Final Deliverable

(Fall10) (Final Deliverable) (08Fall)

(Caribbean Supply Chain)

(CU Student Team:Amanda BussAmanda.Buss@Colorado.edu720.352.4000Janaki DouillardJanaki.Douillard@Colorado.edu303.718.7052Mileta Gebre-MichaelMiletaGM@Gmail.com303.931.1094Ellen HammockEllen.Hammock@Colorado.edu620.341.8368Vail Resorts Client Representatives:Kevin SnyderKSnyder@VailResorts.com303.877.7712Aaron RubinsteinARubinstein@VailResorts.com720.218.2953)

Table of ContentsExecutive Summary2Presentation3Legal & Regulatory Environment19Summary19Research Document20Interviews29As-Is Supply Chain35Summary35Research Document36Interviews39Competitor Analysis45Summary45Research Document46Interviews53SWOT Analysis55Cost-Benefit Analysis57Recommendations58Roadmap58Supporting Research61Lessons Learned68Appendix71Appendices71Meeting Agendas74Meeting Minutes86Status Reports102Weekly Task Lists128Email Communication136First Deliverable184

Executive Summary

Research into the current food and beverage supply chain at The Landings St. Lucia, in combination with the legal and regulatory environment of the region, was largely successful. However, lack of visibility between the home office and the island proved problematic in all areas of the project. The Landings St. Lucia is a RockResort, Vail Resort’s elite resort line. The Landings is unique in that it is managed by Vail Resort, not fully owned. Lack of a streamlined food and beverage supply chain at this site can be largely attributed to this fact.

The Landings St. Lucia has extremely volatile seasonality that hugely impacts standardizing forecasts, as well as formalizing a logistics processes to optimize the supply chain. Lack of visibility is a byproduct of the absence of formal purchasing and logistics processes and inadequate communication. The purchasing process is inefficient due to the want of a well-developed forecast and adequate market research. Forecasting would include an understanding of food and beverage demands based on seasonality, storage and occupancy at the resort.

Our research revealed that international logistics are legally complex and time sensitive, especially for food products. A reliable freight forwarder is vital in maintaining the quality of food shipments, and a knowledgeable customs broker is key in providing the correct documentation to move the products seamlessly through customs. Research also revealed that The Landings only sources goods locally, due to volume constraints and shipping costs. Though our analysis revealed that The Landings’ current use of local vendors is the most inexpensive means of procurement at this time, more research on smaller freight forwarders needs to be conducted to examine their cost efficiency. The prospects of building on site storage, and the introduction of a multi-stop ocean route could also prove cost-effective once more properties are in operation in the region.

Presentation

Slide 1

Amanda:

I want everyone to imagine yourself on your dream island vacation. You’re relaxing on the beach, pina colada in hand, without a care in the WORLD! You’re indulging yourself in the rich local culture and the last thing you’re worried about is where your food is coming from. That’s what we do.

Slide 2

Amanda:

Over the past semester we have been working with VailResorts on a food and beverage supply chain project servicing The Landings St. Lucia.

Introductions

(In order)

(Slide 3)

Amanda:

To start out, we will give you a brief breakdown of this presentation. First we will present an overview of the project purpose. Then provide background that will put the project in perspective, will detail the big picture of our issues, and how these issues are interrelated in the dominos effect. Then we will present our findings that will conclude the roadmap to successfully implementing an efficient food and beverage supply chain.

Slide 4

Amanda:

We were tasked to research and document the F&B supply chain at St Lucia, compare sourcing products on or off island, and gain an understanding of the legal and regulatory environment for importing to this region.

However this process was impeded by one giant roadblock– LACK of visibility, like a lighthouse in the fog.

Slide 5

Amanda:

Some background on The Landings is that it is managed RockResorts, VailResorts elite 5 star line. A managed property is different from an owned property in that VailResorts is only responsible for booking occupants, maintaining the facility, and providing amenities.

Another unique characteristic of The Landings is subject to a drastic difference in occupancy between its peak and low seasons, due to hurricane seasons and other climate factors. The fact that St. Lucia is such a remote location with developing infrastructure, makes communication very challenging at times. Detrimental weather can also affect communication, much of our research of the as-is supply chain was delayed for weeks when Hurricane Tomas hit and our island contacts stopped responding to us.

Slide 6

Mileta:

Communication, purchasing, legal/regulatory constraints, and logistics constitute the principal elements of any supply chain. Without all of these components in sync, the supply chain doesn’t function and directly affects the customer’s experience of a lifetime.

Each of these dominos will be elaborated on in detail.

Slide 7

Mileta:

FEAR NOT . . . Through the fog, we glimpsed the 1st ray of light.

We found that as an industry average for property managed sites, communication channels are strained. We believe that VailResorts can exceed the norm by focusing on communication as the initial step in a standardized supply chain.

The strained communication from Hurricane Tomas added more run around in finding figures for market basket reports, volume breakdown by each product category, and order frequency.

These crucial elements are needed to compile a cost benefit analysis as well as creating a forecasting method to assist in streamlining the supply chain.

Slide 8

Mileta:

Forecasting is the first step in planning a streamlined process of purchasing products. With being able to predict the quantity and quality of desired products, the resort can go into researching which vendors have the lowest costs for the highest quality products. Once these are determined, negotiations can be made between vendors.

Slide 9

Mileta:

KEY STASTICS

Meat: 20-40% of chicken and pork products must be sourced on-island using local vendors

Seafood: closed season for lobsters

LT 30: all cattle used for beef production cannot be more than 30 months of age, and imported cuts must be boneless

Produce: citrus fruits cannot be imported

Misc: No honey or Coca-Cola due bottling plant on-island

Slide 10

Ellen:

The next step in building any supply chain is to standardize the logistics process. To this end, we investigated where The Landings currently sources its goods and discovered that they do not import any of their food and beverage products at this time.

While local venders are the least complicated avenue for procurement, we wanted to investigate their cost efficiency. We explored two options for importing goods and leveraging their corporate partnerships with US Foodservice and FedEx.

The first would be to ship commodities in ocean containers.

The second is to import product via air.

Slide 11

Ellen:

Our investigation into the local vendors revealed that after meeting quotas, they were importing the majority of their goods from the US, and passing on the costs of transportation and customs fees to their clients. This averaged a 30% markup on the cost of goods.

Slide 12

Ellen:

Delving into importation, we researched utilizing ocean containers for the shipment of dry goods, operating supplies, and all other goods that do not require refrigerated packaging. However, this option had one major flaw…volume.

We analyzed 9 months of The Landings highest volume orders and discovered they can only fill 25% of a 40-foot ocean container by weight. The Landings also lacks the on site storage necessary to make this a realistic option.

Moreover, Vail Resort’s current shipping partners- CH Robinson and FedEx- do not fully service St. Lucia by sea at this time.

However, more research on smaller local freight forwarders that would be willing to ship less-than container loads needs to be done before ruling this option out entirely.

Slide 13

Ellen:

The second option- using FedEx Express- is illustrated here. We investigated air shipment due to The Landings low volume orders. We compared the cost of goods from local vendors (CLICK) to those sourcing internationally from US Foodservice and FedEx Express (CLICK). As you can see, the cost of importation is substantially greater than sourcing locally, largely due to shipping costs.

Slide 14

Janaki:

This chart depicts the total costs of sourcing goods on island, via ocean, and via air.

These numbers were taken from the volume purchased over a one year period for their most common dry goods purchases at the Landings.

This shows local vendors are only marginally cheaper than importing via ocean container, but we’re looking at a full year’s volume which is not realistic because current storage units can’t even hold a month’s supply of dry goods. Our competitor analysis revealed that Sandal’s resorts in the Caribbean aim to keep at least 30 days worth of dry food goods on hand at all times.

There is the possibility that a local freight forwarder would be willing to provide pricing for partial container loads. This would be the most cost efficient option if available.  But until that research is completed we can only suggest continuing to purchase through local vendors.

Slide 15

Janaki: In order to ensure clear skies and a sustainable supply chain implementation, Vail should focus on these key areas which compose our roadmap for supply chain success:

· Communication- Create something like a SharePoint that will allow cross-functional information sharing providing necessary departments with figures needed to develop a forecasting methodology

· Purchasing- This standard forecasting serves as the groundwork in matching supply with demand across the seasonality experienced at the Landings. This will limit weekly purchasing and emergency trips to the local grocery. Forecasting allows us to find the best quality products at the lowest overall price.

· Legal/Regulatory-There are many restrictions in place that aim to support the local economy of St. Lucia and if importation becomes feasible it is important that we hire a customs broker to navigate these regulations.

· Logistics- Research needs to be done on local freight forwarders to determine if they may be able to ship less than full container loads. This could make importing the most cost effective method.

Together if all these components are working in harmony we will be able to provide the experience of a lifetime to our customer’s. 

Slide 16

Legal & Regulatory Environment

Summary

Understanding the legal and regulatory environment surrounding the importation of goods into protectionist countries is a tedious and time-consuming exercise. Much of the duty and tax implications are specific to nearly every individual commodity eligible for import. It is critical to take advantage of all services provided by a trade network, specifically customs’ brokerage, in order to smooth over the lack of transparency in the regulatory environment. A custom’s broker is well versed in legal jargon and can efficiently provide estimates for the cost implications of import license fees, custom’s fees, duties, and taxes. Documentation is the major source of bottlenecks in importation, and ensuring that all required documents are filled out accurately is vital to implementing a sustainable supply chain.

Despite the fact that specific duty and tax rates are not readily available, many general restrictions were unveiled. St. Lucia is an extremely protectionist country, which only grants clearance to imported goods if the quantity produced on island is not sufficient to meet demand. A consultation with a custom’s broker with experience in the Caribbean, or extensive research and communication with on-island procurement contacts, can guarantee that these restrictions are known before a purchase order is even drafted.

In regard to freight forwarding, there is only one shipping lane to St. Lucia, making transport by sea fairly homogenous in timing and price. The cost of shipping by air will vary depending on corporate partnerships with freight forwarders, and may require coordination with the food distributor for special packaging.

Overall, developing a strong relationship with a trade network will be critical to the importation of the best product at lowest price, and ensuring adequate product is always on hand at The Landings St. Lucia.

Research Document

I. Regulatory/Economic Background

A. Population is about 140,000

B. Independence 1979

C. Land: 616 sq km

1. Ports and terminals: Castries, Cul-de-Sac, Vieux-Fort, Soufriere Bay

a. Natural Harbor: Castries

2. Agricultural island—tropical commodity crops

3. Natural Resources: forests, sandy beaches, minerals (pumice), mineral springs, geothermal potential

a. Use of land: arable land & permanent Crops = 30%

D. Economy

1. Tourism Main Source of foreign exchange

a. Unemployment high

b. Medium of exchange: East Caribbean Dollar

c. Exchange Rate: $1 USD = $2.7169 ECD (as of 10/4/2010)

E. Mains water: chlorinated- may cause mild abdominal upsets (bottled water advised for first few weeks of stay)

F. Weather Patterns

1. St. Lucia is on the Atlantic hurricane belt. Hurricane season runs from June to November

2. High tourist season runs from Mid-December to Mid- April

a. Tourism can peak outside of high season for various holidays (e.g. Thanksgiving)

II. Products Imported: 2008

[footnoteRef:-1] [-1: CARICOM. CC Regional Statistics Caribbean Community Secretariat. Oct 12, 2010. http://www.caricomstats.org/Files/Databases/QUARTERLY%20TRADE/20081stQtr/SaintLucia.htm.

]

A. 85% from Brazil

B. 5-7% from US

C. 3-5% other Caribbean Countries

III. Islands of Opportunity

A. Caribbean Region [footnoteRef:0] [0: “Islands of Opportunity.” U.S. CommercialService. October 5, 2010. http://www.buyusa.gov/caribbean/en/9.html.]

1. 3rd Largest Market for US Exports

2. Caribbean Basin initiative—trade programs to facilitate economic development and export diversification

3. Caribbean Community (CARICOM)- deep regional integration through harmonized tariffs and duty free trade

4. Assistance

a. Maria Elena Portorreal Senior Commercial Specialist Phone: 809-227-2121 ext. 225 E-mail: maria.portorreal@N0SPAM.trade.gov

b. Kent Hippolyte

Consulate General of Saint Lucia

3700 Cocoplum Circle

MIAMI, FL 33063

Phone: (305) 586-3076

Fax: (954) 977-7660

IV. Import Requirements[footnoteRef:1] [1: “Regulations and Policies.” US Department of Agriculture. October 4, 2010. http://www.fsis.usda.gov/regulations/st_lucia_requirements/index.asp.

]

A. Eligible Product

1. Fresh/frozen poultry and poultry products, except as restricted in the Ineligible Product section below.

2. Boneless beef and boneless beef products derived from cattle less than 30 months of age produced under an approved AMS Export Verification (EV) Less Than 30 (LT30) months of age program. **NOTE: See section F Below**

i. Information about the program for St. Lucia and a list of LT30 approved establishments can be obtained from the AMS (Agricultural Marketing Service) Web site.

ii. If FSIS (Food Safety Inspection Service) inspection personnel become aware of concerns that an AMS approved LT30 establishment is not properly executing its Quality Control Program, export certification should not be issued for the product in question and AMS should be notified at ARCBranch@usda.gov. Inspection personnel should include their immediate supervisor on messages to AMS. The following information should be included in the message:

· Establishment name, address, and establishment number.

· Product type, product code, and quantity of product.

· Date of production, lot number, and shift.

· Date and nature of observation.

· Name of country product is intended for export.

· Export certificate number (if applicable).

· Any other information to verify claim.

· Name of inspection official.

3. Veal and veal products are not subject to the LT30 program. Fresh/frozen pork and pork products are eligible effective July 8, 2009.

4. All federally inspected establishments are eligible to export to St. Lucia. Beef meat must originate from AMS EV approved establishments.

B. Ineligible Product

1. Poultry and poultry products raised, processed, or stored in states where low pathogenic or high pathogenic Avian Influenza has been reported. 

2. Beef offal products.

C. Documentation Requirements

1. St. Lucia Document Requirements

a. First- send list of desired items for import to Ministry of Agriculture in order to receive import license

b. Invoices

c. Documents of Title (Airway Bill/ Bill of Lading)

d. Shipper’s Export Declaration

e. Packing Lists

f. Certificates of origin (For goods manufactured in another Caricom country)

g. Phytosanitary certificate

h. Bill of Sight (in the absence of proper Invoices)

i. Determine tariff rate & fees before exporting

2. Certification of fresh or frozen poultry and poultry products - Obtain FSIS Form 9060-5 (05/06/1999), Meat and Poultry Export Certificate of Wholesomeness.  The following statement must be typed in the "Remarks" section of FSIS Form 9060-5 or on USDA letterhead:

a. "Poultry, poultry meat products, and processed viscera of poultry, originated from birds which were raised, slaughtered, processed, and stored in States where no highly pathogenic avian influenza has been reported or in establishments in which there has been no evidence of notifiable low pathogenic avian influenza in the 21 days prior to slaughter, as defined by the OIE."

3. For boneless beef and boneless beef products. In completing the FSIS Form 9060-6, Application for Export, the following statement must be included: "The product meets EV requirements for St. Lucia." Obtain FSIS Form 9060-5, Meat and Poultry Export Certificate of Wholesomeness. The following statements must be included in the "Remarks" section or on a FSIS Letterhead Certificate:

a. "The United States meets or exceeds the BSE guidance of the OIE pertaining to meat and meat products."

b. "The United States has prohibited the feeding of ruminants with ruminant origin meat and bone meal (MBM) and greaves since 1997, and this prohibition has been effectively enforced."

c. "The meat and meat products should be deboned skeletal muscle (boneless beef) from cattle less than 30 months of age, which were not subjected to a stunning process, prior to slaughter, with a device injecting compressed air or gas into the cranial cavity, or to a pithing process, and which were subject to ante-mortem and post-mortem inspections and were not suspect or confirmed BSE cases."

d. "The meat and meat products were not derived from or contaminated with mechanically separated meat (MSM) from the skull or vertebral column, or the following specified risk materials: tissue from the brain, eye, spinal cord, trigeminal ganglia, and dorsal root ganglia from cattle 30 months of age or older, and the tonsils and distal ileum of the small intestine of any cattle, regardless of age."

4. Please note the title of the letterhead certificate has been modified to include "veal" because shipments of veal have been detained due to the fact that it was not included in the title of the letterhead certificate.

5. All shipments of fresh/frozen pork and pork products must be accompanied by FSIS Form 9060-5, Meat and Poultry Export Certificate of Wholesomeness.

D. Documentation Procedure

A. Under the Customs Control and Management Act No. 23 of 1990 persons importing goods by air are required to submit a customs entry within seven (7) days of importation of those goods, by sea this document must be submitted within fourteen (14) days of importation. Exempt from the above are fresh fish (including shell fish) caught by St. Lucia fishermen and imported by them in their vessel, passenger’s accompanied baggage. St. Lucia Customs and Excise Department reserves the right to refuse to accept any entry of goods if they are dissatisfied that those goods were imported at the time of presentation of the customs entry. Where an error is found on the submitted entry an importer may be granted a period of ten (10) days to account for it. If after final submission the department is still dissatisfied with the entry the person will become liable to penalties under the law.

E. LT30 Program for Beef

1. Requires that any animals involved in the meat production process are under 30 months of age at time of slaughter (in order to protect against disease)

a. Limited vendors process meat according to these standards and suitable options may only be marketed on specific days of the week

b. US Foodservice may not have product that upholds these standards and will have to utilize outside vendors

i. Burger orders under these restrictions require a 3 week lead period to find a suitable vendor and place the order

V. Absolute Constraints[footnoteRef:2] [2: “Help With Trade Problems.” Export.gov. October 4, 2010. http://export.gov/tradeproblems.

]

A. Customs

1. Most common customs-related problems:

a. Misclassification

b. Duties Higher than anticipated

c. Customs Office wont clear the shipment to your buyer/importer

d. Customs office invoking health, sanitary, or safety issues

e. Labeling issues involving a certificate of origin, weight, ingredients, marks, etc.

f. Inadequate documentation provided by the exporter

g. Issues involving the import or packing regulations of the receiving country

2. Harmonized system and schedule B numbers

a. Harmonized System (HS) numbers are used to classify products for customs purposes. By international agreement, most countries recognize the same first 6 "harmonized" digits.

b. Schedule B System- classify exported products in the US

i. Same as HS numbers as for the importing country’s classification code

ii. Must know both

· Determine applicable import tariff rates, preferential tariff under Free Trade Agreement

· Schedule B needed to complete Shipper’s Export Declaration

· HS # needed when shipping documents

iii. U.S. Census Bureau Foreign Trade Division

· Specialist in Non-Durable Goods  301-763-3484      

B. Tariffs

1. A tariff (or duty, the words are used interchangeably) is a tax levied by governments on the value of imported products. Sales and state taxes, and in some instances customs fees, will often be levied as well. The tariff is assessed at the time of importation along with any other applicable taxes/fees. 

a. To get a duty rate, one needs to have the complete product number (HS number and country-specific suffix) used by the importing country. Since this is sometimes difficult, companies can use the Schedule B number to approximate.

C. Import Licenses[footnoteRef:3] [3: Clement, William. Corporate Contact- FedEX. Email correspondence. November 24, 2010.

]

1. Import licenses will be issued for meat on the following conditions:

a. USDA Meat & Poultry certificate of Wholesomeness required

b. Bone-in beef not allowed into St. Lucia (only boneless beef allowed)

c. Poultry and Pork allowed upon proof that a certain percentage was sourced locally

d. Invoices must be supplied 5 days and USDA certificates 3 days prior to shipment arrival into St. Lucia

2. Licenses cost EC$55.00 (USD$20.24) per application- which has to be paid directly to vendor broker by shipper or consignee

D. Seasonality of Fish

a. Lobster is the only seafood with a closed season

E. Protectionist Ideals[footnoteRef:4] - clearance to import only granted if quantity produced on island is not sufficient to meet demand [4: Vitalis, Eustace Chinie. Agricultural Economist. Phone interview. November 17, 2010.

]

1. No importation of citrus fruit

2. No importation of honey

3. Restrictions on importation of Beer and Coca-Cola products because there are bottling plants on the island

4. No restrictions on importation of dairy, dry goods or operating supplies

5. Meat

a. Beef

i. Only boneless beef

ii. Majority of beef comes from United States

iii. Documentation of age of cattle and location of slaughter required

b. Chicken

i. Must purchase 20-40% from local suppliers

F. Typically local wholesalers provide entire chickens rather than cuts, which is less desirable for a resort

c. Pork

i. Use local wholesalers to supply cuts that are available on island

d. Strict restrictions exist because St. Lucia does not have the infrastructure to control outbreak if meat is contaminated.

VI. Flexible Constraints

A. Freight Forwarder: An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. Whether an exporter is large or small, the weight of the cargo light or heavy, a freight forwarder can take care of cargo from “dock to door,” thus freeing the exporter from dealing with many logistics-related details

1. Competitive Advantages

a. Current supply avenues to desired destination

b. Shipment date guarantees

c. High safety standards

d. Volume Pricing

B. Customs Broker: acts as the importer’s agent and ensures that proper duties, taxes, and documents are filed to satisfy legal requirements to enter goods into the sovereign stream of commerce.

1. Importer will sign a power of attorney that gives a customs broker the right to speak for them in legal matters and in the customs clearing process.

2. If the custom’s broker should commit a fault and such that further imports are prohibited into a specific country, the ban falls on the importer and working through a new broker will not nullify the ban

3. Competitive Advantages- alleviates many burdens associated with clearing customs through their:

a. Knowledge of document requirements

b. Capability to file and send entry documents electronically

c. Knowledge of duties and taxes across countries

d. Network of contacts

Note: Many Freight Forwarders are associated with a customs brokerage department under the same corporate umbrella, the combination of services provided forms a trade network. Both CH Robinson and FedEX provide full trade network service.

VII. Safety Procedures

A. CH Robinson[footnoteRef:5] [5: “Temp Controlled.” C.H. Robinson Worldwide, Inc. October 21, 2010. http://www.chrobinson.com/en/us/Freight%2DServices/Over%2DThe%2DRoad/Temp%2DControlled.

]

1. Temperature Control

a. More food and beverage experience than any other provider

b. Diverse range of customer relationships offers knowledge that can be applied directly to each individual business

c. A single point of contact for all temperature controlled truckload and LTL shipments

d. Full visibility to track and trace freight on their customer website, CHRWonline

e. 24/7 personal commitment to your freight

f. Access to one of the largest pools of temperature controlled capacity in North America and Europe, including the aggregated equipment of small- to medium-sized refrigerated carriers, so they can quickly secure the equipment you need

2. Because CH Robinson started out as a produce company, and 50-60% of there revenue is still derived from the transport of produce, they hold safety as an utmost priority to ensure that superior food quality will be maintained.

B. FedEX upholds government and USDA standards.

Interviews

The following are interviews that pertained most directly to the legal and regulatory environment of St. Lucia. They are listed in order from earliest to latest since the timeline of the project helps explain the progression of questions asked to each interviewee.

Interview - FedEX (Bill Clement)

Date & Time:

10/22/2010 3:00pm

Attendees:

Amanda Buss & Janaki Douillard

Questions

Answers

1.

What is the difference between customs broker’s service and freight forwarding?

Sometimes they are one in the same. FedEx is a closed loop system so they are not covered under separate authorities. This closed loop allows for expedited service. A Freight Forwarder is a 3rd Party that you signed a power of attorney with and then they are contacted to assist with warehousing and distribution.

2.

Do you pick up product at distribution location or require drop off?

Determined when customer is set up and contract signed

3.

Do you currently have a distribution channel to St. Lucia? Air and Sea?

Yes, by air and sea

4.

When do you take ownership of products being shipped?

Determined when customer is set up and contract signed

5.

What container size increments do you provide? At what price?

They provide 20’ or 40’ containers. Extended High Q. We need to determine if we can fill a container by ourselves. Also need to consider the cost tradeoff between frozen meat transport and storage as opposed to fresh overnight meat delivery with less storage requirements. Also provide refer containers, but much more expensive.

6.

How does FedEx stand out among the rest with regards to safety and maintaining the condition of perishable items?

It is all controlled, and they are licensed and regulated. FedEx’s standards will be uphold or exceed the government requirements. Bill Clement is going to provide us with a list of the food products they are capable of transporting to St. Lucia, both by sea and air.

7.

Have you had experiences with rejected products? Which products?

Frozen meat because the paperwork was wrong so then it would take 3-4 days and the meat could spoil. This is usually due to incorrect documentation. Rejected products are the responsibility of the shippers and/or recipients, as they are the ones responsible for provided thorough and accurate paperwork.

8.

Please provide any knowledge specific to St. Lucia tariffs for the above categories

a. Ken, who is the local St. Lucia contact, would need specific commodities to give us tariff information

b. Hotels are sometimes entitled to duty-free concessions, or they could be taxed more heavily.

c. The tariffs are discovered as a part of the broker relationship since they sign the power of attorney they are required to keep you informed of the changed in the entire legal/regulatory environment. When they sign the power of attorney they have more of a lawyer or retainer relationship with the client.

9.

How do foreign tax structures affect costs of importing goods?

Tax is generated by sovereign country and determined as a percentage of the declared value of a product. There are differences in formal entry and informal entry. There will be an import tax on most food items and if there are any auxiliary charges they will be line items. There may be a value added tax.

10.

What background information and resources do you use when making the cost estimates related to regulatory costs?

FedEx trade networks keep clients updated with changes in tax rates and tariffs of sovereign country, utilizing broad network of people domestically and across nations.

11.

What common bottlenecks occur in the customs process?

Sometimes there is are a series of agencies that need to check the products and one must happen before the other which lengthens the time in customs. Seafood.com has listings of helpful information. All documentation must be correct and there must be an original copy accompanying the shipment. As long as paperwork is correct, items should clear within 1 day.

12.

Since the USDA inspects products before they are shipped, does this expedite the process of clearing foreign customs (St. Lucia)?

Clearing foreign customs is entirely dependent on the documentation that is with the shipments, all of the legal matters must be complete before the process can begin. This is the shipper’s responsibility and they must be sure to have accurate Health Certificates and Sanitation Certificates, etc. Bill Clement told us that he will provide us with the information on which certificates are required for St. Lucia

13.

Do you provide tracking capabilities?

The record will indicate the date the container was put on the vessel, an expected delivery date, and pick up again once the container reaches receiving port. There is no visibility once the container has set out on the ocean. FedEx only guarantees shipment within a certain timeframe for express air shipments.

14.

In the past, have you coordinated leaving a container at a location for a period of time so your customer can use it as a type of temporary storage in high seasons? How much might something like that cost?

They will need to look at zoning regulations to see if St. Lucia will allow on-site containers. This set-up has a daily, weekly, or monthly pricing that Bill Clement will email to us.

Interview - CH Robinson (Brandon Workman and James Dockery-Johnson)

Date & Time:

10/28/2010 3:00pm

Attendees:

Amanda Buss

Questions

Answers

1.

What is the difference between customs broker’s service and freight forwarding?

a. Freight Forwarder is a third party that arranges transportation directly with asset-based providers

b. A customs Broker acts as the importers agent, requiring a signed power of attorney, and ensures that proper duties, tariffs and documents are filled to satisfy importers legal requirements to enter goods into the stream of commerce

2.

Which do you provide?

Both, would probably take on more of an advisory role for St. Lucia

3.

Do you currently have a distribution channel to St. Lucia? Air and Sea?

a. Yes, but St. Lucia along with all the other OECS (Organization of Eastern Caribbean States) is a very capacity constrained region. Each island normally has only 3-5 providers in most verticals (ie wholesale, retail, etc)

b. CH Robinson does not have any contacts on the island of St. Lucia proper, nor do they currently ship to that island at this time.

4.

When do you take ownership of products being shipped?

Custodial ownership depends on mode and relationship

5.

What container size increments do you provide? At what price?

a. The provide FCL and LCL (Full Container loads, less than container loads: partial or single pallets)

b. Would more than likely be sharing containers with competitors, which can impose a new set of problems.

c. Rate is dependent on business relationship and type. Most customers have 30 day credit terms.

d. Ocean rates are set pricing lists.

6.

How does CH Robinson stand out among the rest with regards to safety and maintaining the condition of perishable items?

CH Robinson’s background is in produce, 50-60% of revenue come from moving food and beverage products. They are very sensitive to food safety.

7.

Please provide any knowledge specific to St. Lucia tariffs for the above categories

a. Tariffs in St. Lucia are between 0-40% depending on commodity. Fresh meat is much more regulated than frozen and will absolutely require a licensed customs broker to file paperwork correctly and provide accurate regulatory information.

b. Customs broker would complete customs documents, itemized by commodity and quantity.

8.

How do foreign tax structures affect costs of importing goods?

Import Taxes are structured like tariffs and will be higher for products that are readily available on the island.

9.

What background information and resources do you use when making the cost estimates related to regulatory costs?

Licensed customs brokers have access to hard and soft resources not readily available to the public because of their complexity. This information requires extensive training to understand and apply correctly.

10.

What common bottlenecks occur in the customs process?

a. Bottlenecks usually due to documentation

b. First step- File Entry: notify that body (government) that you plan on entering goods into their country. Important because there are Caps on certain items and need approval to even send items. File entry before the order physically crosses port waters.

c. Once the file entry goes through, shipper has 10 days to file customs entry documents and pay duties and taxes. Entry documents can only be filed once order has crossed port waters.

d. Customs brokers can electronically file all documents

11.

Since the USDA inspects products before they are shipped, does this expedite the process of clearing foreign customs (St. Lucia)?

No this is a required step of the process and each nation has their own set of policies. USDA is benchmark, but further inspection will ensue regardless of passing USDA standards.

12.

Do you provide tracking capabilities?

a. Yes, can currently track steam ship and other modes of transport via separate systems.

b. In the 2nd year of a 4-year roll-out process of merging the two systems, so that complete transport route can be tracked via one streamline GUI.

13.

What is your estimate for number of days for transport from Miami to St. Lucia “dock to door”?

a. About 15 days

b. There is only one steam ship line that services St. Lucia, timing will be the same across competitors

14.

Do you deliver the products to the physical door? Or picked up at port?

Both. Will want to find out how the island works, some trucking companies have a power over others in many instances and saving money will not necessarily save time.

15.

Does CH Robinson provide its own brokerage system? Does this impose additional fees?

a. Customs brokerage is a flat rate, all fees are based on transactions

b. Volume pricing will be applied to freight forwarding tasks

16.

Can you provide any additional resources for our general understanding of the regulatory environment related to importing F&B products to St. Lucia?

a. FTA- look up their relationship with Caribbean nations

b. US Customs and Border Control, to understand variation in policy even across ports within a developed nation

As-Is Supply Chain

Summary

Though research into the current food and beverage supply chain for The Landings St. Lucia was a very long and arduous process, after much toil we gained a clear picture of the restraints in which the resort operates, in addition to some clarity into the resort’s own food and beverage supply chain. Research revealed that The Landings sources all of its goods on island, and does not utilize any of Vail Resort’s corporate partnerships. Though government regulations restrict numerous products from importation, the real factor limiting international procurement was The Landings lack of volume. Stark changes in occupancy at the resort between peak and low seasons created numerous challenges in forecasting, an essential component needed in properly calculating international orders. In addition, the resort lacks the necessary storage capacity to accommodate large product orders.

Further investigation into The Landings five main vendors revealed that after meeting quota requirements, the companies were importing the majority of the products from abroad, and passing on the transportation and customs costs to their clients. Accordingly, research was conducted into the cost of sourcing similar products to those currently used at the resort from US Foodservice, Vail Resort’s main food supplier. To adequately compare the costs, we researched two methods of transporting the goods as well as the customs fees associated with the corresponding products. Analysis of the costs revealed that international procurement is not currently a cost-effective option.

Research Document

I. The Landings St. Lucia Background[footnoteRef:6] [6: Smock, Adam. Food and Beverage Manager- The Landings St. Lucia. Phone interview. October 25, 2010.]

A. Location and Resort Information

1. Rodney Bay, Gros Islet St. Lucia, West Indies

2. 200 condos and villas

3. Private marina

4. Three in-house restaurants

B. Occupancy

1. Peak: Christmas - March/April

2. Slow: August – September (hurricane season)

3. Hot Season: May – August

4. Ideal rental pool of 80-90 rooms

5. Currently have 44 rooms signed for December, and budgeted for 70-80

6. Buy-out during January and July

C. Suppliers

1. All local vendors

2. Higher cost on imported goods

3. Do not use any third party logistics in procurement

4. Meat quality questionable

5. Main vendors

a. Brydens: dry goods, liquor, frozen

b. Peter and Company: dry goods, liquor, frozen

c. Admac: diary

d. Crown Foods: frozen

e. J. A. Foods: dry goods, frozen

6. No current issues with local suppliers

7. Forecasting used in high season

8. Lean times during high season are next day

D. Storage[footnoteRef:7] [7: DeLouise, Thomas. Corporate Director of Operations- Vail Resorts. Phone interview. October 15, 2010.

]

1. Limited storage at resort

2. Dependent upon weekly deliveries

3. Possibility of paying for a container to be left on-site to compensate for storage limitations; built on-site storage in future

II. Vendors

A. Brydens[footnoteRef:8] [8: Regis, Glenroy. Chief Financial Controller- Brydens. Email correspondence. November 17, 2010]

1. Service Antigua, Barbados, Grenada, Guyana and St. Lucia

2. Headquartered in Bois D’Orange, Barbados

3. Annual sales of $49 million

4. Industries: automotive, liquor, food and beverage, hardware, house hold goods, personal care, pharmaceuticals, tobacco

5. Source countries for products

a. Food products: Trinidad

b. Wines: Italy, Chile, France

c. Tobacco: Trinidad

d. Frozen foods: United States, United Kingdom, New Zealand

e. Dry Goods: United States

B. Peter and Company[footnoteRef:9] [9: “Peter & Company Ltd.” Goddard Enterprises Ltd. November 2, 2010. http://www.goddardenterprisesltd.com/in_co__.cfm?com=43.]

1. Company owned by Goddard and Sons

2. Service Barbados and St. Lucia

3. Headquartered in St. Lucia

4. Distribution center in Castries

5. Products: dry goods, frozen, household goods, liquor

C. Admac [footnoteRef:10] [10: “Provisioning - Specialist.” Superyacht Services Guide to the Caribbean. November 2, 2010. http://www.superyachtservicesguide.com/caribbean10/st.lucia/stl-provisiongSpec.html]

1. Service and headquartered in St. Lucia

2. Distribution center in Castries, St. Lucia

3. Deliver goods to resort by truck

4. Products: dairy, fresh fish, meat, coffee, dry goods

D. Crown Foods[footnoteRef:11] [11: “Our Products.” Crown Foods Ltd. November 2, 2010. http://crownfoodsstlucia.com/products-page.

]

1. Service and headquartered in St. Lucia

2. Distribution center in Gros Islet, St. Lucia

3. Deliver goods to resort by truck

4. Products: wide range of meat products, dairy, vegetables, fruit, pasta, pastries, desserts

III. St. Lucian Hospitality Industry[footnoteRef:12] [12: Vitalis, Eustace Chinie. Agricultural Economist- Sandals Resort. Phone interview. November 17, 2010

]

A. Caribbean region spends $10 billion annually importing food goods

B. Most products on the island are imported, but duties are levied on all third-party imports as well

C. Resorts must be conscious of which vendors they buy from, as crossing the wrong vendor can lead to being cut off completely

1. Large issue of timely payment with vendors

D. Link between agricultural sector and hospitality industry

1. Imported agricultural goods can be produced locally

2. Desire to reduce import bill and stimulate domestic economy

a. Generate interest in local food production by illustrating cost savings to hospitality sector

b. Concern over reliability and consistency in ability to produce goods locally

E. Key produce consumed in hotel industry

1. Fruits

a. Melons: honeydew, cantaloupe, watermelon

b. Pineapples

2. Vegetables

a. Romaine lettuce

b. Tomatoes

c. Cabbage: red and green

d. Squash

e. Zucchini

F. Growth of local agricultural industry

1. Sandals Resorts created a production schedule of items that can be grown on-island after determination of unrealized potential in local production.

2. Realized cost savings of $1 million in first year of buying produce locally

3. Realization of huge cost savings drove demand for local produce

a. Longer shelf life

b. Fresher

c. No storage costs

4. Today, strict protectionist practices exist to protect the industry

Interviews

The following are interviews that pertained most directly to the current ‘as-is’ environment of The Landings St. Lucia. They are listed in order from earliest to latest since the timeline of the project helps explain the progression of questions asked to each interviewee.

Interview – Nick Hagel, Vail Resorts Senior Manager-Procurement

Date & Time:

10/19/10 2:30pm

Attendees:

Ellen Hammock

Questions

Answers

1.

Please list your main suppliers for all of the categories.

· Cheese: DCI (organic producer)

· Coffee: Starbucks

· Dry Goods: US Foods

· Frozen: US Foods

· Milk and ice cream: Robinson Dairy

· Meat: US Foods

· Prepared Goods: US Foods

· Produce: US Foods

· Seafood: Seattle Fish

2.

How were these suppliers selected? Convenience? Price? Accessibility of goods? Please specify for each category.

Broadline Distribution

· Select suppliers to leverage spend

· Use of same suppliers throughout supply chain creates continuity and consistency

· Establishment of controls and compliance

3.

What is the seasonality of the resorts?

Peak: Thanksgiving, Christmas – Easter

· Deliveries daily during peak

· Pricing programs established in fall to lock in prices for winter

Mud season: spring

4.

What is your protocol for goods that are not up to code/health standards?

· File claim with U.S. Foods domestically

· St. Lucia: claim filed with freight forwarder

· CH Robinson offers insurance on goods

· Use air shipping more than ocean freight in distribution to St. Lucia

5.

Have you experienced any distribution bottlenecks getting goods to the resorts? If so, how were they remedied?

· Chef determines the menu, and thus all products that need to be ordered. Need to first establish practices and controls with chef

· Create standards for foods that US Foods or other distributor can follow

· Monitor weather: path closures in Colorado, hurricanes in St. Lucia

· Increase storage

Interview – Conference Call with Thomas DeLouise and Nick Hagel

Date & Time:

10/26/10 10:00-11:00am

Attendees:

Ellen Hammock & Janaki Douillard

Questions

Answers

1.

What does this project need to do for it to be successful in your eyes?

The end result of this project is to create a roadmap that can be followed when implementing a food and beverage supply chain at a new resort. This data will include what products can be sourced on an island and which will need to be imported, as well as the regulation and taxation that is applicable on the island.

2.

What has been/is your involvement with St. Lucia?

St. Lucia is all about being politically correct and building relationships. You have to be conscientious of suppliers and buying local. The citizens are very nationalistic and have stringent protectionist practices. You have to make sure not to cross the wrong supplier or they will cut you off. Most of the products on the island are imported, but duties are levied on all third-party imports.

There is very little storage at the resort. We are currently considering leaving containers on site, but additional storage is not in operation today. Freight is the cheapest option for getting products to the island, costing $4000 a container. Tropical Shipping (I believe) is the current freight forwarder. Amijet is another option, but costs are based on weight resulting in much higher expenditures.

St. Lucia is also extremely seasonal. Peak season is December to April or May, and slow season is August to September (hurricane season). Slow season is characterized by single digit occupancy. May-August is also slow because of the extreme heat and humidity on the island.

During peak season, containers do not go in more than once a week. The Landings currently sources most of its products locally, which are more expensive and can be of a lower caliber, especially meat.

3.

What will happen if we move away from local products in an attempt to acquire lower cost, higher quality products?

There will be backlash from the local producers. St. Lucia is extremely political and we will have to be very careful in negotiating which products we will and will not source from them.

4.

Could you please get me in contact with the F&B Manager at Tempo Miami, or their purchasing manager to discuss specifics of their supply chain?

Tempo Miami is in a transition period and its supply chain is subject to change. Nick Hagel will arrange a meeting to walk through one of the Colorado resorts food and beverage supply chains.

5.

Pat Pascal has been unresponsive thus far. Do you have any other means of contacting her?

A conference call between Adam Smock (F&B Director), Pat Pascal (Executive Chef), Thomas DeLouise (Corporate Director of Operations) and Ellen Hammock will be scheduled for next week to discuss the suppliers and products used at The Landings, in addition to which suppliers are absolute constraints moving forward.

6.

How would you prefer to be contacted in the future, especially with regard to time-sensitive material?

Email is the best way of getting a hold of Thomas DeLouise.

Interview- Glenroy Regis- Chief Financial Controller with Brydens

Date & Time:

11/16/10 9:00am

Attendees:

Mileta Gebre-Michael

Questions

Answers

1.

What is the breadth of products you could provide?

Foodstuff, spirits, wines, tobacco, frozen food

2.

Where are these products sourced? Are these products imported and from where? (Please specify by each product category i.e. operating supplies, dry goods, frozen, meat, etc)

Trinidad-Food stuffs

Wines: Italy, Chile, France

Tobacco Trinidad

Frozen Foods- USA,UK, New Zealand

Dry Goods-USA

3.

Is there a mark up fee for each product category? If so how much?

Yes

4.

How are the goods transported from their origins to St Lucia?

Mainly containers

5.

How are these goods transported from the port at St. Lucia to the Landing Resort?

We have our own fleet of vehicles (30)

6.

What are the costs associated with getting the products through customs, transportation, shipping etc?

Duties, container charges, de-stuffing charges, transportation.

7.

How often are orders placed?

We formalized ordering systems that factors sales, lead time etc.

8.

Where is Brydens headquartered? Where are your distribution centers located?

Bois D’Orange in the north of the island

9.

How is safety and quality of products ensured?

We have standards

10.

Do you have a sales report breakdown by volume for each product category for The Landing at St. Lucia? If so please provide a soft copy as well as a product price list.

Unwilling to send

Interview - Eustace Chinie Vitalis

Date & Time:

11/17/10 2:00pm

Attendees:

Ellen Hammock & Mileta Gebre-Michael

Questions

Answers

1.

Can you give us some background on your experience with Sandals?

1. Agricultural Economist

2. Link between agricultural sector and tourism

a. Imported goods can be produced locally; substituted or produced on island

b. Reduce import bill

3. Payment to farmers major issue; require timely payment

4. Reliability and consistency of goods issue in Caribbean

2.

What type of foods can be produced more cheaply on island?

a. Create production schedule for items that can be grown on island

a. Fruits: melons, pineapples

b. Vegetables: romaine lettuce, tomatoes, cabbage (red and green), squashes

b. Saved $1 million in the first year producing the above goods on island

c. Created demand for local produce

a. Longer shelf life

b. Fresher

c. No storage costs

3.

Could you discuss the importation process for goods that cannot be produced on island?

1. Provide list of desired import items to Ministry of Agriculture

2. Send list to suppliers in US if receive approval

3. US supplier states whether they can or cannot ship that specific good (i.e. cut of meat) to St. Lucia

4.

What type of policies govern this?

Importation is more or less a gentleman’s agreement

· File with marketing department of Ministry of Agriculture for import license

· Only get clearance to import if quantity produced on island is not sufficient to meet demand

· No formal contracts exist binding farmers to users (resorts); farmers always look for best price

4.

Could you elaborate on the process of importation?

1. Caribbean spends $10 billion annually importing food goods

2. Not self-sufficient in producing diary products or meat

a. Cheaper to import meat

b. No restrictions on the importation of diary products

3. Restrictions

a. Lobster only seafood with a closed season

b. Cannot import citrus fruits

c. Cannot import honey

d. Restrictions on importation of beer and Coca-Cola because bottling plants on island

e. No restrictions importation of dairy, dry goods or operating supplies

f. Beef

· Only boneless beef

· Most comes from United States

· Need documentation of age of beef and location of slaughter

g. Chicken

· Have to purchase 20-40% from local suppliers

· Typically local wholesalers only provide whole chicken, not cuts, which resorts do not demand

h. Pork

· Do not have facilities to supply all cuts on island

· Use local wholesalers to source specific cuts

i. Restrictions exist because do not have infrastructure to control outbreak if meat is contaminated

Competitor Analysis

Summary

The Caribbean is one of the most visited vacation destinations due to its beautiful beaches, remote location, and warm climate. Tourism constitutes the majority of island nations’ GDP, and successful generation of revenue in this region is attributed to the ability to manage the volatile inflow of travelers, a byproduct of drastic changes in weather throughout the year. Resorts that focus their efforts on creating a competitive advantage by reducing costs through logistics and supply chain management prove most successful. The most effective way of reducing supply chain costs is to collaborate with suppliers, necessitating effective and timely communication, as well as vamping up strategic planning to utilize just-in-time purchasing. The information pulled from academic journals, articles, as well as interviews with contacts at world-renowned resorts offers valuable insight into this arena.

Our research shows that utilizing a forecasting model that incorporates occupancy, as well as historical data, increases the accuracy of purchasing predictions. Cost deduction is achieved by only purchasing the amount of product to be consumed within specific time intervals, reducing waste product. This cost reduction allows resorts to focus on ensuring the procurement of the highest quality products at the lowest price. Reducing order costs by increasing quantity of products ordered and decreasing the frequency of orders distinguishes the elite resorts from the competition.

Research Document

I. Competitor Environment

A. Leading Industry: Tourism[footnoteRef:13] [13: “Caribbean Living and Lifestyles.” Caribbean Property Magazine. http://www.caribpro.com/Caribbean_Property_Magazine/index.php?pageid=313]

1. 5xs number of resorts, restaurants & bars

2. Not enough of local population

B. 9/11

1. Huge decrease in tourists

2. Leverage costs

C. Business Environments

1. Major Economies: Jamaica, Dominican Republic, Trinidad & Tobago, St. Lucia, St. Kitts & Nevis

2. Caribbean Tourism Organization: data rich with updated statistics

a. http://www.onecaribbean.org/error.aspx?statusCode=500

3. Caribbean Hotel Association: organizes major players in hospitality

a. http://www.caribbeantravel.com/

II. Doing Business in the Caribbean

A. Overview[footnoteRef:14] [14: .Brown, Greg. “Guide to doing Business in the Caribbean.” Business.com. http://www.business.com/guides/doing-business-in-the-caribbean-1055/

]

1. Thousands of islands

2. 5 colonial masters with distinct languages

3. Disparate legal systems

4. Different levels of development

5. Thousands of square miles of open sea

B. CARICOM

1. 32 members

2. Caribbean free trade bloc and principal voice

3. Organized to set foreign investment, energy, tourism & agriculture dollars

C. US-Side Advocates

1. U.S. Commercial Service aims to place U.S. exporters in Caribbean Markets

2. Compile market research, events & business matching

D. Free Trade Advantage

1. DR CAfta trade deal easier to sell into Dominican Republic

2. Foreign Investments heavily attracted in large economy countries.

III. Hotels & Resort: Food & Beverage

A. Forecasting

1. Yield/Revenue Management

a. Help hotels decide on most profitable mix of transient business

b. Can increase revenue

i. Airline industry increased 0.5-3.0%[footnoteRef:15] [15: Weatherford, Larry R. “A comparison of forecasting methods for hotel revenue management. International Journal of Corecasting. Volume 19 (3) July-Setpember 2003. Pgs. 401-415]

ii. 10-11% increase in 34 out of 41 hotel food and beverage outlets

2. Dimensions:

a. Reservation Arrival

b. Occupancy

c. Historical data

3. Benefits

a. Leverage Costs

i. Purchasing

ii. Kitchen staff preparation

iii. Labor costs

b. If occupancy is down during a low season- leverage costs with appealing to locals

4. Forecast examples[footnoteRef:16] [16: Thompson, Gary M. “Revene Management Forecasting Aggregation Analysis Tool”. The center for Hospitality Research. Cornell University School of Hotel Administration. http://www.hotelschool.cornell.edu/research/chr/pubs/tools/tooldetails-15093.html

]

a. Total number of arrivals for a day and then break that number into length of stay and rtae classes using historical proportions

b. Forecast the total number of arrivals for a particular day in each rate class, and then break that number into lengths of stay using historical proportions

c. Forecast total number of arrivals for a given day in each length of stay and then break that number into rate classes using historical proportions

d. Independent forecasts of total number of arrivals for a day for each length of stay and rate class.

B. Storage

1. Inventory significant effects on profit reporting & asset valuations[footnoteRef:17] [17: Ojugo, Clement. Practical Food & Beverage Cost Control. 2nd Edition. NY. 2010]

a. Directly affect cash flow, production levels, & customer service

b. Inventory turnover ratio:

i. High- not buying enough stock

ii. Low- buying too much and sinking cash into expense

2. Manager must apply dollar amount to stored goods to a dollar figure

a. Costs incurred

b. Waste & inefficiency of discarded food

C. Cold Storage

1. Risk of Food poisoning & food spoilage

a. Cold Chain[footnoteRef:18] [18: A.R. Trott, T. Welch. “Refrigeration of foods. Cold storage practice.” Refrigeration and Air Conditioning, (Third Edition), 2000, Pages 162-169.]

b. Temperature-controlled supply chain: uninterrupted series of storage and distribution that maintain a given temperature range

c. Used to help extend and ensure shelf life of products such as fresh agricultural produce, frozen

d. Global temperatures and climate change increase—cold units drastically affected

e. Further prevent food born illness

2. Temperatures [footnoteRef:19]: 2-5 [19: Li Guo, Ying Ma, Da-Wen Sun, Peng Wang. “Effects of controlled freezing-point storage at 0 °C on quality of green bean as compared with cold and room-temperature storages.” Journal of Food Engineering, Volume 86, Issue 1, May 2008, Pages 25-29.

]

a. Freeze Point: 0 degrees Celsius

b. Cold Storage: 8 degrees

c. Room Temperature: 25

D. Quick Facts

1. Economics of Food Preservation

a. Produce & Ingredients

b. Equipment & supplies

c. Fuel consumption

d. Capital outlays

e. Time & energy

f. Cost of Similar food preserved commercially

g. Large capital outlays

2. Freezing Costs

a. Benefits

i. Simple to do

ii. Keeps food more like fresh produce

b. Disadvantage

i. Cost to buy and operate a freezer

· Divide over 20 years if new vs 9 used

· Lost interest on cash outlay for freezer

· Maintenance & repair

· Electricity needed to reach and maintain 0 degrees F

· Packaging materials

· Water & fuel to prepare food for freezing

· Added ingredients (sugar or ant darkening agents)

ii. US DEPARTMENT OF AGRICULTURE

E. Shelf Life of Goods

Product

Refrigerator (40 °F)

Freezer (0 °F)

Eggs

Fresh, in shell

3 to 5 weeks

Don't freeze

Hardcooked

1 week

Don't freeze well

Hot dogs & Luncheon Meats

Hot dogs, opened package

Unopened package

1 week

2 weeks

1 to 2 months

1 to 2 months

Luncheon meats, opened package

Unopened package

3 to 5 days

2 weeks

1 to 2 months

1 to 2 months

Bacon & Sausage

Bacon

7 days

1 month

Sausage, raw from chicken, turkey, pork, beef

1 to 2 days

1 to 2 months

Ham

Ham, fully-cooked vacuum sealed at plant, undated, unopened

2 weeks

1 to 2 months

Ham, fully-cooked, whole

7 days

1 to 2 months

Hamburger, Ground & Stew Meat

Hamburger & stew meat; Ground turkey, veal, pork, lamb & mixtures of them

1 to 2 days

3 to 4 months

Fresh Beef, Veal, Lamb, Pork

Steaks

3 to 5 days

6 to 12 months

Chops

3 to 5 days

4 to 6 months

Roasts

3 to 5 days

4 to 12 months

Soup & Stews

Vegetable or meat added

3 to 4 days

2 to 3 months

Meat Leftovers

Cooked meat and meat casseroles

3 to 4 days

2 to 3 months

Gravy and meat broth

1 to 2 days

2 to 3 months

Fresh Poultry

Chicken or turkey, whole

1 to 2 days

1 year

Chicken or turkey, pieces

1 to 2 days

9 months

Cooked Poultry

Fried chicken

3 to 4 days

4 months

Pieces, plain

3 to 4 days

4 months

Chicken nuggets, patties

1 to 2 days

1 to 3 months

Pizza

Pizza

3 to 4 days

1 to 2 months

Stuffing

Stuffing-cooked

3 to 4 days

1 month

Beverages, Fruit

Juices in cartons, fruit drinks, punch

3 weeks unopened7 to 10 days opened

8 to 12 months

Fish

Lean fish (cod, flounder, haddock, sole, etc.)

1 to 2 days

6 months

Fatty fish (bluefish, mackerel, salmon, etc.)

1 to 2 days

2 to 3 months

Cooked fish

3 to 4 days

4 to 6 months

Smoked fish

14 days or date on vacuum package

2 months in vacuum package

Shellfish

Shrimp, scallops, crayfish, squid, shucked clams, mussels and oysters

1 to 2 days

3 to 6 months

Live clams, mussels, crab, lobster and oysters

2 to 3 days

2 to 3 months

Cooked shellfish

3 to 4 days

3 months

Dairy

Butter

1 to 3 months

6 to 9 months

Cheese, Hard (such as Cheddar, Swiss)

6 months, unopened3 to 4 weeks, opened

6 months

Cheese, Soft (such as Brie, Bel Paese)

1 week

6 months

Cottage Cheese, Ricotta

1 week

Doesn't freeze well

Cream Cheese

2 weeks

Doesn't freeze well

Margarine

4 to 5 months

12 months

Milk

7 days

3 months

Sour cream

7 to 21 days

Doesn't freeze

Yogurt

7 to 14 days

1 to 2 months

[footnoteRef:20] [20: “Cold Storage Chart.” U.S. Deparment of Agriculture and the US food and Drug Administration. http://www.plasticsinfo.org/s_plasticsinfo/sec_level4_alt.asp?CID=577&DID=2335.

]

F. Purchasing Process

1. Acquisition of appropriate goods and or services a the best possible total cost of ownership

2. Documentations ensures best practice and regulatory authority rules are compiled closely

3. Adapt to meet requirements of Caribbean

4. Minimize fraud and open competition

5. Decisions include:

a. Delivery & handling

b. Marginal benefit

c. Price fluctuations

d. Cost benefit analysis & cost utility analysis

e. Level of risk

6. Systems

a. Just In Time

i. Timing purchases of consumables so as to keep inventory costs low

ii. Framework agreement setting terms & price created between supplier and purchaser

b. Bidding

i. Depending on policy or legal requirements: quotes from multiple vendors

ii. Prepare supply, expediting, shipment, delivery & payment base don contract

Interviews

The following are interviews that pertained most directly to the competitive environment of the Landings St. Lucia. They are listed in order from earliest to latest since the timeline of the project helps explain the progression of questions asked to each interviewee.

Interview - The Ritz-Carlton, Denver Executive Chef: Justin Fields

Date & Time:

10/26/10 7:30-8:00am

Attendees:

Mileta Gebre-Michael

Questions

Answers

1.

Ownership?

1. Ritz Carlton manages property

2. Operate with approved vendors based off:

a. Contracts

b. Volume based discounts

c. Lowest shipping and freight costs

2.

Forecasting?

2. All volumes based on forecasting

3. Factors:

a. Percentage of occupancy within the hotel

a. 220 rooms with 2 people per room

b. Days of the week- Friday & Saturday higher traffic

c. Seasonal Times

a. Peak: July to mid-November

i. 81% Occupancy drops to 40%

b. Late November to January

i. 50-60% occupancy

d. Banquets

e. City wide events

3.

Product Categories?

1. Dairy

a. Vendor: Leeds Robinson Dairy

i. Handles 80% of orders

ii. Amount: 400-500 lbs per order

a. 4-5 cases of butter

b. 4 cases of milk

iii. Ordered and Delivered 3 times a week

b. Vendor: Shamrock

i. Handles 20% of orders

ii. Amount: 50-100 lbs

a. Specialty cheeses

iii. 4 times a week

2. Meat

c. Vendor: K&M Meat brokers

i. All steaks come from same ranch

a. Prime prices for meat—company finds best prices

b. Specifications—prime meat

ii. US Inspector on hand

iii. Amount: 800-1000 lbs per order

iv. Ordered and Delivered 3 times a week

3. Seafood

d. Vendor: North East Food

i. Amount: 25 lbs

ii. 6 days a week

a. Keep 2 days in house

b. If wanted specialty fish from Hawaii—ship fish over night

i. 40% of cost of fish was shipping

4. Produce

e. Vendor: Shamrock- Freshpoint

i. Handles 95% of orders

ii. Amount: 800 lbs per order

iii. Delivered and ordered 4x’s

f. Vendor: Fresh Guys-

i. Amount: 5%

ii. Small/ Specialty Items i.e. Asian fruits

iii. Maybe 1 a week

SWOT Analysis

Food and Beverage at the Landings St. Lucia

Strengths

· Both the Beach Club and the Palms are RockResort caliber restaurants that incorporate RockResorts’ environmental sustainability model by sourcing produce and fresh fish locally.

· The Beach Club is an open-air restaurant with the best views of Rodney Bay and the private Landings beach.

· The Landings has a strong culinary team. Recently, they were awarded Best Presentation at St. Lucia’s Rhythm and Spice Festival. Also the Landing’s Sous Chef Gilrey Samuel, as a part of St. Lucia’s national team, brought home the bronze medal at CHTA’s Taste of the Caribbean event.

Weaknesses

· Lack of visibility with Vail Resorts headquarters. The Landings is potentially losing money by not taking advantage of their corporate partners, analysis capabilities, and capital investment for growth opportunities.

· There is little standardization of the food and beverage supply chain, which if utilized, would allow for easy scalability to newly developing food and beverage processes at other Caribbean RockResorts.

· Standard forecasting has yet to be perfected given how recently the food and beverage operations began.

· There is very limited storage at The Landings. If they take advantage of economies of scale in the future and import their own products, they will also have to purchase a container to stay on site as additional storage, cutting into the profit margin that importing would provide.

· There is no known formal purchasing process in effect at The Landings currently, and they appear to order as needed from the local suppliers. This ties back to the lack of storage, forecasting and standardization.

Opportunities

· Bring in fresh meats due to poor quality of meat on island. This could in turn be a competitive advantage in the resort restaurant genre.

· Source meats, dry goods and operating supplies from US Foods to take advantage of economies of scale.

Threats

· Local suppliers have been known to implement tying agreements where they force certain foods to be sourced locally or else the local supplier will cut the Resort off entirely.

· Importing products to St. Lucia can be very difficult given the quotas, food restrictions, food safety regulations and limited existing shipping lanes to St. Lucia.

· St. Lucia is such a remote island that not only is getting food and supplies to the island a unique problem but being on an island, the Landings is more prone to hurricanes and the effects of detrimental weather than are the Colorado resorts.

Strategy

The Landings at St. Lucia’s Food and Beverage sector appears to be employing a focused differentiation strategy since they are promoting a unique product to obtain a competitive advantage in a narrowed market. In this instance, the unique product is their luxury RockResorts standard restaurant experience that is targeted at the specific market of the yachting community.

Cost-Benefit Analysis

Aaron Rubinstein provided us with a cost analysis spreadsheet comparing the St. Lucia vendor prices to the US Foodservice prices. Given this spreadsheet we were able to add the freight information and customs fees information we had collected through our research. These spreadsheets are quite large and complex and are therefore not imbedded as tables into this document and instead have hyperlinks to the full document below and can also be found in the appendix in large printouts.

Original Spreadsheet

Two major comparisons were run with this spreadsheet. The first took a sampling of this data and compared 2 foods from each category given airfreight prices quoted for us by FedEx Express.

FedEx Express vs. Local Vendor Pricing

As the chart shows, the freight cost through FedEx Express is too high to be anywhere close to cost effective.

The second major comparison looked across all three sourcing methods that the Landings St. Lucia would be able to employ: local vendors, ocean containers, and airfreight.

Sourcing Methods Comparison

Once again, we see airfreight prices skyrocketing, but the really interesting data here is how the container costs and the local vendor prices are so close. The local vendor prices appear to only be beating the container prices by about 6%. This is until we remember that this chart was run from approximately a full year’s worth of data. Keeping that in mind, we can deduce that over a year the Landings St. Lucia only has the volume to fill about 25% of a container and even at 25% the prices are competitive to the local vendors. The last piece of information that needs to be considered is the lack of storage at the Landings St. Lucia and their current ability to only store enough for weekly intervals. To make shipments via containers worthwhile we should be aiming for monthly shipments, which is obviously going to require more storage. Research into local freight forwarders may prove cost effective to ship via container if they are willing to price partial loads. If this becomes an option, then the various options for increasing storage space could then be looked into.

RecommendationsRoadmap

S

ResearchSupporting Research

Freight Forwarding Figures

Supplied by FedEx

Ocean Containers

Quote # 10-0575

Container

Dimensions (Inches)

Maximum Weight (Pounds)

Cost (Miami to St. Lucia)

20’ std

234 x 92 x 96

35,000

$3,050.00

40’ std

474 x 92 x 96

45,000

$4,050.00

I. Rate for 40’ operating refer container from Miami to St. Lucia: $5,650.00

i. FedEx has since stated that they have “exhausted all FedEx Trade Networks options to deliver Frozen Meat from Port of Miami using Ocean Reefer Container and do not have any options to provide.” (Clement, William. November 19,2010)

II. Temperature controlled packaging: no additional charges for packaging meat products being shipped in ocean containers

Air Express Figures

Temperature Controlled Packaging Rates

Supplied by FedEx

Supplied by US Foodservice

Air Express Shipments

Note: The net rate sheets presented in this document are based on customer's discounts effective on 11/15/2010. The net rate sheets presented in this document are for your convenience only and are not intended to be a agreement or part of a agreement. Actual net rates may vary due to changes in customer's shipping pattern that affects the revenue thresholds used in the rate calculations. The customer may have additional pricing features on the agreement that is not captured in the net rates calculations presented in this document. Please review your agreement for complete details or contact your Account Executive for more information.

I. St. Lucia falls under column I for delivery rates (as highlighted in tables below)

II. Temperature controlled packaging for air freight:

i. $98.00 minimum

ii. $1.13/lb fee

iii. $0.59/fuel surcharge

iv. $0.06/security fee

v. $1.78/lb total

vi. An additional $25.00 documentation fee

Express International Export Rates: Export Non-Freight & International Freight Priority

Weight (in Lbs)

Zone -A

Zone -B

Zone -C

Zone -D

Zone -E

Zone -F

Zone -G

Zone -H

Zone -I

Zone -J

Zone -K

Zone -L

Zone -M

Zone -N

Zone -O

FedEx Envelope

$22.15

$22.80

$22.80

$26.55

$26.55

$26.55

$26.55

$29.50

$26.55

$31.00

$41.30

$41.30

$59.05

$31.00

$41.30

FedEx 1 Lb Pak

$26.95

$27.60

$27.60

$33.90

$33.90

$33.90

$33.90

$39.80

$33.90

$36.90

$41.30

$41.30

$67.95

$36.90

$41.30

FedEx 2 Lbs Pak

26.95

27.6

27.6

33.9

33.9

33.9

33.9

39.8

33.9

36.9

41.3

41.3

67.95

36.9

41.3

1

$31.00

$31.65

$31.65

$39.15

$39.15

$39.15

$39.15

$48.70

$41.30

$47.30

####

$53.20

$76.85

$47.30

$53.20

2

31

31.65

31.65

39.15

39.15

39.15

39.15

48.7

41.3

47.3

53.2

53.2

76.85

47.3

53.2

3

31

31.65

31.65

39.15

39.15

39.15

39.15

48.7

41.3

47.3

53.2

53.2

76.85

47.3

53.2

4

31

31.65

31.65

39.15

39.15

39.15

39.15

48.7

41.3

47.3

53.37

53.87

76.85

47.3

53.2

5

31

31.65

31.65

40.48

40.48

39.15

39.15

48.7

41.3

47.3

60.73

61.3

77.11

47.3

53.2

6

31

31.65

34.63

42.85

42.85

41.07

41.08

48.7

42.51

47.3

68.3

68.95

82.55

47.3

53.2

7

31

32.8

37.61

45.31

45.31

43.57

43.5

50.76

45.52

49.7

75.87

76.58

89.58

47.88

53.2

8

31

34.89

40.79

47.57

47.57

46.46

46.46

54.15

48.21

53.52

82.93

83.71

96.21

51.56

55.25

9

31.51

36.29

42.67

50.55

50.55

48.46

48.46

58.16

48.48

57.56

89.69

90.54

101.87

55.45

59.17

10

32.7

37.99

44.66

53.34

53.53

50.7

50.42

60.93

48.57

61.49

96.55

97.46

102.44

59.24

63.16

11

33.84

38.71

47.14

53.62

55.69

52.83

50.62

64.32

50.32

63.63

103.1

103.72

106.21

62.29

67.25

12

33.99

38.9

47.49

53.91

56.1

55.08

50.88

66.8

51.99

64.01

103.8

104.38

107.12

63.71

71.08

13

36.89

42.68

50.61

59.8

59.8

56.57

56.13

69.56

54.93

71.66

115.4

117.53

125.22

68.7

75.11

14

38.58

44.47

52.4

62.47

62.47

58.81

56.66

72.54

57.1

75.48

116.5

123.54

134.23

72.37

78.83

15

40.08

45.96

54.18

64.63

64.63

60.95

60.95

74.81

63.68

79.19

128.7

129.95

141.26

75.92

82.88

16

41.58

47.46

56.37

66.9

66.9

63.19

63.19

78.2

68.32

82.37

134.6

135.86

148.09

78.97

85.92

17

42.77

48.85

58.45

69.36

69.36

65.32

65.32

80.59

68.78

85.42

140

141.36

154.52

81.9

88.99

18

44.27

50.85

60.14

71.7

71.7

67.35

67.35

82.75

69.03

88.27

145

146.35

162.24

85.32

92.42

19

45.46

52.44

61.29

73.97

73.97

69.49

69.49

85.13

74.05

91.21

149.9

151.34

168.78

88.19

95.45

20

47.16

54.24

62.35

76.36

76.36

71.73

71.73

87.74

76.8

94.16

155

156.44

175.1

91.37

98.48

21

48.66

55.73

63.21

79.02

79.02

74.5

74.5

90.46

77.68

97.11

160.5

162.03

183.35

93.57

101.52

22

49.95

57.23

63.31

80.49

80.87

77.56

77.58

93.97

77.76

100.06

165.9

167.43

190.01

95.14

104.77

23

51.25

58.43

64.36

80.64

83.03

79.62

78.91

95.22

77.85

103

170.6

171.31

192.71

97.15

107.81

24

51.82

59.16

64.47

80.73

85.17

81.75

79.05

96.15

77.94

105.34

175.1

171.7

192.98

99.15

110.83

25

51.99

59.37

64.69

81.15

85.38

81.96

79.16

96.44

78.4

105.62

175.6

172.41

193.8

101.57

113.87

26

55.24

63.61

68.97

89.5

89.5

85.82

81.36

102.25

87.56

111.2

184.8

186.58

210.05

107.14

117.13

27

57.53

66.4

71.75

91.25

91.25

87.59

87.59

104.29

88.48

113.93

189.7

191.47

215.89

109.77

120.15

28

59.52

67.29

73.44

93.51

93.51

89.72

89.76

106.67

88.57

116.89

194.5

196.36

221.93

112.62

123.3

29

60.62

68.12

74.53

95.25

95.25

91.44

91.44

109.16

88.69

119.84

198.6

200.43

227.28

115.46

126.34

30

61.82

69.3

75.42

97.29

97.62

93.62

93.66

111.43

90.98

122.78

202.8

204.71

233.22

118.3

129.59

31

62.71

70.48

76.22

97.49

99.57

95.46

95.37

113.69

93.3

125.73

206.7

208.68

238.76

121.15

132.62

32

64.01

71.66

76.61

97.81

102.65

97.99

95.58

116.19

97.41

128.79

210.9

212.86

244.8

124.09

135.66

33

65.31

73.08

77.5

104.07

104.6

99.91

99.91

118.69

99.51

131.74

215.1

217.13

250.14

126.93

138.69

34

66.6

74.26

78

104.7

106.87

101.94

101.94

121.07

103.17

134.59

219

221.1

255.69

129.67

141.83

35

67.7

75.44

78.8

108.92

108.92

104.08

104.08

123.45

103.61

137.53

223

225.08

261.04

132.51

144.87

36

68.6

76.61

79.29

110.87

110.87

106

106

125.6

112.39

140.48

227.1

229.25

266.58

135.35

147.77

37

69.99

78.03

80.28

112.93

112.93

108.02

108.02

127.98

118.66

143.43

230.9

233.12

271.73

138.19

150.63

38

70.89

79.1

81.18

114.67

114.67

109.91

109.95

130.25

119.28

146.38

235

237.19

276.78

141.04

153.18

39

72.19

80.16

82.17

117.14

117.14

111.97

111.97

132.63

121.73

149.11

239.2

241.48

281.92

143.67

156.03

40

73.48

81.22

83.76

118.99

118.99

113.68

113.59

134.78

121.98

152.06

243.2

245.44

286.38

146.51

158.58

41

74.78

82.29

84.75

121.04

121.04

115.6

113.77

137.16

124.33

155

247.1

249.42

290.93

149.35

163.08

42

75.97

83.59

86.04

122.59

122.59

117.42

117.42

139.66

124.85

157.96

251

253.39

295.68

152.19

166.14

43

76.98

85.35

87.03

125.05

125.05

119.34

119.34

142.15

124.97

160.91

254.8

257.46

300.24

155.04

169.1

44

78.07

86.66

88.32

126.7

126.7

121.15

121.15

144.65

127.34

163.86

255.2

261.44

304.5

157.88

172.06

45

79.27

87.72

89.32

128.65

128.65

123.08

123.08

146.8

127.7

166.81

263

265.51

308.95

159.3

175.12

46

80.16

89.61

90.51

130.71

130.71

124.36

124.36

149.18

134.84

169.76

266.3

268.77

313.5

160.72

177.87

47

81.36

90.55

91.99

132.97

132.97

126.39

126.39

151.56

135.55

172.71

270.4

272.94

318.25

166.4

180.93

48

82.46

92.23

93.19

134.92

134.92

128.31

128.31

153.83

135.64

175.66

274.3

276.92

322.71

169.25

183.89

49

83.36

93.12

94.57

136.87

136.97

130.33

130.33

156.21

135.73

178.5

278.2

280.79

326.96

171.98

186.85

50

84.55

94.22

95.57

137.07

138.93

132.18

132.18

158.24

136.48

181.22

282.1

284.76

331.41

174.66

190.01

51

85.07

94.92

96.59

140.91

140.91

132.37

132.37

158.48

151.56

181.56

289.4

292.08

332.38

174.93

193.04

52

86.55

96.02

97.65

142.62

142.62

134.5

134.5

163.11

153.08

188.31

290.2

292.91

340.66

178.46

196.44

53

87.17

96.68