1.The supply chain management of the company of fruit juices has to be done keeping in mind the shelf life of the product along with the market demand and the consumption pattern among the consumers. The supply chain strategy of the product according to this study keeps in mind the longevity of the product along with the supply chain pattern of the product. One of the major issues that arise in the supply chain management of low shelf life product is the fact that there is an increasing chance of the wasting the product (La Scalia et al., 2017). To decrease the losses due to the wastage of the product such that the market demands of the product are met with minimal wastage.
There are a number of issues that should be taken into account regarding the supply chain management of the company in terms of the Safety Stock, Production Interval, Lot sizes and Frozen Production period. The fruit juice company must produce the stocks of different flavors of fruits and the supply chain for the different flavors must vary according to the demand of the product in the market.
Safety Stock
The safety stock is the amount of the extra product stored in the inventory to keep the product from stocking out in the market. In case of product with low shelf life, a market survey can be conducted on the sales of the various flavors of the product a week after the initial supply. Based on the information collected in this survey, the safety stock can be produced depending on the demand of certain products. The safety stock of such a product should not be much because the preferences and the initial data may also vary but enough to satisfy the requirement of the retailer in case of urgent demands. The safety stock for different products and their ratio also depends on the storage capacity of the preservation chambers available (Muriana, 2016). The flavors also matter, it is dangerous to produce a large amount of a new flavor, which showed high initial sales as their initial hike was due to the innovation and may decline, and it is better to produce it after a frozen production period after ascertaining the market demand.
Production Interval
The production interval of the products is another feature that should be kept into mind while planning a supply chain management of such a product. The production interval of the product should be in tandem with the feedbacks that the management has from the inventory. Fruit juice sales may vary seasonally in the market and a constant production of all the flavors may lead to overstocking of the inventory. The change in the consumerism patterns should be kept in mind to see the seasonal change in the market demand of the product. The interval of the production should be such that the demands of the market are met without any overstocking of the product (La Scalia et al., 2017). A proper inventory management keeping the flow of the product based on their expiry date can also achieve a proper production interval. The production interval of a product like fruit juices may also vary according to the seasonal availability of the raw material so it is the responsibility of the management to ensure a constant supply of the raw materials.
Lot Size
The lot size is the amount of the product that is produced in a single production line on certain day and has the similar longevity. It is not advisable to produce larger lot sizes of the same flavor everyday as that may lead to the overstocking of the product. It should also be noticed that even a short time interval shift of one or two days in a product with a low shelf life can affect the cutting down of the losses greatly. The lot sizes may vary according to the demand though (Ukil, Islam & Uddin, 2015). During the summers, the more favorite flavors like mango and orange can be produced in larger lots considering their sales in the vacations and outings. Therefore, it is seen that the lot size of the product depends on a number of features other than the market demand.
Frozen Production Period
The frozen production period in a supply chain management is the time when the product is made according to the demand of the retailers and the production is frozen until the credible information of the requirement of the market is assimilated. The different marketing requirements are to be collected before the production so that the product is not over produced. While having a frozen production period the supply chain manager has to keep in mind the safety stock and its expiry and the production to be completed accordingly (Taoukis & Tsironi, 2016). The frozen production time is a very important phase in the supply chain management system, as it prevents the overstocking and expiry of low shelf life products.
2.There are a number of risks that the supply chain management of organization producing low shelf life goods is threatened from. The risks have to be analyzed at an early level of occurrence to be mitigated without repercussions. There are a number of ways to understand the risks in the supply chain management through survey and market analysis (Brindley, 2017). One of the best ways to understand the risks in the businesses is from the past experiences of the company and similar such business models. The different risks are enumerated according to the supply chain and the different risks in the supply chain of the food products.
Risks in the Supply Chain
The risk in the different types of the supply chain presents themselves in the form of different uncertainties in the market. The different supply chain risks are:
Process Uncertainty: It occurs when the process of the production that is done to meet the daily requirements of the market is hampered due to some external factors such as the failure of the machinery or other mechanical failures (Aitken et al., 2016).
Supply Uncertainty: It is when the suppliers fail to meet the requirements of the market due to certain failures such as the miscommunication between the retailers and the suppliers (Christopher, 2016).
Demand Uncertainty: It is the uncertainty in the demand of product in the market. The demands of the products vary due to number of reasons in the market and a sudden fall in demand may lead to the overstocking of the product (Christopher, 2016).
Control Uncertainty: This is the uncertainty that occurs due to the fact of the miscommunication on the part of the management of the organization in controlling the production of the products according to the market requirements (Ross, 2015).
Risk in the Fruit Juice Supply Chain
There are number of risks that are attributed to operations of food industry and its supply chain. Some of them in context of short shelf life fruit juices are:
Product Contamination: It is one the problems that are common to any food and beverage related industry. It is an important factor to prevent the beverages from being contaminated as they are an edible product and directly influence the product health. Another issue has been understood in this case that the risk of the loss of the name of the company is huge in such a condition (Musa, Gunasekaran & Yusuf, 2014). For example, the food poisoning caused among the children in Caraga due to poisoned candies. Such incidents not only malign the company’s reputation but may get it caught in a number of lawsuits, ultimately bankrupting it.
Packaging Issues: Since the fruit juice produced have a very short shelf life and can be easily contaminated leading to loss of taste and harmful chemical changes, the packaging is a very important part of the supply chain management in industry. The shelf life of the product greatly depends on the packaging of the product and packaging issues may cause the company great losses. Unlike the solid food products, liquid food products are not made to endure packaging issues to be repackaged (Ashurst, Hargitt & Palmer, 2017). Instead, they lead to a complete loss of the product leading to complete losses of the product.
Food Safety Regulations: The fruit juices use a number of products as preservatives and a number of tastemaker to ensure its longevity and preserve its taste. These products are often the chemical agents or extracts which need a formal authentication from the food and safety standards authority of the country (Ashurst, Hargitt & Palmer, 2017). If in any case the product doesn’t not comply to the standards or the standards are changed suddenly, the company can suffer huge losses as these changes cannot be foreseen by the company.
Unavailability of the Raw Material: It is one of the major risks in the industry of the production of the fruit juices. The raw materials of these are the fruits mainly and they are strictly subjective in their availability (Jonkman et al., 2017). If due to a certain discrepancy the supply of the fruits falls, the industry will be affected adversely and in case of extreme natural disaster the operations may come to a temporary halt.
Disruption in Logistics: It is one of the major issues in the supply chain management of the food and beverage industry. Unlike others, they are located in remote locations to get easy access to fresh products as their raw materials (Ashurst, Hargitt & Palmer, 2017). The disruption in logistics may disrupt the supply of the raw materials or the supply of the products to the market and in both the cases, the company will suffer a number of losses.
Loss of Water: One of the major issues in the supply chain of fruit juices is the loss of water. The water is one of the basic raw materials industries but it is all the more important in the fruit juice industry as it is required in almost every step of production. It is needed in everything from washing of fruits to dilution of juice (Borodin et al., 2016). It is a risk, which may threat the very existence of the industry.
References
Aitken, J., Childerhouse, P., Deakins, E., & Towill, D. (2016). A comparative study of manufacturing and service sector supply chain integration via the uncertainty circle model. The International Journal of Logistics Management, 27(1), 188-205.
Ashurst, P., Hargitt, R., & Palmer, F. (2017). Soft drink and fruit juice problems solved. Woodhead Publishing.
Borodin, V., Bourtembourg, J., Hnaien, F., & Labadie, N. (2016). Handling uncertainty in agricultural supply chain management: a state of the art. European Journal of Operational Research, 254(2), 348-359.
Brindley, C. (Ed.). (2017). Supply chain risk. Taylor & Francis
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Jonkman, J., Bloemhof, J. M., van der Vorst, J. G., & van der Padt, A. (2017). Selecting food process designs from a supply chain perspective. Journal of Food Engineering, 195, 52-60.
La Scalia, G., Nasca, A., Corona, O., Settanni, L., & Micale, R. (2017). An innovative shelf life model based on smart logistic unit for an efficient management of the perishable food supply chain. Journal of Food Process Engineering, 40(1).
Muriana, C. (2016). An EOQ model for perishable products with fixed shelf life under stochastic demand conditions. European Journal of Operational Research, 255(2), 388-396.
Musa, A., Gunasekaran, A., & Yusuf, Y. (2014). Supply chain product visibility: Methods, systems and impacts. Expert Systems with Applications, 41(1), 176-194.
Ross, D. F. (2015). Distribution Planning and control: managing in the era of supply chain management. Springer.
Taoukis, P., & Tsironi, T. (2016). Smart packaging for monitoring and managing food and beverage shelf life. In The Stability and Shelf Life of Food (Second Edition) (pp. 141-168).
Ukil, S. I., Islam, M. E., & Uddin, M. S. (2015). A Production Inventory Model of Power Demand and Constant Production Rate Where the Products Have Finite Shelf-Life. Journal of Service Science and Management, 8(06), 874.
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