Supply chain assignment – Nina Van Diest chocolatier
Introduction
Nina Van Diest is a chocolatier who use to work for one of the largest food production companies in Europe. She was based in the food development centre in Paris working for MyscoBee Corporation for over twenty years. Nina Van Diest had an idea to produce a vegan chocolate bar in the 1990’s, but the organization management could not see the potential for this type of product.
After several years of requesting funds to develop this vegan chocolate bar within MyscoBee Corporation, she left to start her own business and personnel funded the research and development.
After five years of working in her small kitchen, she finally managed to develop the vegan chocolate bar and sold to near by shops in her home town of Bruges in Belgium. Sales were slowly increasing and she managed to purchase a small scale manufacturing facility in a farm out side Bruges and increase her production capacity. She has managed to purchase some used manufacturing equipment, but most of it’s quite old and at times breaks down.
Media exposure
During filming of a German TV series Nina Van Diest vegan chocolate bar appeared in one of the episodes and requests for the products have now dramatically increased across Europe and the global. One of the TV directors has offered to produce a mini video of the product which can be used to advertise and marketing her product on social media.
Web and social media has been highly positive for product, with requests coming from all around the world. Companies have approached her on the ability to stock the product and even manufacture the product in their local country, under a suitable licence agreement. Nina Van Diest is against out-sourcing has she is worried about the quality of the product been manufactured and impact to her brand image.
Product demand
Nina Van Diest friend has now come on board to help out with the sales and marketing, but the requests are over welling from new customers across the global. The micro manufacturing faculty cannot cope with the sales and new faculty & equipment will take months to purchase, set up and starting operating.
Venture capital funding
Nina Van Diest has been approached by a Californian who would like to fund the expansion of the and take a part ownership of business. The problem they face is the need to develop a suitable supply chain strategy to manage the growth of the company, as this will hold back the company expansion and investment.
Product overview
In the past most of the ingredients have been purchased from a local whole seller, but they have limited stock and several times some products have been out of stock. This has caused a complete stoppage of the production line and staff having to drive miles to find more ingredients.
The team would like to change the ordering process to ensure they have at minimum of one weeks stock in storage, but the manufacturing is at times very random and there is no stock control process in place. Normally once an ingredient has ran out they will re-order, but no on checks the other amounts of ingredients.
The company has invested into the branding of the products, as luxury goods and use high glossy paper for the packaging of the product. The type of paper has to be imported from Italy, which can take up to six weeks and the printing company need a minimum of four weeks to print and produce the sleeve. This has meant Nina Van Diest has now purchased 100,000 selves in one order, so feels there is enough to manage product for several months.
At this time the company has six members of staff and Nina Van Diest who runs the company, takes orders, works on the production line with the other members of staff. All the team are very friendly and support production in every role, some days they are packing the product and other working on the production line. The team some times are frustrated as large orders are some times left and then the team have to work overtime to ensure the orders can be delivered in time. One of the team has suggestion using a CRM system, so they have better overview of orders and delivery.
The production equipment which was purchase is quite old and regulars breaks down, one several occurrences a complete vat of chocolate had to be thrown away as the convey motor failed and the staff had to manually move chocolate down the production line. Sadly due to this manual operation, one of the staff fell off a ladder and hurt her back, she was off work for eight weeks.
Technology
A recent conference and exhibition have demonstrated the benefits of Industry 4.0 within the food production and supply chain. One interesting area of Industry 4.0 is how direct sales can be used to manage the complete supply chain, production and logistics operation. This would be a massive change to the company, but this could help to improve efficiency as the company starts to increase in size and global customers.
Customer orders
As the company has evolved the ordering process can be from any source phone calls, e-mails, on-line shop and postal requests. As new products come on to the markets there is normally a sudden rush from customers, so the existing products production is put on hold and then the team need to work overtime or weekends to ensure delivery of products.
The requests are now increasing in size and the production, team and ordering system cannot cope with the quantities of potential orders. Currently the production faculty capacity is 100,000 per month, but due to equipment failures, poor ordering of stock etc this is down to 80,000 per month.
With the recent requests the team have forecasted the future sales orders for they global customer base, see Appendix A for the future forecast. Nina Van Diest will always admit she is no expert on supply chains and her focus is on developing new products and she very worried if they can meet these future orders. The aim is to have a safety stock of two weeks, just to ensure if orders do increase they can meet these deliveries.
In the past global orders have been sent via DHL, sadly at times these have been late so they were air frighted at a very high cost which meant a lost in profits. There is a strong network of partners across the global, who would be willing to hold stock more local in each country. Nina Van Diest is concerned about holding stock local to customers, as this stock is sitting in a warehouse and not been sold it’s a dead money. But, as orders have to be flown due to lack production planning she is losing money with this method of shipping.
Product Sustainability
Nina Van Diest wants to ensure the company and products have zero impact on the environment, one of her current suppliers produce the plastic tray using non-recycled plastic material. As the product range has expanded, so has the complexity of purchasing the ingredients, packaging, shipping material, cardboard boxes. The current suppliers struggle to provide information on the original sources of the products.
The company are investigating the sustainability of all the suppliers, the whole seller cannot provide any traceability to the end suppliers. Nina Van Diest is investigating using Fairtrade suppliers or evenpurchasing the Coco bean directly framers in developing countries, but this would add complexity and longer lead time to the supply chain.
One idea is using blockchain technology to completely track the products from the original source and it would first time any chocolate bar has used this type of technology to ensure it’s completely sustainable.
Summary
The company which Nina Van Diest has created is expanding very quickly and overall the production and supply chain has a number of problems and issues. As the company expands in the future, Nina Van Diest has to decide how she wants the company to be organized and create a robust supply chain. As there are willing financial investors into the company, she needs to prove she has a robust plan detailing her supply chain strategy.
Consultancy report
Your role is to define a suitable supply chain strategy for Nina Van Diest, considering some of these items but are free to expand on your own ideas and solutions
1. Supply chain model/framework
2. Benefits and disadvantages of outsourcing the production, supply chain, logistics
3. Suitable forecast and modelling of sales and impact to downstream suppliers
4. Environmental and sustainably across the complete supply chain (cradle to grave)
5. Suitable supply chain risk management
6. Use of technology to aid the company
7. Benefits and disadvantages Agile Vs lean Vs Hybrid supply chain strategy
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