increase of reservations appears the supplier will notice this immediately and can handle according to this (supplying more in this case). This faster and easier communication will also be cheaper so another advantage will be cost reduction. The difficulty of integrating supply chains by using ERP systems can be that different ERP systems have to interact and communicate. This sometimes causes that data has to be translated for the other system to understand it. ————————————————- Push or Pull? Push:Club Med uses, in general, the push strategy. The villas are build in advance of the order, the resorts are created and ready for use; and in most cases diner is prepared before the customer orders it (in case of a buffet). To conclude, Club Med has prepared the total holiday before the customer has ordered it.

Pull: ————————————————- In contrast, the company uses also, in some way, the pull strategy. A lot of customers will reserve their holiday a few months in advance. Therefore, Club Med knows how much resources they need in terms of materials, food and mployees. As a consequence of customers’ orders, the company will place an order to their suppliers. ————————————————- What are the possibilities for Just In Time in Club Med? Just in time (JIT) is a system in which goods are made or purchased just before they are needed, so as to avoid carrying high levels of stock. With this, a reduction of waste is possible and therefore efficiency levels increase.

In Club Med, there are several possibilities for this inventory strategy to be used.One of them is the company’s rooms: a room doesn? t get available before being booked, meaning it won? t be prepared/ready to receive a costumer. With this, money is saved on keeping the “stock” in order (for example cleaning services). Also another possibility for JIT in Club Med is the catering services and storage. Usually for this company? s village, food, and liquor products (etc) are only ordered “just in time” for the summer season or the winter season, or even, for example, an unexpected big group of tourists.One of the ways that Club Med can keep up with this inventory strategy, in these two cases, is by having their suppliers/services providers near-by the villages. With this they can literally get their products (or services) delivered just in time.

It is important, however, to keep in mind that Club Med can? t apply this method to its fullest, since they have the natural need of keeping a minimum amount of storage: One of the main reasons being the “all-inclusive” strategy, which allows customers to make use of any available services and products.Essentially, with the “lean synchronization” or the JIT, Club Med is able to avoid any excesses (and therefore errors), but mainly time and money through the already mentioned waste reduction. ————————————————- Which of the operations challenges mentioned in Chapter 21 is the most relevant for you case company in the near future? The most relevant operations challenge for Club Med is globalization. When the company opened its first village in the 1950ies, they only focused on one continent: Europe.It was not until 1968 that they settled in America, and only in 1971 the first village in Africa is opened.

It took till 1980 before the company had villages all over the world. In the following 25 years their main focus was on gaining new customers and creating new services and products for the current villages, and not creating new villages. In 2004 they realized their mistake, and have been trying to correct it ever since.

However, that is not an easy job. To help with this, they launched their renewed website in 2008, along with a new slogan for their campaign: “Club Med, a world full of holiday pleasure”.This multicultural and international campaign focuses on the many cultures the villages of Club Med have to offer. Not just the staff is multicultural, but also the activities, food and drinks are not specifically focused on 1 culture. This also insures that the quality of all of their villages remains high; by not focusing on only 1 culture and its requirements, norms and values, but opening up all of their villages for every culture in the world. Another main issue of Club Med is the capacity planning and control aspect.Club Med needs to make realistic forecasts in demand with respect to weather, seasonality and holiday periods. They need to forecast properly to have enough staff, food and drinks available.

There is some flexibility involved regarding these factors, but they cannot manage everything on a day to day basis. They can, for instance, hire temporary staff or transfer staff to another village if the demand forecasts are much larger in that specific village. However, they cannot do this on a daily basis, as this would lead to a huge cost increase and possibly employee dissatisfaction.Therefore, they need to plan carefully and have reliable demand forecasts for all villages in the world in every period, in order to plan the capacity properly.

Sources used: Slack, N. , & Chambers, S. , & Johnston, R.

(2007). Operations Management. Harlow: Pearson Education. Corporate Report 2008 (2008). Paris, Club Mediterane www. Club Med. com ——————————————– [ 1 ].

Eventually, two other possibilities for JIT in Club Med would be renting transportation but also sporting tools for the different activities they offer.