Supply chain management is an important part of business operations. For this reason, it has become important for companies to try and find out which are the best practices with regard to their product of trade in order to enable the best quality to reach the customer while at the same time lowering the costs of the process. This paper will look at the supply chain process at MIB company with an aim to understand what are its strengths and weaknesses in order to make appropriate recommendations.
The MIB was founded in 2001 and it operated as a trading company which specialized in food products. It was incorporated in Malaysia and has since expanded its business to Singapore. The company has managed to distinguish itself as a reputable brand that specializes in the provision and trade of Halal food products for Indonesia, Singapore, and Thailand. Other than Halal food products, the company also is in the business of selling Hyson Tea to both its Malaysia and Singapore Markets. The company has two main target customers, dealers and end customers. With dealers, it operates a B2B business where the dealers now sell the products to end user customers. With the end consumers, it operates a B2C where the company directly deals with its customers. For these two markets, the company offers different prices given that one is bound to buy at a more wholesale level than the other (Blanchard, 2010). In general, the company uses the similar MTO (make to order) model in order to satisfy a demand for these two groups of customers.
Hyson Tea is a form of green tea which is especially used for its medicinal benefits. Sri Lanka contributes nearly 11% of the world’s Hyson tea. The hyson tea products have a wide range of tea blends based on the combination of fruits, flowers, spices and tea variants. After two weeks of harvesting, the teas are then packaged in Sri Lanka. The supply chain process used by the company is a pull process where the customer demand drives the process. It is almost similar to the Just in time method of inventory management which is dependent on last second deliveries. It is, therefore, necessary for the customer demand to justify the production. While this method is beneficial in terms of reduction of waste and its ability to maintain responsiveness when required by the customer, the process is susceptible to delays in the case where the materials have not been obtained on time. Also, the pull system benefits from lower inventory levels which mean that there are lower associated costs (Brindley, 2017). It may also help the company improve its overall cash flow as compared to a push strategy which may lead to the incurrence of debt to satisfy forecasted demand levels. On the other hand, a pull system has its disadvantages. It is necessary that balanced systems are in place to assist with the whole process. Also, it has a high risk of not meeting customer satisfaction (Carter & Rodgers, 2008). A pull system means that the environment is quite high stress which may negatively impact on the motivation and health of the involved workers. In this production, the company’s estimated lead time to customers is two weeks for the product to be harvested and packaged. The company is therefore given the ability to control its associated costs in relation to production. However, it is clear that in the event that the harvest is poor, the company may go into the risk of losing customers as their demand may not be appropriately met (Chow & Tseng, 2008).
The objective of this report is to provide an assessment and understanding of the current processes and strategies in the MIB supply chain in order to come up with the value proposition. The paper will also provide an analysis of the information obtained with consideration of the best practices as per the academic theory. Finally, the paper will offer a recommendation and conclusion which can be considered in the implementation of MIB’s current value chain where gaps may have been identified.
Since the company uses a pull strategy, the customer demand determines the production orders. The sales and marketing group, therefore, provide information with regard to the sales orders that have been made by the customers. This information is then forwarded to the procurement branch who documents the make to order plans on a daily or weekly basis (Christopher, 2016). Some of these plans utilize historical data that can be used to identify trends and patterns which are useful for the planning phase. Also, the procurement office is also able to make direct sales of the product. In the case the company obtains a one-time project, they are supposed to inform the production unit about the increase in the level of production units to accommodate the one-time order. In case it is not a one-time project, the data is sent back to procurement in order to adjust the stocking strategy. The company obtains the information on a monthly basis. The data is both qualitative and quantitative in nature. The qualitative data look into the demand and supply of the previous process and passes the information on to the procurement branch in order for them to better plan their orders. The quantitative data, historical information is collected (Closs & Meachan, 2011). MIB will consider their past sales records as well as the current warehouse inventory record. At the procurement level, the information will be used to support the ordering plan. In the case of an unexpected project that leads to a large order, the demand team goes to an ad hoc meeting in order to discuss a resolution. This is because; next month may be too far for them to respond to the change in demand. In the case the demand is one-time order, the MIB will increase the order and inform the manufacturer appropriately. In case it is continuous, the procurement will have to review and adjust their stock appropriately (Wisner & Leong, 2014).
The continuous replenishment strategy also relies on the demand side where the feedback is supposed to feed the current inventory levels. A decrease in the stock out is replenished by a high order fill rate from the supplier to the end customer. Also, the company maintains a high service level which aims to obtain low costs in holding inventory as well as creating close relationships with suppliers (Fawcett & Ogden, 2013).
The continuous replenishment strategy focuses on the efficient replenishment process. It is necessary that the dealers and the distributors have notified MIB of their actual sales and the current inventory level. MIB is then able to organize for a timely delivery of stock replenishment with that information. With a predetermined demand, MIB is able to replenish the sales without the risk of stock outs or receiving replenishment orders. In turn, this results in low associated costs of holding inventory as well as a decrease in the level of stock out. Also, it is advantageous due to the high order fill rates from the supplier to the end customers as well as improvements in the inventory turnover. It also creates a high service level for the company as well as a close relationship with the suppliers (Ganesan & Weitz, 2009).
The overall supply chain begins in the farm. Once the tea bushes are grown, they are pruned and thereafter plucked. Once there are sufficient green leaves obtained, the leaves are taken through the manufacturing process where they are withered, rolled and fermented. Once the fermentation process is sufficient, the leaves are dried and crushed and thereafter blended, packaged and branded.
Some of the finished product is sold as Hysop direct sales while the rest is taken to a forwarding agent who takes the product to a wholesale agent (MIB). The products are put in the MIB warehouse until a delivery plan is submitted from the procurement office. Then the product is distributed to the various B2C or B2B customers. The retail dealers are able to sell the product to other end consumers. Also, the company can use a B2C online platform where the products are sold directly to consumers using e commerce (Gold & Beske, 2010). The physical product flows upstream from the point of origin and downstream from the point of consumption. In this case, the point of origin is the farm and the point of consumption is the end consumer. The information flows from first making forecasting decisions about the product (Golicic & Smith, 2013). This is done through the use of past information in order to analyze the data for trends. Next, stock deployment decisions are made where the procurement office makes the decisions on the level of demand quantity that should be maintained in the warehouse at MIB. This demand quantity takes into account the trending demand as well as the unprecedented demand (Holt & Ghobadian, 2009). Thereafter manufacturing decisions are made with regard to the size to manufacture the product. Physical procurement decisions such as transportation and the forwarding agent are made. In case there is feedback from a customer, new product introductions are made and the process is repeated again. The process is quite comprehensive and there needs to be a balance of each stage in the process. Also, the process needs to be quite responsive with regard to changes which have been identified since there is no room for a delay to satisfy the discrepancies that might occur. It is also clear that order processing remains to be an important part of the process since, the demand has already been accounted for (Mangan & Lalwani, 2016). It is therefore up to the inventory management and the transport management to deliver the products appropriately.
The company is able to provide its customers with high-quality products. This is because of a pre-established production and manufacturing process that ensures that only the best quality Hysop tea gets to the consumer. Because of this the company is able to maintain a good reputation with regard to its customers and the products that it provides (Seuring & Muller, 2008). The company has a strong sourcing strategy in which it is able to identify farmers who provide the best quality products. The company has also invested in training opportunities for these farmers in order not ensure that they are made aware of the best technology of harvesting crop as well as being able to identify any potential sources for diseases. The company exercises quality control when it comes to the final product that is packaged and branded. A high company reputation is an important business asset since it enables customers to gain trust in the establishment and the brand due to product reliability. It acts as a way in which the company differentiates itself from its competitors. it also means that the customers have a minimum product quality requirement in order for it to be established as an order qualifier (Talib & Qureshi, 2011). Also, the stock is passed through the country’s bureau of standards in order to ensure that all the products standards have been met. The mark of quality that the product is halal makes it entice more to a wider range of consumers, especially from the Muslim community.
In order for the company to stand out amongst its competitors, it needs to adopt a profitable pricing strategy. A price not too high but is able to communicate the quality of the product. Also, MIB required a price not too low so as to take to a company to low returns in the process. The company, therefore, maintained price competitiveness by ensuring that it has low production costs. By making to order to company reduces the production costs through reduced inventory management costs as well as reduced transportation and wastage costs. The company is, therefore, able to have high returns as much as it executes an equilibrium market price (Walker & Mcbain, 2008).
The company is able to provide its customers with convenient purchasing since their orders are met as and when they make them (Ninlawan & Pilada, 2010). This enables the customers to plan for a replenishment of stock and obtain reliability from MIB that the stock will be appropriately satisfied. In this way, the customer is not forced to buy more than he may require at a certain point in time (Monczka & Patterson, 2015). In the meeting with the administrator, it was comprehended that input was accumulated from MIB clients on their needs when taking a gander at offers offered for their venture pre requisites, and speed of conveyance was regularly referred to. This is because of undertakings being kept running on tight calendars, clients additionally purchase in the nick of time and not ahead of time. This implies clients get the items just when they have achieved the period of the venture that the items are required. The diminishment all together lead time to two weeks can likewise be viewed as one of the endeavors to surround this request champ (Wisner & Leong, 2014).
Taking a gander at the idea of the interest for MIB’s items, responsiveness was distinguished as a request champ, this view is additionally set as we took a gander at the procedure stream in the prior segment and in the meeting with the supervisor. At the point when clients buy items, they likewise regularly hope to have an administration concurrence with MIB to keep up their buys. At the point when things separate, the specialized help group should react to in a brief timeframe, as a rule inside 24 hours. In the event that parts should be supplanted, just a short lead time is required for transportation as items are made to stock (MTS). MTS will likewise cover a specific level of sudden request consumption (Hsu & Keong, 2009). At the point when there is a tremendous uptick all together admission, there is a procedure set up that empowers MIB to a reaction in an opportune way to such circumstances as said before. Having an Enterprise Resource Planning (ERP) framework, likewise, helps in responsiveness (Wieland & Marcus, 2012). As a typical stage is utilized as a part of the association, it goes about as a channel that backings the stream of data, making the data lead time to wind up noticeably irrelevant and limits misfortune or mistake in data. With the work of materials (BOM) put away in the framework, when a request is set, the framework will create the interest for the production and manufacturing process required consequently without a requirement for human intercession (Lambert & Cooper, 2000). These exchanges can appear to be momentary because of the frameworks preparing speeds and as long as the BOM are right, there will be no mistakes in the exchanges (Lu & Swaminathan, 2015).
To do an audit and look at MIB’s practices against Scholastic prescribed procedures, a reasonable methodology should first be recognized so as to do the correlation (Zhu & Lai, 2008). The accompanying chart portrays four nonspecific SC methodologies where the suitable decision of methodology is needy upon the qualities of both the free market activity for the item (Wu & Pagell, 2011).
Taking a gander at the request qualifies for MIB’s items, request as said beforehand, is extremely flighty as a bit of it is extend construct that is needy with respect to whether the clients give their ventures to rivals or to MIB in the wake of looking at offers. On the supply side, notwithstanding the accomplishment in slicing the request lead time to 20 days to achieve the HUB, which implies it might take up to a month to achieve client’s end if an item must be worked starting with no outside help. The lead time is as yet thought to be long as MIB has kept prerequisites to keep well-being stock at FG level. Taking a gander at these attributes, the author chose the Hybrid SC Strategy to think about against MIB’s present practices (Christopher, 2016).
A half and half SC methodology endeavors to join the two components of Lean and Agility into the operations (Ballou, 2007). A half and half SC system can be executed in two ways. The Separation of a Base request and Surge request and assets are partitioned to deal with each individually. A deft technique will be used to deal with the unstable and erratic changes sought after. A decoupling point is actualized to isolate the upstream and downstream exercises (Brindly, 2007). Lean is most appropriate to be utilized in upstream where operations can be proficient and improved, while in the downstream exercises where a request is unpredictable, spryness can be more viable.
Conclusion
Taking everything into account, it can be seen that MIB has made upgrades to the production network in light of clients’ requirements for responsiveness and speed of conveyance, for example, lessening all together lead time. The inventory network technique of liability was connected deliberately or unexpectedly through the PCBA mini mart idea which goes about as the decoupling point. In any case, MIB may need to guarantee that costs drivers, for example, renting expenses and expenses of stock possessions are under control so the items can stay aggressive with rivals regarding evaluating. The abnormal state of item offerings is another range of concern which likewise prompts expanded expenses and thwarts store network spryness. MIB should investigate how it can diminish the inconstancy which is connected to the high assortment.
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