Supply Chain And Logistics Management Essay For Anchor Foods - New Zealand.

Choose any particular product and discuss about it suppliers and demand ,flow , cost , according to the question asked answer it.

Discuss the market and the nature of customer demand.

Determine competencies and capabilities of the company.

Discuss organizational structure.

Discus criteria used to select supplier.

Discuss sources of information used for evaluating suppliers.

Discuss supplier relationships.

Discuss supply chain flow.

Discuss which aspect of the chain should or could be optimised.

Discuss how this is affected by the various environmental impacts on the supply chain.

Having determined a suitable supply chain give an outline proposal plan to implement the new supply chain.

Explain the role that cost has to play in making the purchasing decision.

Discuss TCO implications.

For your chosen company suggest the control policies for items of stock.

The objective of this paper is to focus on supply chain and logistics management for Anchor Foods – New Zealand. Anchor is a brand of dairy products that was founded in New Zealand in 1886 and is one of the key brands owned by the New Zealand-based international exporter Fonterra Co−operative Group (Chidlow & Ghauri, 2015). The market and the nature of demand in this industry can be discussed as:

The players in this dairy industry generally operate in Business-to-Business market. The market of dairy products is a saturated market and the customer demand is stable in this industry. There are number of players in this market. In recent times, the organizations in this industry have realized the importance of managing logistics in domestic and international market (Zsidisin, 2012). With the forces of globalization, the companies in this sector have further expanded. The competencies and capabilities of Anchor Foods – New Zealand can be discussed as:

There are various firms in the market that have different capabilities. The core competency of Anchor Foods – New Zealand is cost leadership strategy (kolk, 2015). Typically, the firm would have cost leadership strategy or the product differentiation strategy. Anchor Foods – New Zealand almost had a monopoly in the New Zealand market before government regulated the market.

Anchor Foods – New Zealand is a private company and has close to 2000 employees and the company has relatively flat organizational structure. Other than the CXOs of the company, the company has only three layers of employees and management. The top layer or the layer 1 is the layer of leaders. These are the leaders that are responsible to manage the entire line of business. For example, each of line of business of Milk, Powdered Milk and Cheese has its own leader (Santacreu-Vasut & Shenkar, 2014). There are managers to support the leaders in each line of business and then there are employees that reports to these managers. The organizational chart of the organization can be shown as:

In the dairy business, the companies have number of suppliers. The company has tie up with both domestic and international suppliers (Sridharan & Simatupang, 2013). The key criteria used by Anchor Foods – New Zealand to select the suppliers can be discussed as:

The company has various parameters that it uses to select the supplier. The company would rate the suppliers (on a scale of 1 to 10) and based on all the parameters, a weighted index is calculated. The three steps involved in the supplier selection method can be discussed as:

A sample matrix to select the supplier can be shown as:

Parameter	Supplier_1	Supplier_2	Supplier_3	Supplier _ n
Cost	1	2	3	7
Quality	4	4	6	4
On Time delivery	5	6	7	2
Market Reputation	3	3	3	3
Relationship	6	7	4	4
Credibility	7	8	4	3
Finances	6	5	3	3
Reliability	3	4	4	4

Parameter	Supplier_1	Supplier_2	Supplier_3	Supplier _ n	Weight
Cost	1	2	3	7	0.2
Quality	4	4	6	4	0.2
On Time delivery	5	6	7	2	0.2
Market Reputation	3	3	3	3	0.1
Relationship	6	7	4	4	0.05
Credibility	7	8	4	3	0.1
Finances	6	5	3	3	0.05
Reliability	3	4	4	4	0.1

The table with the weighted average and final score of suppliers can be shown as:

Parameter	Supplier_1	Supplier_2	Supplier_3	Supplier _ n	Weight
Cost	1	2	3	7	0.2
Quality	4	4	6	4	0.2
On Time delivery	5	6	7	2	0.2
Market Reputation	3	3	3	3	0.1
Relationship	6	7	4	4	0.05
Credibility	7	8	4	3	0.1
Finances	6	5	3	3	0.05
Reliability	3	4	4	4	0.1
Net Score	3.9	4.5	4.65	3.95	1

The above table show that supplier # 3 is the preferred supplier for Anchor Foods – New Zealand. Actually, this procedure is repeated for number of suppliers and based on the procedure, a pool of supplier is selected.

The company uses both internal and external resources to evaluate the suppliers. The key internal and external resources can be discussed as:

Internal sources to evaluate suppliers	External sources to evaluate suppliers
References given by the employees of the company	References given by other customer of suppliers
The research done by the vendor selection team of the company	References given by the competitors of Anchor Foods – New Zealand
The past relationship with suppliers	Market intel and market knowledge
Gut feeling and perception of decision makers	Brand reputation and market credibility of vendor
Any other internal (disclosed) criteria of company	Any other external source

Competencies and Capabilities

Anchor Foods – New Zealand is a fairly big organization and the company believes to have good relationship with its suppliers (Lengnick-Hall & Lengnick-Hall, 2013). The management of the company acknowledges its dependency on its suppliers as this is one of the reason that Anchor Foods – New Zealand and supplier wants to engage in win-win situation. At the same time, Anchor Foods – New Zealand does not give bargaining power to suppliers. In the end, the management of the company realize that the competition is high among the suppliers and suppliers have to provide best quality at optimized cost. The company has a pool of fixed and variable or contractual suppliers. The relationships with fixed suppliers and contractual suppliers can be discussed as:

The fixed suppliers are the one that have fixed or long term contract with Anchor Foods – New Zealand. Mostly Anchor Foods – New Zealand and fixed suppliers have quarterly contract where in the supplier would provide the supplies to Anchor Foods – New Zealand.

The contractual suppliers are the need based suppliers. These are the suppliers that does not have any long-term relationship with Anchor Foods – New Zealand. The company would use the services of these suppliers on need basis. The company takes milk from suppliers and the raw milk is converted to dairy product. The contracual key suppliers for Anchor Food are the small owners of dairy farms.

On a scale of 1 to 10, the supplier relationship of Anchor Foods – New Zealand can be termed as 7.

The management of the company realizes that supply chain management is one of the key functions for organization to manage international warehousing. The various aspects of supply chain management for Anchor Foods – New Zealand can be discussed as:

The business model of Anchor Foods – New Zealand is to help customers to get the best dairy products at cheap cost. The company operates in both B to B and B to C market. The company has a strong dependency on transportation (Temiz, 2014). The efficient transportation systems help Anchor Foods – New Zealand to reduce the cost and pass on the cost benefits to its consumers. It helps Anchor Foods – New Zealand to eventually achieve its objective of cost leadership. The supply chain flow of Anchor Foods – New Zealand can be shown as:

The supply chain flow of Anchor Foods – New Zealand starts with the procurement of raw material from suppliers. The high level steps of flow can be shown as:

1. Step 1: Procurement of raw milk form suppliers
2. Step 2: Conversion of raw milk to various dairy products
3. Step 3: Manufacturing of various products like cheese, etc.

The existing supply chain of Anchor Foods – New Zealand is strong; however, there exist a scope of improvement. One of the scopes of optimization in the existing supply chain flow is the use of Information Systems like ERP systems. When it comes to Supply Chain Management (SCM), businesses need to interact with numerous suppliers and partners in order to obtain the raw materials and resources needed to bring finished goods to market. ERP plays a vital role in combating inefficiency; reducing waste and ensuring that workers are better able direct their efforts (Tatoglu & Bayraktar, 2016).

Organizational structure

The management of Anchor Foods – New Zealand is committed to focus on sustainable development. This is one of the reasons that the company uses green and clean fuels of energy. The company is aware of the fact that it must minimize the environmental impact.  There are various examples that demonstrate that the company is committed to minimize its environmental impact. For example, Anchor Foods – New Zealand has abolished the use of bulbs of CFLs in the organization. The company uses only LEDs in its premises. It helps the company to save a lot of energy. The company also has a strong sustainability policy in place that ensures that the company is always focused towards environment (Cantwell, 2014).

The new or recommended supply chain management focuses on the integration of supply chain management with the ERP system of the company. It would be correct to say that the technology and information systems like ERP system can really add to the strength and agility of existing supply chain of Anchor Foods – New Zealand. In general, the integration of Supply chain management and ERP allows manufacturing and distribution businesses the ability to gain greater visibility into all operations while increasing speed, efficiency and overall customer satisfaction (Fawcett & Ellram, 2014). The proposed structure of integrated supply chain with ERP is focused on three pillars or three drivers. These drivers can be highlighted as:

1. Reducing waste in the system and driving efficiency
2. Cost savings
3. Employee satisfaction and improved customer feedback

The proposed ERP implementation is one on the lines of above drivers. It is suggested that Anchor Foods – New Zealand should get the ERP implemented from an external vendor that can manage the challenges that rise from ERP implementation (Stadtler, 2015). The integration of both systems (ERP and Supply Chain Management Systems) may pose some unique challenges for Anchor Foods – New Zealand. It is in the company’s best interest to ensure that the leaders and your staff fully understand the role of ERP within the SCM process. It is important that the company must understand the risk and benefits before integrating its ERP system and SCM system (Qrunfleh & Tarafdar, 2015). The targeted or the proposed high-level view of the systems at Anchor Foods – New Zealand can be shown as:

This stage can be achieved only when the leaders of Anchor Foods – New Zealand have a strong implementation plan in place. The implementation plan to achieve this target state would have four different phases. These four phases and the corresponding objective in the phase can be discussed as:

Implementation Phase	Objective
Phase 1: Assessment Phase	Assess the current stage of supply chain of warehousing business
Phase 1: Framework Phase	Develop the framework to bring the change in the organization (Leuschner & Rogers, 2013)
Phase 3: Implementation Phase	Bring the change in the organization
Phase 3: Continuous Improvement	Focus on further optimization of integrated ERP system with SCM system (Whitelock, 2013)

It is suggested that the company should have an implementation team that would do the initial assessment (Zeng & Chen, 2014). This team should have the people or representation from different stakeholders group.

The above implementation plan would be successful only when the company has the required resources to complete the work. The company would need both financial and non-financial resources to complete the work (Surie & Reuter, 2015). The major non-financial resource would be the support of employees. It is important that the investors of the company should be ready to absorb the cost for a long-term profit. The role of cost in the purchase decision or the change management for Anchor Foods – New Zealand can be discussed as:

Criteria to select the suppliers

It would be correct to say that the successful implementation of the above plan would depends a lot on available funds. Therefore, it is important that the company should take investors into confidence. The investors can be taken into confidence only when they can see the Return on their Investment. As a part of integration of ERP in the existing supply chain of warehouses, the company would feel and increase in both operational cost and capital cost. The increase in the capital expenses and operational expenses of Anchor Foods – New Zealand can be discussed as:

The capital cost of the capital expenses is the one that are done in raising the equipment, devices, etc. This cost is dedicated towards the infrastructure or the support cost. In this case, the capital cost would include the investment to be made on ERP systems like the procurement of new computer systems, licensing costs, etc. It is important that the effort should be taken to optimize the operational cost (Adebanjo & Laosiri, 2016).

The operational cost refers to the recurrent cost. In this case, the operational cost would be the cost involved in training and development programs, change management cost, etc. It is important that the effort should be taken to keep the operational cost low (Schonsleben, 2016).

Simply defined, Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. It is a management accounting concept that can be used in full cost accounting or even ecological economics where it includes social costs. The total cost of ownership of this project should be with the leaders of Anchor Foods – New Zealand. It is suggested that the company should have an implementation team that would do the initial assessment (Caprar & Devinney, 2015). This team should have the people or representation from different stakeholders group. In the end, this is the team that would have total cost of ownership.

One of the objectives for organization is to reduce the cost of production. However, it can have some repercussions. For example, the quality of products could be compromised if cost of production has to be reduced significantly. Therefore, it is important that a balance should be created. This balance could be created with the supply chain management and logistics management strategies like lean management, six sigma, etc.

The company has number of warehouses spread across the globe. For Anchor Foods – New Zealand, it is important to have strong control policies and measures in place. The warehouse division of the company does not have any items for stock as such that has to be maintained. However, the utilization of different warehouse has to be effective (Son & Lee, 2015). The control policies that the company can use can be discussed as:

It is important that the company should use control policies to manage both its internal and external environment. One of the core control policies for Anchor Foods – New Zealand is to use benchmarking. With the use of benchmarking, the company would be able to use the control mechanism as compared to the industry best players (Wisner & Tan, 2015). The company can benchmark its operations against the established players. At the same time, it is critical that the company should be quick enough to change its organizational culture to suit the external policies.

Source of information to evaluate the suppliers

Another key control policy for Anchor Foods – New Zealand would be to establish the SMART objectives with respect to the supply chain of warehousing. The use of SMART objectives would enable the company to have short term and long-term objectives in place. For example, the company can have the SMART goal to reduce its IT support cost by 5% in next year (Zander & McDougall-Covin, 2015). With this objective in place, the company can have specific control mechanism to address this objective.

One of the objectives of control policies would be inventory management. The control policy or procedure that should be followed to management inventory should be Just In Time System. With the JIT system, the company would be able to manage the inventory as the goods would be procured and supplied on real time basis.

Conclusion 

The above paper discusses the supply chain management of Anchor Foods – New Zealand. With the above discussion, it can be said that the company is doing good. It is important that the company should continue to operate with the same strategies in place. The paper addresses the need of supply chain optimization for Anchor Foods – New Zealand. The existing supply chain of Anchor Foods – New Zealand is strong; however, there exist a scope of improvement. One of the scopes of optimization in the existing supply chain flow is the use of Information Systems like ERP systems. With the above discussion, it can be said that the company should try to integrate its Information System with its Supply Chain Management processes. It would help the company to improve the cost in ling-term (Kocaoglu & Gulsun, 2013). The integration of ERP with SCM may need some initial investment. However, it is expected that it would be beneficial in long term. It is important that the leaders of the company should have a strong watch on internal and external parameters to ensure that the agility of its supply chain is maintained. The progression towards the targeted state would certainly bring subtle change in the organization. Therefore, it is important that the management of Anchor Foods – New Zealand should be willing to accept the change. The company must use a change management model to manage the change. For example, the company can use the Lewin change management model or the Kotter change management model to manage the change in the organization (Brannen & Piekkari, 2014). With the above discussion, it can be said that the organization should be flexible and should realize the dynamic nature of the supply chain. Today, the successful organizations in logistics and warehousing business are the one that can change their operations with any change in the market conditions. The integration with technology and Information Systems like ERP systems would help the organization to remain competitive in the market. Therefore, it is suggested that Anchor Foods – New Zealand should look for end-to-end supply chain management solution with the base as the underlying ERP system.

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