In this essay we are going to look at the importance of Supply Chain Management in the production of fresh food for the big retailers in the market. In particular the Chicken industry. For these task, we will look at the supply chain in various terms, analysing the different streams of information and materials that are in this process. We will also look at our competitors and ourPartners activities to see different manners of improving our relation.
Another key issue will be the knowledge of the demand. Here, is really important to work as a network with our retailers and try to see them as retailers-affiliates. This partnership will help us with valuable information about the demand, the behaviour of the final consumers, and it will help us to cope with the demand ina better way.
The main issue of the debate is “how” a production company can succeed in the supply chain process when they have to deal with unstable demand and unpredictable consumer behaviour, and the difficulty that the assortment of “fresh” products has itself.
BRIEF OF THE COMPANY
The company we are going to look at is a poultry processor called Wings&Legs. They deal with theretailer and not with the final customer. They have a large range of different products all made from chicken. This kind of good as it is a main necessity product use to show a predictable demand and long life cycles, a market with a high level of competition with low profit margins. But the globalization and the improvement of new substitutes have made it more unpredictable. The poultry processor hasintroduced new varieties of Chicken products whit higher profit margins. But the promotional activities that the retailers suddenly carry out made very difficult the job for the production line as they use to fail with the quantity of the assortment.
For this reason, the poultry processor has to deal in an unstable environment. One, because of the uncertainty of the demand, and two, because ofthe nature of the product. All the “fresh” products have a short time limit before they are not safe to human consume. So, they have to deal sometimes with “waste units”. This are the key factors for the production and assortment that a poultry processor should look at.
The strategy will need to focus, on both areas, the supply of materials and the supply of information. The more you know abouthow is the company provide and how the company provides the others, the better you will do it. The more information you have, the better you will know the situation where you are.
ANALISIS OF THE SITUATION
The product in which Wings & Legs is working is a typical commodity product. This type of product use to have relatively predictable demand behaviour. The retailers, which are Wings &Legs clients, make a lot of promotional activities with the chicken products. This is because the chicken is a good very used in all kind of foods and cultures, so for the customers is important to look at promotion on the price. For this reason, the demand is relatively unpredictable, the retailers have a lot of power to guide the consumers through promotions.
The customers drivers are Cost andQuality, therefore the profit margin are low.
The product variety in this poultry supply chain is not big, although they are increasing it because of the boom of globalization, different recipes, and the fast food. This makes the supply chain a little bit more complex, but it gives more profit margins.
In the production and assortment of fresh poultry products, the dominant costs are thephysical costs. The cost that derivate from human labour on the processing and logistics, and obviously the materials.
Another thing, and one of the most important requirements, the lead time to deliver the products to the retail company are short. Because of the structure of the supply chain, the company has to wait for the raw materials, and then process it quickly to deliver it to the retail...