Carman’s company was established on 1992 by a young women name Carolyn Creswell. At that time Carolyn was only 18 years old working part time at the small muesli business? The business didn’t go very well so the owner decided that the business would eventually closed. Carolyn pooled off her savings for developing the business with the help of her friend named Manya van Aker. With the passion about muesli that Carolyn has, she offered $1000 to that business owner and took over by herself (Carman’s Kitchen, 2018). Along with Manya Carolyn began to work on her business since together with her studies which made it quite rough for her, but because of her strong passion, she made it through and became very successful until now.
Carman’s muesli bar valued their best quality products at its most. Starting from sourcing the best quality ingredients, process of making, packaging until the last step that it reaches customer’s hand. Carolyn said that here in Carman’s, they believe that food should come from the kitchen and not chemist. They believe that nuts and seeds is what people needs to enrich their wellbeing. The valued they pride and the strong commitment of its best is what make people love Carman’s. Carman’s first muesli ranged in supermarket in 1997, launched their muesli bars in 2002, offered on airlines since 2006, and exported to 32 countries in 2012(Carman’s Kitchen, 2018).
Operation management is crucial for business development and takes into account of three core components of operations that include efficiency, cost and quality. This case study will be focusing on Carman’s Muesli products, offering a description of Carman’s from an OM perspective, provide a detailed analysis and discussion on varies aspects of its operation management including value chain management and supply chain management.
Muesli bar is a nutrition-packed breakfast and snack food that is loved by many people around the world. Carman’s muesli business began in 1992, with over 25 years of growth and expansion, the family owned Australian business has become an international brand and a market leader in muesli (Carman’s Kitchen, 2018). Carman’s overseas expansion reached 32 countries in 2012, but the owner Carolyn Creswell took one step further and expanded into China which has no history of consuming muesli in 2017.
Although, the most important aspects of operation management that applies to Carman’s is supply chain, value chain and quality management.
Carman’s is a business that has over $100 million annual turnover, it outsources manufacturing and has a head office that manages all aspects of business. On Carman’s website, it states that its ingredients are natural, almost entirely GMO free and lactose free (Carman’s Kitchen, 2018). This indicates the cost for ingredients and quality control are quite high, as Carman’s as a brand is actively advocating for natural and healthy products which are mostly expansive comparing to GMO and artificial ingredients.
This is signified in the Carman’s Fine Goods website which states that the brand is facing growing competition and high cost of operation which leads to high cost of products are potentially making Carman’s losing customers. Carman’s current business model consists outsourcing the manufacture aspect of business, but with quality control and establishment of trust with customers, Carman’s in turn is able to distribute its product through varies channels including in supermarkets, airlines, cafes and more. The forward integration enables Carman’s to secure customer loyalty which ultimately lead to the business’s success. This report will further discuss the operation management aspect of Carman’s as a business and a brand, focusing on value and supply chain management.
Carman’s value chain model is similar with other corporations, which comprises inbound logistics, operations, outbound logistics, marketing and sales as well as services. Carman’s gets its material from a variety of sources in mostly Australia and New Zealand, after outsourcing the manufacturing process, Carman’s then distributes its products through distributors, there is a list of distributors on Carman’s Kitchen’s website which details all locations of its distributors in Australia (Carman’s Kitchen, 2018). With the manufacturing being outsourced, Carman’s had encountered some serious debacle as wrong ingredients were used at one point and the products are not sellable.
There is no information on the exporting aspect of the business, but according to a Sydney Morning Herald report, Carman’s product will be sold in 536 stores in China, hiring local staff, but products will still be manufactured in Australia (SMH, 2017). This demonstrates that Carman’s has a large number of distributors and most of those are stores and supermarkets. But after Carman’s emphasis on quality control, the problem was quickly resolved, and the brand image improved over time.
Carman’s marketing strategy focuses on the quality of ingredient and advocating for a healthy lifestyle, innovative packing which led to a 25% increase of sales and visually appealing to consumers (Carman’s Fine Foods, 2018). In addition to marketing and packaging, Carman’s also offer services for customers by displaying a variety of recipes, providing them with ways of using their products; furthermore, Carman’s has an entire section of information related to health and safety issues relating to its product which offers insights on issues such as allergies and lactose intolerance.
With such excellent service provided to customers, Carman’s is able to secure its space in the marketplace, allowing its brand to expand domestically and internationally. Therefore, the value chain model that Carman’s offers is considered to be relatively comprehensive and well developed as it covers most of the components of the Starbucks model even though not all information is publicly available.
Discussion Business Issues Associated with Value Chain of Carman’s
In order to examine the activities of Carman’s and to demonstrate the connection among the activities, Porter’s Value Chain Model is applied in order to help to understand the sources of value in Carman. As demonstrated in Figure 1, it shows how inputs of an organization will be turned into outputs purchased by customers.
Figure 1: Porter’s value chain model
(Source: Fitsimmons, 2017)
In Porter’s value chain, major operation management activities of Carman’s that are creating value and brining value to customers include inbound logistics that involves all receiving, storing and distributing processes (sourcing raw ingredients such as oats, wheats, whole grain wheats, glucose, Emulsifer, Puffed Rice, Honey, Nuts, Sunflower seeds, compound chocolate chips, milk solids, salt, sugar, chicory root fiber, coconut, flavors from Australian locally owned suppliers and package materials including painted cardboard, plastic bags and from suppliers), operations that involves all transformations activities turning input to output (producing muesli bars through Mixer Machine, Inclined Conveyor, Feeder, Spreader, Enforced Compression Roll, Air Cooler and Cross Cutter, packaging through Electronic Automatic Plastic Packer and Separator, quality checking and storing), outbound logistics that involves all activities delivering service or products to customers (usually using Third-party Logistic to distribute products to retailers), marketing and sales that involves processes persuading customers (advertising Carman’s muesli bars and highlighting healthy features) and communicating with customers, and service that involves all activities maintaining value of product or service after purchase (answering questions and coping with complaints) (Antonucci, Corbitt, Stewart & Harris, 2004; Porter & Heppelmann, 2014; 2015; Yilmaz & Bititci, 2006). It could be seen that Carman’s value chain starts with delivering healthy, high standard muesli bars to customers by sourcing credible raw ingredient materials and unique production methods, and through proper marketing activities to convey the value to customers, and finally maintaining customers’ loyalty by providing comprehensive after-sale services (Fitsimmons, 2017). Therefore, the major business issue to guarantee the success of this value chain is maintaining the values of the company, including good healthiness, customer-friendliness, high standard, convenience and snack-style (Fitsimmons, 2017). Other business issues include guaranteeing harmonious as well as motivating workplace environment for staff (human resource management), developing better products (firm infrastructure), introducing new packages or new products (technology development) and sourcing better or more cost-worthy raw ingredient materials (procurement).
A supply chain is a system that helps an organization to move products or services from input end (inbound logistics / operations) to customers (Brandenburg, Govindan, Sarkis & Seuring, 2014). Supply chain management is significant important term for an organization, as it encompasses supply planning and managing all sourcing, procuring, logistic, conversion and delivering activities (Hazen, Boone, Ezell & Jones-Farmer, 2014). Following Figure 2 shows Carman’s supply chain.
Figure 2: Carman’s supply chain
(Source: Beske & Seuring, 2014)
The measurable business issues of Carman’s supply chain include delivery reliability / retailers’ order fulfilment, responsiveness / lead time, customer-related measures / meeting customers’ needs, efficiency / inventory value and turnover, final measures / supply chain cost, sustainability / water discharge, CO2 emissions, energy consumptions (Beske & Seuring, 2014). In order to run an efficient and sustainable operation management, addressing the business issues associated with Carman’s supply chain will be significantly important.
As part of operation performance measures, sustainability of an organization will affect the customers’ attitude and brand awareness. Sustainability and sustainable operation is a key part of Carman’s operation management (Fahimnia, Sarkis & Davanrzai, 2015). The focused environmental sustainability measurements include energy consumption, recycling, air emissions and solid/waste rates. The social sustainability measurements include consumer/workplace safety, community relations and ethics. The economic sustainability measurements include financial result, regulatory compliance, sanctions and accomplishment of strategic initiatives (Pagell & Shevchenko, 2014).
In terms of evaluating parameters of supply and demand in order to maximize utilization of resources and minimize wastes, the Push-Pull systems and Push-Pull boundaries are introduced and considered (Figure 3).
Figure 3: Push-Pull boundaries and systems of Carman’s
(Source: Touboulic & Walker, 2015)
The measured parameters to control the amount of inventory and to guarantee sustainability are market demands, feedback from marketing activities, retailers’ orders and inventory conditions (value/turnover) (Touboulic & Walker, 2015). More importantly, in order to sustainably produce muesli bars, Carman’s should also put focuses on controlling water discharge, CO2 emissions, efficiency of raw ingredient material usage and energy consumption.
The sustainable issues to be addressed include improving sustainability awareness, increasing efficiency of raw material usage, reducing waste of water or energy in both production and workplace, developing sustainable packages and helping customers to realize the importance of sustainability.
The report is based on the issues based on the supply chain and logistical as well as the operational areas of the company. Focusing the areas of problem the study will be providing on the improvement of supply chain and logistics that are needed to be implemented by the organisation.
Carman operates in two major segments where the first category is the muesli products that has turned in to the market leading variant. However, there are some problems observed in their supply chain and operational system of management.
Firstly, in case of Carman’s fine food organisation it has been seen that the optimisation strategy used by the company on their lead time were not well defined. As a result of which their focus was mostly on the Australian and Chinese markets instead of being Global markets where future growth is evitable. Secondly, it has been found that the outsourcing strategy of the company for different processes and operations are not well illustrated. The customer service at all levels are effective but the service levels according to needs of the customers are not well planned and organised. Along with it, the asset network and logistics of the company are not well developed in terms of production tool.
Analysis of supply chain issues
The present business model of the organisation is related to supply chain and value chain, the company also maintains a successful marketing operation strategy. However, the company has certain problem in supply chain and outsourcing operations occurring due to lack of communication in between department and complicated system of logistics supply. Considering this issues the company needs to improve their system of marketing as well as supply chain to retain more customers (Dabbene, Gay & Tortia, 2014).
Lean production is the process that is completely based on the theory of removal of water and its emphasis is on the system flow that follows five mahoe step.
From research conducted on operational management of other industries based on muesli bar production, it has been found that lean production is the main part of operational management that helps to improve the quality of the products by reducing the risk of getting the product damaged (Thi, Kumar & Lin, 2015). This is because the product spends less time in getting manufactured. However, Carman Company uses this lean production to improve and develop their performance and strategy using the statistics of operational management.
Sustainable value chain is a significant part of the operation management that may influence on the system of food processes by improving the economic sustainability and by adding some more value to the equitable distribution of food. Therefore, aimed towards building policy and designing of the project, the value chain always help to develop some value for its potential field (Jones et al., 2016). However, sustainable value chain is needed to be used by Carman’s muesli bar company for addressing the operational management. The steps of the operational process of management are as follows:
In this step project planning and designing is being done. All the supply chain processes of Carman’s are planned from here. This is first step of the operational management. All the business method are being decided in this step. The main objective of the strategy is to provide best product to the consumer in cheap value (Cameron et al., 2015).
The plan is being developed in this step. All the raw materials and food ingredients are brought in this phase and the development is done with the help of the managers. This is the second phase of the operational management of supply chain. Carman’s company is required to select a specific supplier to deliver the products that they need to create (Dalton et al., 2014). Therefore, for the purpose of doing this the supply chain manager are required to set a specific price on the products and payment in collaboration with the suppliers. They will be performing this step to enhance the relationship with the suppliers.
Implementing the plan:
In this phase all the planning will be be applied by high level of expertise managers. In this step, the raw materials are being turned into sellable products. In this phase, the food item product is being produced, tested, packaged and scheduled for delivery. Moreover, managers will be responsible for the scheduling of activities that is needed to be performed in this step (Peloza & Montford, 2015). These phase are the most metric intensive operation of the supply chain process. This is because the managers in this step measures the production output and activities of the workers.
The final step of operational management of supply chain is known as the return where the customers may receive defective products. Therefore, in this step the company is accountable to address the questions of the customer. These step is usually problematic part of the operational management (Villamayor-Tomas et al., 2015).
Along with the appropriate supply chain and value chain management the organisation ensures the business distributes the right product in the appropriate place at a proper time. Carmen Company is needed to manufacture the suitable products based on their market research and depending on the requirement of the consumers (Pulker et al., 2018). In this context, the company will be able to successfully manage its channels of distribution to place its products in all their stores. Apart from these, in case of operation management the company is needed to focus on cost efficient programs for ensuring the competitive price of the product. Moreover, it works with the retailers for enhancing the promotion of the product.
However, the company tries to maintain the levels of inventory high for meeting the unpredictable and fast demands of the consumers. In addition to this they uses the system of Just in tome provision of supply chain to offer effective system of stock inventory in Australia and other locations (Quarshie, Salmi & Leuschner, 2016).
For the purpose of sustainable operation management the company is required to adopt an expansion strategy by collaborating with major Australian super market chains and major aviation industry in Australia including Coles, Woolworth, Qantas and Virgin provided with an easy diet program. In this context the company has expanded its business in United Kingdom, with listings in supermarket chains of Sainsbury and Waitrose (Verghese et al., 2015).
Apart from these exporting areas, the company also exports their products in almost 15 countries with an annual turnover of $80,000 each of the year with almost 1000 customers in Melbourne that expanded with 2000 outlets in Australia with an annual turnover of $10 million (Brandenburg et al., 2014).
There are three major type of operational planning that are necessary to be followed by the organisation. They are as follows:
Strategic: At this level, the Carman Muesli bar company is required to seek for high level strategic planning and decision making for generating more profit from the business (Paam et al., 2016).
Tactical: Tactical decision will be required to be implemented within the company focuses on implementing measures that will help them to produce cost related benefits by using industries best practices and by establishing warehousing strategies for the organisation
Operational: Carman’s is needed to develop a operational decision on the basis of business requirement to achieve the most profit in any given situation (Göbel et al., 2014).
In case of market segmentation the company needs to use behavioural strategy to use the product on a daily basis. Along with it as an inspirational quotation for the food product they shows wake up and say today is going to be great (Jones et al., 2016). However, in case of advertising slogan that represents the regular occasion of market segmentation that is needed to be used by the Carman’s food organisation.
After evaluating the various segments of the market they will be needed to adopt a differentiated approach for targeting the market. In this regards the entire market will be targeted with breakfast food items. They will be offer nutritious healthy breakfast snacks and food items without any definition of specific target of the society (Duffield & Whitty, 2016).
They are required to follow the current social trends where customers are highly concerned about health and fitness. By doing so, the Carmen’s company will be targeting different segments of the market using different methods of advertisement through the recipes on media in interest of the people.
The positioning of the food items are needed to be are very wisely structured by the producers of the Carman food industry. Therefore, with the use of competitive advantage of healthy food about the products they will be easily capturing the interest of the customers (Belekoukias, Garza-Reyes & Kumar, 2014). They are also using chemical free ingredients in their food products are impacting there reputation as well. The Australian oriented approach will be providing them the benefits for creating a sense of patriotism amongst the mind of the customer, the positioning strategy of Carmen is working successfully for national as well as international customers.
Product’
The company is required to produce and increase the number of products by outsourcing their services in different location beyond Australia:
Muesli Bars: Nutrient containing bars with a unique balance of carbohydrate and proteins
Roasted nuts bars: roasted nuts bar are usually Gluten free nut bars, which is chewable containing delicious mix.
Muesli: the ingredients in this bars are usually of high quality that are free from artificial chemical colours and flavours.
Gourmet porridges: this are made up of 100% original Australian oats.
Yummo: These are school friendly snacks, containing wholegrain Popcorn Bars along with Wholegrain bakes.
Promotion
In case of promotion of products Carmen needs to utilise smart system of marketing with a range of solid market methods to ensure the growth of business. The company apart from media promotion required to use word of mouth strategy for enhancing the marketing experience of the customer. By doing so, the company will be providing simple suggestion through an individual customer for expanding the number of customer base (Reynolds et al., 2014). The company will be needed to dedicate a whole section of their website for customer service for solving any service related query of the customers related to the products. However, Carmen’s fine food recipe pages offers the customers with extensive information to use the products.
Pricing’
In case of pricing Carman is required to pay additional attention to their usuals customers. However, the company will be using a high cost with the increasing demand of high quality products and health ingredients provided by the company. The company will be needed to produce their products at a reasonable process in exchange of the high quality ingredients that are not generally cheap in the market (Vidgen & Gallegos, 2014). As a result if which this high cost ingredients will lead to increased cost of production by selling the products in the expensive stores in accordance to the customers’ requirements.
Packaging
The company is required to use sophisticated black packaging to style the product line and highlight the importance of health consciousness as well as completeness of products. In addition to this Carman’s needs to implement product differentiation strategy while packaging products thereby separating their service from the competition while drawing attention of the potential customers (Davis, Frolova & Callahan, 2016).
In order to change the infrastructure of logistics and supply chain services the company needs to use effective logistics and management infrastructure where the employees are regularly involved with email and feedback system. By doing so, the management of the company will be able to ensure that all the employees as well as customers of the company are well aware of the needs and objective of the organisation (Phan & Baird, 2015). Apart from these, the company is required to use effective system of logistics and supply chain as Infrastructure of the organisation as a part of food retailing system.
In order to improve their areas of logistics the company additionally needs to effectively supply all their products in different location. This activity will be done by the receiving stock management by transporting the products and supplies in the central warehousing facility and thereby distributing it to multiple stores. While doing so, the company needs to ensure the food safety standard and basic requirement associated with the product. The company need to have a flexible chain capability for maintaining specified products by maintaining the temperatures (Loft et al., 2015). Along with it the company is needed to work in collaboration with the retailers and system of technology.
The Carman fine food company needs to consider the export consolidators and the distributor with a developed present in the target market by working with suitable collaborator that will allow them with advantages of expertise and effective infrastructure by reducing down the risk of the business (Vidgen & Gallegos, 2014). Moreover, they company needs to maintain cold chain management while doing export due to the increasing number of steps in between seller as well as the purchase. However, while negotiating contracts of transport and transportations of goods they need to ensure the steps before arriving the buyer’s premises.
Each of the departments in Carman’s related to sales, quality management, development of product and human resources are all inclined towards the strategic benefits of the customers. The human resources department of the company needs to develop a clear objective about the business objectives of the organisation and work in collaboration with all the employees to achieve the goals (Varsei & Polyakovskiy, 2017). The culture within the organisation is needed to be more inclined towards “culture eats strategy for breakfast” that will help to expand the business and helps to facilitate the culture of the workplace.
Development of technology
Carman’s for producing granola and muesli cereal bars need to develop equipment for preparing cereal bars. In this process the crunchy muesli is made by mixing all the baked ingredients. The process will be dependent on the gentle handling and reliable transfer to obtain a balance between quality of the products and efficient productions (Fraser, Hvolby & Tseng, 2015). The technological process that will be used in the organisation will help in blending the dry ingredients within a batch mixer. The ingredients mainly consists of oats, other grains and dried fruits for creating the healthy bars. After doing so, the mass is placed in to the oven where a spreader helps to distribute the band of mixer evenly across the area.
Carman’s technology is the most recognised technology that will be used for the retailing as they are process centred in approach that as well will help in future development and in improving the existing operations. Therefore, for fulfilling this motive the system will be completely dependent on the process design team that is developed by the company. They are required to use the ARIS platform central repository in Carman and the major tools of modelling that are will be used by the ARIS business with the help of even driven process chain (Belekoukias, Garza-Reyes & Kumar, 2014).
Moreover, a heat transfer process will be used that will allow to reduce the excess moisture of the final products determined by the combination of temperature and time. Supported by cooling at the oven discharge that will help to bind the mass together to give the feature of granola and muesli crunch. For packaging the products they are required to utilise advanced technology to give their packaging an attractive outlook that will help in retaining increased customer base (Duffield & Whitty, 2016).
A business supply chain engaged with all the chain of activities taking from the establishment of product till the production of the final product to the consumers. In this context, Carmen needs to successfully follow a socially responsible duty at different processes that are managed by the supply chain department for ensuring that product that is being manufactured are accessible to the customers across various location (Juan Ding et al., 2014).
The Supply in this company is classified in to different sectors:
Primary sector: In this field all the raw materials will be provided by the organisation from all around the world (Takeuchi, Kojima & Luetzow, 2014).
Secondary field: In this field all the products will be developed using supplied raw materials and will be shipped to the wholesalers and are usually preserved in the warehouse.
Tertiary sector: This is the private filed of the company that will be working to optimise and benefit the process of business (Vidgen & Gallegos, 2014).
Carman’s company will be required to develop an efficient supply chain system of management by offering goods and services to the customers on a particular time. The organisation needs to ensures that customers are provided with quality standards product without compromising any factor that are accountable inn the supply chain system. In this context, the organisation is required to operate its system of logistics by putting its operation in two centres for receiving, distribution and processing its products and food items for the supermarkets (Belekoukias, Garza-Reyes & Kumar, 2014).
The purpose of the supply chain of the organisation will be to streamline the production of products through different supermarket outlets for reducing the cost of suppliers. By doing so, the company will be able to manage a smooth flow of merchandise to the retailed stores for avoiding the business related issues and also to maintain an effective communication in between the buyer.
Moreover. The organisation will be needed to carry out the logistics management task in an effective way. In this regards, the company will be needed to develop a well effective warehouse and centre of distribution of the retail for keeping the retailed stock aligned with the demands made by the customers (Varsei & Polyakovskiy, 2017). The effective system of inventory management process will help the company to recognise the amount of products that is required to be held and also the location to meet the requirements made by the customers.
However, different departments and operations will be required to coordinate with each other and work with each throughout the supply chain network. This supply chain network of the company will be including purchasing of products, quality checking of the muesli bars products, sales, transportation if products and process of distribution (Soosay et al., 2016). Therefore, it will be the part of the business strategy for obtaining the raw materials from the best available source that can be used for the manufacturing of product.
At Carmen’s the business is associated with the food distribution and it fall under the type of secondary industry. Therefore, it is necessary for the company to achieve best available service and ensure the satisfaction of the customers (Reynolds et al., 2014). The company is required to use intermediaries such as wholesalers, supermarkets and high street stores for transporting and storing their product process that are present between all the phases of the supply chain management.
Conclusion
Therefore, it is evident from the study that managing the organizational operational capacity is considered to be the most necessary activity that may add to the effective performance of the company. The main operational strategy used by the company is to deliver the products to the customers through major supermarket chains so that the products reach the customers on time. Although there are few problems related to supply chain and logistics faced by the company. However, the following the suggestions for improving the system of supply chain and marketing the company will be able to reach a successful position in the market.
In the Operations Management (OM) point of view, it shows that Carman’s company has quite a good process from producing to delivering their goods to meet their customer’s expectation level. The company also understand the needs and concept of how people in this generation is living and what they want. The muesli bar pack answers people nowadays routines who wants a quick and easy meal but also healthy at the same time.
The packaging is attractive enough that it could visually appealing to customers and the size is just perfect for carrying around is an excellent marketing strategy. Their commitment of using all the good ingredients stated as natural and almost entirely GMO free and lactose free shows how serious they are on the quality control, together with the information provided for customers such as displaying a variety of recipes and ways of using their products plus a section of information related to health and safety issues have gained customer’s trust and make them loyal customers (Carman’s Kitchen, 2018). From the reasons above it built up the company’s reputation and image to customers enabling them to expand their products both domestically and internationally.
As the business running, the company hasn’t stop themselves in the same pace but instead they keep searching for the better fits to make their company even more successful. They keep trying to get a better offer from their ingredients suppliers but maintain their standard of their products at the same time. The packaging has been remade to make it more attracting and appealing to customers. They keep up with after purchased service by answering customer’s questions and replying to their feedback.
Carman’s also got a good sustainable operation management by having all environmental sustainability, social sustainability and social sustainability. This include energy consumption and recycling as an example of environmental sustainability, consumer and workplace safety as well as community relations and ethics as social sustainability, and financial results as an example of economic sustainability.
It has come to the conclusion that Carman’s muesli company has a good operations management within its company. They maintain their value and pride themselves for being one of high quality brand products. It is safe to say that Carman’s muesli will keep growing and make itself more reputation in the near future
This operational plan used by the company also helps them to save money without compromising on the quality of the product that provides them high competitive advantage. Therefore, considering all the above factors and principles of the operational management it has been found that Carman’s fine food is adopting most of the necessary principles of operational management with the help of process technology and successful marketing strategy to improve their performance.
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