Supply chain for fresh fruit products
Introduction:
Supply chain deals in perishable market and enhance the competitive advantage of organization through the enhanced integration of suppliers, manufactures and all who are in the chain of supply. Supply chain considers the aspects of inventory, logistics optimization, transportation management, supply and demand forecast, and so on. Supply chain assists organization from procurement of raw material to the delivery of final product to end consumer.
This paper describes the suppliers’ selection and management, production process, distribution and end customer importance from the perspective of supply chain in fresh fruit products market.
Paper has been divided into 4 sections; first section describe the selection process of suppliers and supply chain practices through which they can be managed; second section consists of the transformation process from the point of view of supply chain; third section is based on the distribution channels. In forth section, it has been elaborated that how important the end consumers are in supply chain and how needs can be satisfied by fresh food products’ producers.
Selection and Management of suppliers:
Procurement has been an important task for organizations; and when it comes to perishable items then it becomes more crucial. Selection of suppliers is an important part of procurement process and major strategy for producers in order to run the smooth production process in SCM (Pattnaik, 2013). When fresh fruit companies select suppliers they must keep in mind that, either the price needs, delivery needs, and quality standards are met or not by suppliers. The fruits quality is important because fruit products have short shelf life and if the material is not of high standard, then companies have to face wastage (UK P&I Club, 2006).The aim of supply chain management with many others is also to reduce the waste and lead-time. Maintaining the quality of fruits is important to deliver quality products and suppliers play important role in maintain the product quality. Therefore, the selection of suppliers should be through smart process; fresh fruits products’ manufacturers while selection suppliers should consider all the strategic outcomes. Freshfruit products’ manufacturers must collected information regarding suppliers from other purchasers, suppliers experience should be considered because the experience of supplier will prevent company to be extra conscious due to the good performance history (Scott, Lundgren and Thompson, 2011), manufacturers must understand the claims and warranties policies of suppliers, their production capacity and facility, technical capabilities, financial position of suppliers, reputation in industry, procedural compliance, packaging ability, and relationship records with labors (Pal, Gupta and Garg, 2013).Suppliers must be interview in order to recognize their validity in different market conditions(Cousins, Foskett and Gillespie, 2007). Company must keep relations with more than one supplier because diversification provides flexibility and competitiveness. After the evaluation of all requirements, company should prepare a list and shortened the suppliers into manageable numbers and then in order to select the most appropriate suppliers, MOP (multi-objective programming model) should be utilized. Such process will enable company to select the most effective suppliers that can fulfill the just in time needs of the organization within different situations. Managing suppliers is equally important as managing customers. The management of suppliers is important to remain at competitive positioning; fresh fruits product’s manufacturers in order to enhance the good relationships and keep good relations with suppliers, should enhance the flow of information in order to generate value through collaborative designing, planning, and information sharing (Harrison, Lee and Neale, 2005). Companies should provide them fair chances to grow and rather to seek what they can do to lower cost also find out that how manufacturers can help them to reduce cost. Company should accept the accountability and should place order sufficiently; incentives and penalties should be designed strategically, they should share critical information with suppliers as soon as possible that enable to reduce waste, and should reward the honesty of suppliers and make the integration meaningful (Blasnchard, 2009). If the suppliers selection process of Aldi is considered, the company has developed a global supplier policy according to which in order to be the Aldi’s suppliers compliance with GFSI (Global food standard initiative) is essential through this system Aldi removed the need of supplier audit system (BSI 2015).
Production or transformation process
Companies manufacture different products from fresh fruits such as some companies manufacture juices, some produce smoothies, and some sale slices in tins. The production process of each of the companies except few initial steps is different. However, if the general process of supply chain is considered, then supply chain consists of crop production, harvesting, and production of raw product, production of processed product, retail operations, and consumption. The demand of safety processes of consumers with increased knowledge of health is increasing. Supply chain helps organizations in reducing the lead-time, lower down the cost, and enhance the quality of products through maintaining their shelf life (James, 2006). In order to better understand the production process, Dole Frozen’s example has been considered below (also see appendix for general production processing):
Dole frozen is a provider of fresh frozen fruits; company believes on ethical procurement of fruits, in order to maintain the quality of food modern technology has been used in production process. Company consider the timing as a crucial components of its production process; for example strawberries once sold fresh are well picked before they arrive so they won’t spoil before reaching stores as much as week later; but the barriers for the freezer section require proper time for harvesting.Thefarmers pick the fruits from the farm and peel the top from a sharp sharpener. Within 90 minutes of harvesting fruits are in the way of factory with refrigerated process for cleaning, processing and freezing. After reaching at factory, fruits are washed with normal water to remove the dirt then showered with rinse water followed by the spray rinse by highly coordinated water to sanitize the fruits. Next the fruits are discarded that found under quality (Waste management); the rest for the freezing purpose are washed on negative 34 degree then fruits are put in filter machine that separate the small, medium and large size fruits and then send to the cover belt that pack the fruits accordingly. If it’snot barriers and other hard fruits then cut into pieces and each machine cut 90 pieces in a minute (reduced lead time) then hard fruits sent to the vibrating belt that separate the cutting slices and stones from pitches. Each fruit sent to frizzier and then sent for packaging, a picker machine pick standard amount defined and put into pack then the machine send it to the final cover belt that sent the packed food for reshipping freezer.It is made sure that pieces that are packed are of equal size and up to the quality standards. In this manner, supply chain of the company ensures the total quality of the product. However, the packaging requirements are also considered; each material used in production process is mentioned on packaging. The production process of Aldi is cost effective because company offer 30 percent cheaper products as compare to its competitors; this is possible for Aldi because Aldi believes on lean manufacturing; through lead manufacturing production process Aldi constantly makes improvements in its quality and just in time production allows Aldi to receive material from its suppliers when needed that eliminates the requirement of stock management. Time based management approach and total quality management helps Aldi to reduce the waste of time and improve quality at its first time. Fro example, in order to reduce the costly and time consuming delivery; sourcing of fruits up to 60 percent is done locally (The Times100 n.d).
The management and distribution channels
In supply chain management, distribution refers to the move of product from one to another place; it could be retailers to end consumers, factory to supplier, and suppliers to retailer. Distribution comes under the title of logistics; the aim of logistics is to plan, implement and control the operations efficiently that enable organization to reduce the cost of product through managing in process inventory, reducing the storage place, and fulfilling the demand of customers. Distribution channels play important role to guarantee the reliable delivery of fresh fruits products. Distribution inefficiency add significant increase in cost of fresh food products; producers of fresh fruits products face difficulties on monitoring the shelf life, safety and freshness of products and in order to maintain the quality, retailers make partnership with sustainable suppliers who bring the trust in distribution. Most of the fresh fruit products are distributed by docking system; manufacturers rather to use intermediaries directly sale its products to customers. The customers can be retail stores, food service establishments, and end consumers. Supply chain practices enhanced the competition in fresh produce market; companies continue to utilize cross-docking facilities, inventory replenishment, selective wholesalers, and direct delivery of raw material to factory or store by suppliers (Nestler, Nobel, and Mackenthun, 2013). In such way supply chain enabled manufacturers to reduce the number of distribution channels. If necessary then warehouse utilization can be made more effective through the utilization of modern technologies. Companies use cross docking in order to reduce their lead time and cost and through the cross docking the transportation of sorted and packed products is made faster and efficient that contribute in shelf life. For example, if a fresh produce has 12 day shelf life and take two days in shipping it means the shelf life of the product is 10 days (Nestler, Nobel, and Mackenthun, 2013). The consolidation evidence of retailers can be observed through the increased share of sales by the larger manufacturers (Dimitri, Tegene, & Kaufman, 2003). If the management of Aldi’s distribution channels is considered, the company owns wholesale channels and control tasks of physical distribution that enable company to charge lower prices (Greenland and Newamn 2015).
Importance of end consumer:
A great change has been encountered in last few years that encouraged the embracing of supply chain frameworks; however, the tendency of approaches or models changes by the type of the products. Supply chain allows organizations to integrate the customer prerequisites into operations strategy (Godsell et al., 2006).End consumers are always important for business regardless of their nature of the business. It is crucial for fresh fruit products’ producers to deliver the standard quality products to the customers and increased competition has made this requirement more important. The delivery of the produce to the end consumers is a long and complex process and requires strategic approach to deliver customers. However, supply chain through analyzing the internal customers and suppliers exist within the chain allows organization to enhance integration that lead to customer satisfaction through the elimination of issues. Supply chain through enhancing the communication between the manufacturers and suppliers improves the quality of distribution and therefore, customer service (Woollard, 2014).Enhanced communication enables manufacturers to do share information and increased collaboration; it is more important than the tracking of shipment. In current arena, organizations demand from their logistic providers to take life-cycle approach to customers’ services, provide organization with insight information, and guide them regarding the customers from beginning to the end. Supply chain has major focus on end consumers and due to this reason; it allows people to acquire many strategies that can serve customers with benefits. From many the one major factor that provides satisfactory services to customers includes goods relations between shipper and manufacturer; effective partnership of both can lead organization to improved customer services through the application of supply chain practices. Therefore, it can be said that the major aim of supply chain is to satisfy the end customers through the application of different practices either in term of low cost, high quality or timely delivery. Aldi gives great importance to its end customers and it 30 percent lower pricing strategy as compare to competitors is the visible evidence of its efficient logistics system. Company procure material in large amount in order to have economic of scale and through streamlining of process, company gain ability to reduce cost and therefore price; company out bound logistics is concern with the process through which things are sent to end consumers. Aldi acquires its own transportation system that eliminates the cost of long distribution processes and gives Aldi an opportunity to reach its customers. In such way, Aldi through it logistics serves the end customer needs.
Conclusion:
It has been determined that fresh fruit companies’ major focus is on maintaining healthiness of fruits. Companies focus on the appearance; safety, taste, and shelf life of fresh produce and supply chain enable all these factors possible through the application of different practices. Like supply chain try to reduce the bullwhip effects through accurate forecasting, reduce distribution cost through cross docking, and enhance product quality through total quality management practices. Supply chain has made the production or transformation process more convenient through the JIT practices that helped organization to reduce the lead tome and waste. It has been determined from the research that changed preferences of consumers (nice packaging and good taste) have increased the demand of supply chain in fresh produce companies. Due to health awareness, consumers eat fruits as snakes and suppliers play important role to meet the increased demands and needs of customers.
List of References
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Dimitri, C., Tegene, A., & Kaufman, P. R. (2003). US fresh produce markets: marketing channels, trade practices, and retail pricing behavior (No. 33907). United States Department of Agriculture, Economic Research Service.
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Harrison, T. P., Lee, H. L., & Neale, J. J. (Eds.). (2005). The practice of supply chain management: where theory and application converge (Vol. 62). Springer Science & Business Media.
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Nestler, S., Nobel, T., and Mackenthun, F. (2013). Best Practices in Cross Docking in Europe. Available from http://www.ecohubs.eu/uploadfiles/DGG_Best_Practices_Cross_Docking_23_09_2014.pdf[Accessed 21 April 2015]
Pal, O., Gupta, A. K., & Garg, R. K. (2013). Supplier Selection Criteria and Methods in Supply Chains: A Review. International Journal of Social, Management, Economics and Business Engineering, vol. 7, no. 10, pp. 1403-1409.
Pattnaik, M. (2013). Fuzzy Supplier Selection Strategies in Supply Chain Management. International Journal of Supply Chain Management, vol. 2, no. 1.
Scott, C., Lundgren, H and Thompson, P. (2011). Guide to Supply Chain Management. UK: Springer Science & Business Media.
UK P&I Club. (2006). Fresh fruit and vegetables. Available from http://www.ukpandi.com/fileadmin/uploads/uk-pi/LP%20Documents/Carefully_to_Carry/Fresh%20fruit%20and%20vegetables.pdf [Accessed 21 April 2015]
Woollard, D. (2014). Everyone Has a Customer – The Importance of this throughout the Supply Chain. Available from http://www.dmg-freight.com/importance-customer-in-supply-chain/[Accessed 21 April 2015]
Appendix
(James &Nagramsak, 2011)
