MOD004160 NINA VAN DIEST CHOCOLATIER
1. Introduction
Nina Van Diest chocolatier used to work for a renowned food production house in Europe and the individual was based out of Paris and working for MyscoBee corporation for more than 20 years. In this report, supply chain along with issues will be analysed by using SCOR process.
2. Supply Chain analysis of Nina Van Diest chocolatier
2.1 The current supply chain: Lean or Agile?
It needs to be stated that after the chocolate bar’s official appearance on the German tv show, request for the same has been overwhelming and therefore, Nina herself has decided to help out with the marketing and sales aspects of it. The small manufacturing faculty is unable to deal with the sales and a new faculty along with equipment will take several months to purchase, set up and start operations. Although Nina Van Diest has been contacted by an individual living in California, however, the challenges that are being faced now are regarding the development of a suitable strategy for the supply chain management to enhance the growth of the company. The Lean Supply Chain management focuses on reducing the amount of waste along with cost as much as one may and companies with a greater volume of low variabile orders, such as food items benefit significantly by taking advantage of the lean supply chain framework.
Therefore, a lot of research is being focused on this approach to supply chain management as it has proven to be an effective way to elevate operations along with discarding waste within the supply chain (Nimeh et al., 2018). On the other hand, the agile supply chain framework has been built upon the notion that it is able to quickly adapt to a changing situation. This framework is considered imperative for companies that want to adapt to different external changes, such as technology, customer demand and economic changes as well. In today’s business world, agile supply chain management has become a crucial strategic move to deal with instability within the market, handle the pressure of competitiveness and enhance the performance of an organization (Centobelli et al., 2020).
However, after analysing the case study, it may be opined that the company needs to invest on relevant technology and as the number of orders is increasing, Nina also needs to adapt to a different delivery procedure and therefore, the team is being unable to cope with such a situation. Thus, it needs to be established that by adapting the agile supply chain framework Nina and the company will be quickly able to adapt to the external changes and that will further enhance the performance of Nina’s company as well.
2.2 SCOR Analysis
Planning: Planning is the process that involves evaluating resources, requirements and the process of communication to ensure that it cooperates with the overall business plan. After going through the case study, it has come to light that Nina is facing relevant challenges in generating any money due to the lack in production planning and also losing money with the shipping method Nina has chosen. It may be stated that even before the occurrence of a disaster an organized and strategically developed plan for managing disaster may be helpful in overcoming the unexpected (Soni, 2020).
Sourcing: Sourcing is the process of acquiring goods and products in order to meet the market and customer’s demand and this process includes activities, such as purchasing, supply of materials that are incoming and more. However, Nina Van Diest is against the concept of outsourcing, as the individual is concerned about the product that has been manufactured and thinks that it may impact the brand image negatively as well. The business has expanded and therefore, sourcing products and purchasing ingredients have become much more complex for the company.
Making: In this process, the finished product is taken and manufacturers or makers make these products ready for the market to meet the predetermined or actual demand. In order to make the products market ready, Nina Van Diest has been committed to make all the products sustainable and thus, the company is currently monitoring the sustainability of all suppliers. In order to maintain a sustainable supply chain management system, several multinational corporations have decided to work only with suppliers who have proven to adhere to all the environmental and social standards in the individual’s respective business practices (Hbr.org. 2021).
Delivering: Any processes that are involved in delivering the finished items and services to meet the requirements of customers, including managing the distribution and transportation belong to this category. Nina’s company has been committed to have a safety stock that may last two weeks, in order to ensure that if orders somehow increase then the company is able to meet these delivery requirements. Furthermore, as new products emerge in the market, there is a sudden rush from the customers, therefore, the products that are already going through production have to be put on hold and the team works overtime to ensure that the products are delivered within time.
Returning: The process of returning addresses the practices of dealing with products that have either been returned by the customers or the suppliers and this process falls under the customer service approach after delivery. It needs to be stated that Nina Van Diest will face quite a few challenges in case any product is returned by the suppliers or the consumers, since Nina has admitted that the individual does not have much knowledge about the supply chain system. Any product returned by the supplier would create inconvenience and similarly Nina will also face difficulties in providing post delivery support to the customers in case someone returns a product, as there are not many staff working in the company. It will be difficult to cater to the needs of the consumers and simultaneously manage operations at the company as well.
Enabling: The enabling process is known for including several business rules that are associated with the supply chain management, such as risk management, performance, compliance and more. One of the business rules that Nina has made for the company is that all the products will be sustainable and to ensure that Nina has been doing everything possible so that the finished products are made in a sustainable manner. In order to avoid risks Nina also keeps products for two weeks in the inventory so that in case of an unprecedented rise in demand, the company is able to deliver the products to its customers.
2.3 The relevance of standardization and impact of manufacturing in local environment or expansion
The concept of standardization is extremely imperative for businesses as it enables a company to ensure that the products or goods produced by the company in a given industry are of good quality and also equivalent with other products in the same industry. Standardization helps to incorporate innovation and also spread knowledge and therefore, the process of standardization is relevantly crucial in all businesses across all the sectors. In order to maintain a balance of standardization, it is imperative to develop standards that may be influenced and edited by top executives and also the staff of an organization involved in carrying out the tasks mentioned in these standards (Klochkov et al., 2017). Therefore, Nina and the employees working in that company have been extremely particular about maintaining the quality of products at all costs to ensure that the products are equal in quality with other products in the industry.
Along with standardization manufacturing also has quite an impact both locally and after expanding, since starting manufacturing at a place is significantly correlated with boosting the economy of the region. In accordance with research, it may be established that in several developing as well as developed countries, the manufacturing sector is regarded as one of the most important economic sectors (WELDETENSAY, 2020). Many people get employed in the manufacturing companies and especially in a local area and the cost is also relatively lower at local manufacturing, since there is no outsourcing involved and the business owner has complete ideas of the market knowledge as well. The case study opines that Nina had been approached by companies to manufacture the products in their respective countries, however, Nina being against the concept of outsourcing has discarded the offers.
On the other hand, the case study has also stated that Nina was manufacturing the products at a local firm outside of Burges in Belgium, which was Nina’s home town and gradually, Nina had increased the capacity of production as well. However, in case Nina wants to expand the business globally, then there may be no option other than having few manufacturing companies in different countries as well.
3. Analysis of the issue
3.1. Issue and root cause
- Poor supply chain
Analysing the case study it has been observed that the chocolate company of Nina Van Diest has faced multiple supply chain issues which may harm the growth of the business in the long term. Moreover, there is a huge requirement of raw materials in producing a vegan chocolate bar such as Cacao butter, maple syrup, packaged material and many more and due to the poor supply chain, the company is unable to fulfil the requirements of customers. In the modern era, it is essential for an organization to focus on Supply Chain Integration which is closely associated with the higher financial and operational performance of the organization (Wiengarten et al., 2019). In addition to that, the company is mainly dependent on the local suppliers and the local suppliers are not able to provide adequate amounts of raw materials and due to this reason the production of the company has been disrupted. Moreover, the stock control process of the company is extremely poor and due to insufficient stocks sometimes the company was not able to fulfil the order requirements of customers.
Generally, the company reorders when the raw materials have run out of stock and currently the company is not able to establish a system to measure the existing stocks of the ingredients. The company needs to focus on finding new raw material suppliers who will deliver all of the ingredients at a low cost. Additionally, if the company will be able to get the raw material at low cost the price of vegan chocolate bars will be low which enhances the competitiveness of the company. Due to an ineffective supply chain, the company may not be able to produce a high amount of chocolate bars which may create an adverse impact in decreasing the competitive advantage of the company. The company has experienced several changes in packaging and shipping as due to the high cost of shipping material the purpose of the protectors have increased. Additionally, in the past the company has decided to deliver the orders to air freight, however, it was extremely costly which indicates that the poor supply chain also affected the delivery process of the company.
- Insufficient employee power
Considering the case study, it may be argued that the employee power of the company is extremely low as currently there are only 6 employees who are working in the firm. Additionally, due to the insufficient employees, the company was not able to fulfil the order of the customer which may harm the brand image and reputation of the company. It is one of the biggest duties of the company to implement an effective Human Resource Management (HRM) which will recruit skilful employees and it may enhance the productivity level of the organization. The management of the company needs to focus on enhancing the number of employees or less the company may experience a huge loss in the international market. Nowadays, the orders of the company are increasing day by day while if the company is not able to increase the number of employees then other competitors of the company may capture the market. On the contrary, low numbers of employees may not be able to handle and manage the entire operations then it may result in dissatisfaction with customers.
- Unavailability of Innovative technology
It has been observed that the technology of the company is not modified and due to this reason, the production capacity of the economy has dropped. According to the case study, the current production capacity of the company is 100,000 units per month, however, due to the failure of organizational equipment the prediction has decreased to 80,000 per month. It may be noted that the modern organization needs to use Information Technology (IT) which may create a positive impact in enhancing the Organization performance and productivity (KHAN et al., 2020). Nina Van Diest wants to maintain product sustainability by reducing the use of plastic trays in the production unit while if the company will not use innovative technology the company may not be able to achieve sustainability and profitability in the future. In addition to that, the current workers of the company are feeling frustrated and due to poor and traditional technology, the production speed is extremely low which may be a threat for the growth of the company.
- Product complexity
It needs to be stated that after the chocolate bar’s official appearance on the German TV show, request for the same has been overwhelming and therefore, Nina herself has decided to help out with the marketing and sales aspects of it. However, Nina had faced several difficulties regarding the product the individual had chosen to produce, as getting the funding for the product was initially difficult for Nina. Moreover, as Nina decided to make sustainable products, it was also extremely complex to find suppliers with sustainable business practices and suppliers were also unable to answer about the sources the raw materials had come from.
3.2 Recommendation for supply chain improvement
It may be opined that the company needs to adopt several changes in the current manufacturing unit and for that reason, multiple recommendations are suggested to resolve the existing challenges of the company.
3.2.1 Management of current and future suppliers
It is extremely essential for the company of Nina Van Diest to change the current Supply Chain Management if the company as the current supplier of the company is not able to supply an adequate number of raw ingredients needed in making chocolate vegan bars. On the contrary, many organizations focus on introducing block chain technology that is extremely effective in establishing a sustainable SCM for the company (Saberio et al., 2019). However, the management of the organization has decided to implement Industry 4.0 which is also effective in resolving the difficulties of the current SCM of the company. One of the biggest advantages of Industry 4.0 is that it may create a beneficial impact in marinating the balance between productivity and logistics of the company. On a special note, there is a huge impact of Industry 4.0 in managing and handling the supply chain risks in an effective way as this technology is also able to create SCM risk analytics which may recognize the upcoming risk of the company (Ivanovo et al., 2019). Nina Van Deist has also planned to find fair trade suppliers which may provide an innovative opportunity to the company in collecting raw ingredients such as Cocoa beans from farmers. The company needs to focus on several factors regarding this context:
- It is essential to identify the value and cost of the improved SCM
- Selection of Industry 4.0 may be effective to resolve the SCM challenges of the organization
- Maintain effective communication with the suppliers
- Analysing the legal rules and regulations
- Focusing on reporting the suppliers before the supplier selection
3.2.2 Fulfilling the customer orders
One of the main approaches of the company will be to fulfil the order of the customer through implementing multiple innovative technologies. It needs to be opined that many organizations of the world have implemented the Internet of Things (Iota) which may be extremely impactful in managing the warehouse as it also supports the logistics framework (Lee et al., 2018). The company requires to follow the recommendation regarding the context:-
- The company needs to improve the logistics in order to deliver the products within the time
- Improved logistics may be able to cut down the shipping expenses
- The company needs to require several skilful employees to increase the production rate
3.2.3 Return process to improve customer satisfaction
It is extremely essential for the company to establish an innovative return process in order to satisfy the customers. In addition to that, sometimes, the quality of chocolate confectioneries may be dropped and due to that is the reason the company needs to implement reverse logistics in returning the damaged items. On the contrary, it may be argued that post purchasing logistics and shipping always helps in enhancing the customer service quality which is completely related to the satisfaction level of customers (Cao et al., 2018). Additionally, the recommendations are as follows:-
- The company needs high-quality chocolate confectionery to satisfy the customers
- Customer orders need to be fulfilled
- The implementation of reverse logistics is immensely essential in returning the damaged products
3.2.4 Implementation of sales forecast system
The implication of sales forecast supreme needs to be imported through following approaches:-
- The company needs to invest in developing a new CRM system
- An innovative sales forecasting model needs to be implanted
- The company needs to understand the entire sales process and future goals of the company
4. Conclusions
It may be concluded that supply chain issues are extremely harmful to the growth of the company as the company needs to execute a robust supply chain with the help of innovative technologies such as Industry 4.0.
References
Cao, Y., Ajjan, H. and Hong, P., 2018. Post-purchase shipping and customer service experiences in online shopping and their impact on customer satisfaction: an empirical study with comparison. Asia Pacific Journal of Marketing and Logistics.
Centobelli, P., Cerchione, R. and Ertz, M., 2020. Agile supply chain management: where did it come from and where will it go in the era of digital transformation?. Industrial Marketing Management, 90, pp.324-345.
Hbr.org. 2021. A More Sustainable Supply Chain. [online] Available at: <https://hbr.org/2020/03/a-more-sustainable-supply-chain> [Accessed 23 November 2021]
Ivanov, D., Dolgui, A. and Sokolov, B., 2019. The impact of digital technology and Industry 4.0 on the ripple effect and supply chain risk analytics. International Journal of Production Research, 57(3), pp.829-846.
KHAN, U., ZHANG, Y. and SALIK, M., 2020. The impact of information technology on organizational performance: The mediating effect of organizational learning. The Journal of Asian Finance, Economics, and Business, 7(11), pp.987-998.
Klochkov, Y., Papic, L. and Butkevich, R., 2017. Development of the Standardization System in an Organization. International Journal of Reliability, Quality and Safety Engineering, 24(06), p.1740004.
Lee, C.K., Lv, Y., Ng, K.K.H., Ho, W. and Choy, K.L., 2018. Design and application of Internet of things-based warehouse management system for smart logistics. International Journal of Production Research, 56(8), pp.2753-2768.
Nimeh, H.A., Abdallah, A.B. and Sweis, R., 2018. Lean supply chain management practices and performance: empirical evidence from manufacturing companies. International Journal of Supply Chain Management, 7(1), pp.1-15.
Saberi, S., Kouhizadeh, M., Sarkis, J. and Shen, L., 2019. Blockchain technology and its relationships to sustainable supply chain management. International Journal of Production Research, 57(7), pp.2117-2135.Soni, V.D., 2020. Disaster recovery planning: Untapped success factor in an organization. Available at SSRN 3628630.
WELDETENSAY, B., 2020. THE ECONOMIC IMPACT OF MANUFACTURING INDUSTRY ON THE ECONOMY OF WOLISO TOWN (Doctoral dissertation, ST. MARY’S UNIVERSITY).
Wiengarten, F., Li, H., Singh, P.J. and Fynes, B., 2019. Re-evaluating supply chain integration and firm performance: linking operations strategy to supply chain strategy. Supply Chain Management: An International Journal.
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