scm lecture 1 - part (c)

Now that we understand the various physical elements of a retail supply chain, let us examine the basic types of supply chains …

Copyright: Raja Shuja-ul-Haq (2010)

Key Types of Supply Chains


Type 1Complex Supply Chains


Manufacturing Plant

Sortation Depot

Regional Distribution Centre

Local Distributors

Superstore Shelves

Retailer’s Warehouse

Manufacturer-owned UnitsDistributor-owned UnitsRetailer-owned Units


http://upload.wikimedia.org/wikipedia/en/b/b9/Storeisle.png

Manufacturing Plant

Sortation Depot


Local Distributors

Convenience Store

Manufacturer-owned UnitsDistributor-owned Units


Type 2Manufacturer-Controlled Supply Chains


Manufacturing Plant

Sortation Depot


Superstore Shelves




Large retailers like superstores have their own warehouses and can maintain a small inventory

http://upload.wikimedia.org/wikipedia/en/b/b9/Storeisle.png

Manufacturing Plant

Sortation Depot





Retailer’s Store 1



Convenience Stores

Convenience store chains can operate a common warehouse for more than one stores in a geographic location and get supplies from the distribution centre rather than from distributors

Manufacturing Plant

Sortation Depot


Discount Store

Manufacturer-owned UnitsDistributor-owned Units


Discount stores usually get their products directly from the distribution center at cheaper rates rather than paying the distributor’s profit margin …

Type 3Simple Supply Chains


Manufacturing Plant

Local Distributors

Convenience Stores

Manufacturer-owned Units


Convenience stores or high-street stores require small consignments of goods on a daily basis (since they lack storage space and can not maintain an inventory of goods) … Distributors ideally serve their needs …

Manufacturing Plant

Non-store Distribution Center

Customer’s Home

Manufacturer-owned Units

Retailer-owned Units


Non-store format (www.amazon.com)

Websites like Amazon.com follow this distribution channel strategy where books are stored in a distribution centre …

Orders are taken online and books are shipped directly to the customers …

Type 4: Temperature-Controlled

Supply Chain(TCSC)


Cost of Production (@ Unilever):

Rupees 5/-

Sales Price:

Rupees 30/-

A bulk of price charged to the customers covers the cost of the “unbroken” cold chain of distribution … including temperature-controlled trucks, storage facilities, loading bays and even fridges given to individual retailers …

Simple Economics:

?


http://upload.wikimedia.org/wikipedia/commons/5/5a/Magnum_ice_cream.jpg

Celsius Scale of Temperature

Freezing and Melting Point of Water

In Pakistan:Peak Summer Day Temperatures can vary between

38 degrees Celsius to 50 degrees Celsius

Peak Winter Day Temperatures can vary between 15 degrees Celsius to 25 degrees Celsius

The importance of TCSCs in Pakistan is on a much higher scale as compared to Europe and the US, since there are extreme ambient temperatures

(i.e. temperature differentials of 54 degree Celsius)


Many products in Pakistan require a “TCSC” (Temperature-Controlled Supply Chain) so as to maintain maximum shelf-life once the product reaches the retailer’s shelf …


A TCSC is an “unbroken” supply chain

A proper inventory of temperature-controlled items is not maintained because of their short shelf-life and the supply chain is in a continuous phase of transportation …


The ultimate objective of a TCSC is to maximize a product’s shelf-life once the product reaches the retailer’s shelf …

(exposure to the ambient temperature can reduce some products’ shelf-life)


Products which require a TCSC for distribution in Pakistan …


Temperature-controlled supply chains (TCSC) is a food supply chain that requires that food products be maintained in a temperature-controlled environment rather then exposing them to whatever ambient temperatures prevail at various stages of the supply chain

There are several temperature levels to suit various product types: Frozen supply chain, cold chill supply chain, medium chill supply chain and exotic chill supply chain


Frozen Chill Supply Chain is maintained at -25 degrees Celsius for ice-creams and -18 degrees Celsius for other frozen food items

Cold Chill Supply Chain is maintained at 0 degrees to +1 degrees Celsius for fresh meat, dairy products, vegetables and some fruit types

Medium Chill Supply Chain is maintained at +5 degrees Celsius for butters, fats and cheese products

Exotic Chill Supply Chain is maintained at +10 to +15 degrees Celsius for poultry, potatoes, bananas and some exotic fruits

Failure to maintain these recommended temperatures throughout the supply chains reduces the shelf-life of the products


Factory: Cold StorageDistribution Centre: Cold Storage Facility

Refrigerated trucks

Refrigerated trucks

Ambient temperature endurance: 15 minutes

Loading Bays (with airbags)

15 minutes

15 minutes


Airbags

15 minutes

Retailer’s Refrigerated Shelves

Importance of TCSCs:

1) Increased shelf-life of perishable goods with very short expiry dates

2) Improved quality for the customers (customer satisfaction)

3) Food safety obligations set by the government (i.e. Food Safety Act of 1990 in the UK dealing with storage, handling and transporation requirements of food products)

4) Reduced wastage cost (low levels of expired products)


Temperature-controlled storage facilities have to be maintained at the appropriate temperature with accurate recording equipment and cooling equipment, including the capacity to cope with high ambient temperatures especially during transportation in summers

Vehicle loading bays need air bags that inflate around the vehicle to prevent exposure to ambient temperatures

For frozen food and ice-cream products, loading and unloading bays should be at 0 degrees Celsius temperature

Vehicles require appropriate insulation , refrigeration and control panels to manually set and maintain temperatures

Challenges of operating TCSC

Frozen food items like ice-creams in Pakistan, can not be left in ambient temperature for more than 15 minutes while loading or handling, according to Unilever Pakistan’s supply chain manual


In Pakistan, temperature-controlled trucks and vans from most Distribution Centres and Distributors deliver pallets of products to convenience stores twice a week

On delivery, the goods are not checked at the door of the convenience store, but are first shelved in refrigerated chambers and then the stock keeper records the delivered order

Challenges of operating TCSC

Even products we might take for granted may require temperature controls like bread and prepared sandwiches. Failure to maintain adequate controls can further reduce the product’s shelf life and increase wastage expense, adding up the total supply chain costs


Multi-temperature composite warehouses and vehicles

Such warehouses and vehicles are a cost-effective way for most companies to store and transport temperature-controlled products

Such warehouses and vehicles have up to five different temperature regimes, set-up as five different compartments in the same unit (i.e. frozen chilled, cold chilled, medium chilled, exotic chilled and ambient temperature compartments in one storage or transportation unit)

Benefits of composite warehouses and vehicles are:

a) better utilization of resources (i.e. transport and warehouses)

b) efficient service to the retailers (i.e. collective delivery of mixed temperature orders)


A Composite Transportation UnitA Composite Transportation Unit

-20 degrees Celsius

0 degrees Celsius

+5 degrees Celsius

+15 degrees Celsius


A Composite Transportation UnitA Composite Transportation Unit

Frozen Food, Ice Cream

Fresh Meat, Vegetables

Butter, Yogurt and Cheese Products

Poultry, Exotic Fruit, Potatoes


scm lecture 1 - part (c)

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