Leitax Digital Camera Producer Case Study

Introduction

Leitax is a large digital camera producer that earned revenues of $423 million in 2002. Leitax was as a subsidiary of Newplex an experienced producer of consumer electronics. With the large boom in the digital camera market, Newplex decided to start Leitax, a company solely devoted to producing and selling digital cameras in three geographical areas. On average Leitax produced a total of eight camera models available to upper end and mid level consumers. Brian McMillan and Kevin Fowler were charged the task of redeveloping Leitax's consensus forecasting process as Leitax prior to this development were experiencing negative benchmarks. In my analysis of this case study I will analyze some of the issues Leitax faced using potential alternative viewpoints and analogies to the healthcare industry.

Metro Challenges:

* Initially, Leitax's main issue was the lack of communication amongst all departments involved in the big picture of producing and selling a product. Sales, finance, market, and production lacked communication to the point where separate forecasting budgets were being prepared by individual departments. The poor cross-functional integration o the supply/demand planning activities resulted in miscues and negative benchmarks. McMillan and Fowlers efforts to bring all parties to the table resulted in the initial creation of a system that promoted integration that facilitated more intelligent decision making amongst all stakeholders. An important addition to this effort would be to create the appropriate incentives that do not create an environment where departments are counterproductive. Aligning sales incentives to the greater good of the company can help to produce better forecasting and revenues.

* Leitax made an error, as many companies do, by establishing forecast numbers based on what the "public" is saying as they did with the SF-6000. The consumer and photography press rated the camera a hit, but these technical users of photographic equipment do not necessarily represent what the average person looking to enter photography desires. Forecasts must be based off of average consumer demand along with the statistical information available. In healthcare, I have succumbed to the same error by setting budget based on a great year versus analyzing census trends over a longer period of time. Quick fire decisions sometimes are made based on the positive comments of a few versus looking at our client population as a whole.

* Companies that experience rapid success will often introduce new products to new customer bases due to the rapidity of the market. Leitax introduced the Shoot XL and the Optix-R models to hopefully capture as much of the market segment as possible. Unfortunately, Leitax did not research the market enough to realize the products had the potential to cannibalize each other.