Lessons Learned Fri 7

Experience

Capsim has been really challenging this week. I made a few mistakes this week mostly in forecasting and it really has not paid off. When it comes to planning for the worst case scenario, I really need to be true to that. In both the 3rd and 4th round I was confident that I could increase my low tech market share by 2% and and in both cases I was wrong. In the second case I even had the best product, but I couldn’t see it because of I was unable to produce the right amount with the revision date so late in the year. I’m sad about that because I had so much automation my R&D times were horrible so the smallest revision, put the product at the end of the year. My second product actually did better than the first, able. Able by the way has a 54% contribution margin in the low tech. That’s with an automation of 10, but I admit I layed off some workers to get that variable cost down.

Reflection

Reflecting on these experiences I hope that I’m able to do better in the team rounds. I feel like I really got off to a bad start in the first round by not taking out loans, which lead to a lower leverage ratio. I was struggling to get that back up and surprisingly, by taking out the emergency loan I was able to get that up to the ideal zone. But after two emergency loans of $20,000 I wasn’t able to make a profit, which was disappointing. I was able to get back market share, so I believe if this were to go to eight rounds I might be able to pull it back.

Identifying Key Learnings

I’d say one of the key learnings was the customer survey score, after the huge disappointment in round 3 I went pack to the drawing board and really looked at why my products and done so poorly. Basically what happened is that I had forecasted for a market share of 22% but had cut back the quality of the MTBF to a minimum. This was a huge mistake in the low tech segment, who relies on quality, so my 20% market was cut back to 15% and the fourth round was 13% even with product modifications. However the fourth round was mostly held back do to a late revision date. Again, in the fourth round I was too optimistic, if I had forecasted at 15% I would have been right on the mark. I would have guessed I’d sell around 1243 including 45 days of extra inventory. I actually sold 995 which would have left me with 248 units of inventory, about 91 days of inventory. A little high but better than the current 200 days of inventory. Which caused another emergency loan. Worst case scenario is now my new best friend.

Action Planning

Planning from here on out I’ll have to go with the worst case. This may mean I’m more likely to stock out but stocking out is better than getting an emergency loan. As I demonstrated in round 4, sometime the worst case is still too high if the product drops market share unexpectedly. To help out with this I’ve made a rudimentary customer survey score calculator. It really only works for for price and MTBF, where it is really hard to tell how many points a product loses with every 0.1 the product is away in the perceptual map and in age. I think I’ll try a few practice rounds to see if I can get any difference.

Applying

As I’ve discussed there are several ways that I can apply the lessons I’ve learned this week. From relying on the worst case scenario, to not discounting the MTBF in the Low tech. I’m excited to try out these new concepts in the next team stage.

$100 Project Progress

I have officially completed the $100 challenge, I’ll have to rename it the $500 challenge because I’ve already passed 100 and 200 so my next goal is to earn $500. I’m sure that I’ll be able to do it by the end of october too. Right now I have at least $120 on custom orders to fill. That’s the worst case, charging $10 a bowl. My average sell price has been around $17.50 meaning that the next 12 bowls could turn into $200 to $300. I could not have had this success without the help of my family and the very generous donations from my customers. I was impressed with the value that they were able to see in my bowls. Their generosity encourages me to make better bowls. I’ve also come up with the idea to include a lifetime warranty on all the bowls. That way if ever one does break, I’d be happy to turn another for them. This week I’ve only sold 5 bowls and from that it’s generated over $200. To be exact my net income as of October 7 is $211.67. I’m excited to donate all this profit to a charity. I hope it will really make a difference is their life. I’ll make sure to find a great charity. I also sent out a few posts to my other classmates because I’d like to know how they are doing. I hope I’m not too far ahead of anyone so I’ve decided to help anyone out. I put my phone number in the discussion board so anyone can call me with any help they need. Hopefully this lead in the $500 challenge will help me catch up with my other classwork. I’ve really been learning quite a few things in this practical challenge, and I hope to continue to grow the business even though I’ll be taking it a little bit slower.