Adopting green and sustainable technologies that are energy efficient is one method food companies are investing in. Fellows states that improvements in energy efficiency make food companies more competitive. Therefore, firms have incentives to adopt green and sustainable technologies that generate additional sales, reduce costs, and thereby increase profits for shareholders. Transportation is one component of the supply chain that can greatly benefit from advances in green technology, particularly for vehicle maintenance and certain fuels although that depends on the application and the present market conditions for fuel.
Ethanol E used in flexible fuel vehicles is often much cheaper than gasoline on a per gallon basis; however, ethanol results in fewer miles per gallon. This is because the gasoline gallon equivalent GGE or the amount of alternative fuel it takes to equal the energy content of one liquid gallon of gasoline, is greater in ethanol.
One gallon of E has about However, proponents of E claim this is simply due to the fact that automotive manufacturers currently fail to take advantage of characteristics that are superior in ethanol-based fuel blends.
Biodiesel, while more expensive than petroleum diesel, can be used in a standard diesel engine without the need for special modifications. While fuel costs for biodiesel exceed costs for petroleum diesel, short-term engine wear has been found to be less than petroleum diesel. In spite of the benefits, the production of certain biofuels may increase food prices.
Farmland that was once dedicated to producing food for human consumption or fodder for livestock is now diverted to the production of biofuel. Nevertheless, the lure of reducing transportation costs increases the competitive nature of profit-seeking firms and, ultimately, could benefit the consumer.
The use of fossil fuel alternatives such as ethanol and biodiesel are still controversial, but there is no denying that these alternatives are drawing increasing amounts of attention from firms seeking sustainable, cost-reducing practices. Packaging Figure 4 is another example of a technology in the food industry that has a significant effect on the supply chain and the environment.
Recently, the food industry has focused its attention on reducing the amount of total packaging materials while improving the quality and shelf life of the products. These innovations will continue as important trends while retailers will be continually challenged to reduce the amount of packaging waste.
British retailers Sainsbury and Tesco have had great success in reducing the amount of packaging they use, which decreases their costs and contributes to their bottom line.
Other green technologies include the use of natural fertilizers and pesticides in the production of organic foods, although there are limitations to the practicality and marketability of such products.
In many cases organic food production is more expensive when compared to conventionally produced food. This is partly due to the increased cost labor, post-harvest handling, yield losses, technological limitations, and the demand associated with organic food production. With this in mind, "organic food production is not on its own enough to grant the whole food chain sustainability" Mariani As a result, attempting to feed the world with organic foods or the technologies associated with their production would not be realistic.
However, they are important parts of the food system and present strong marketing opportunities. These technologies are not without their limitations. Technologies may have high capital costs and, depending on the size of the firm, these investments may not be feasible.
For example, RFID technology has limits to its performance. According to Welt , lack of hardware interoperability has been a major limiting factor for RFID implementation. Certain products such as liquids can interfere with the transmission of the electromagnetic waves to the terminals and result in a "bad read" of the data.
Also, GPS can have problems with the transmission and reception of the satellite signal. If the signal is disturbed, then the location of the product in transit will be unknown.
The accuracy of that signal may also be in question. GPS may only be able to track a product's location to within a certain range despite recent innovations in GPS technology that have made this less of an issue. Information technology has limitations as well. Older generations may have a difficult time adjusting to newer standards and applications, whereas younger individuals may find the use of these technologies much easier. Information technology also requires the expertise of individuals who are trained to understand the complexities of the system in order to maintain and troubleshoot it.
This takes time, energy, and money. Firms need to calculate and determine if the benefits outweigh the costs of administering such a system. Depending on the type of system, privacy may be an issue.
With the rise of the Internet and the information age, threats of stolen information are a real risk. There are also disadvantages associated with green technologies, and given their current state, they may not be practical for all firms. While green technologies may have a positive environmental impact, the financial cost of implementing the technologies may outweigh the benefits.
Also, depending on the location, green technologies may not be practical or well suited for a particular environment. For example, you wouldn't want to use wind turbine energy in a location such as the southeastern United States, which frequently experiences hurricanes and tropical storms.
Availability is another disadvantage, especially with biofuels. In the United States, our infrastructure is still heavily dependent on fossil fuel derivatives, so using alternatives such as ethanol and biodiesel is not a practical solution to meet every need in the food industry.
As stated before, technology has the potential to increase profitability and efficiency by strengthening supply chains. Increasingly, there is more competition between supply chains than between individual firms, and technology has unquestionably played an integral role. Firms in the food industry must weigh the benefits and the costs before deciding if a certain technology is appropriate for their given business model.
Electronic devices, information technology, and green and sustainable technology are just some options that managers and stakeholders can incorporate into their supply chain, but those options are not without limitations. Download Free PDF. Lalinda Geekiyanage. Icmr Icmr. A short summary of this paper. Download Download PDF. Translate PDF. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
The case was compiled from published sources. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means — electronic or mechanical, without permission. Website: www. Any lack of accurate information and processes creates costly bottlenecks in the flow of goods and materials.
Wal-Mart was the largest retailing company in op the world. The company also sold products on the Internet through its tC website, walmart. According to analysts, Wal-Mart was able to achieve a leadership status Refer Exhibit II in the retail industry because of its efficient supply chain management practices.
Captain Vernon L. No one does that better than Wal-Mart. In his first job, Walton had displayed the qualities of a good salesman. He realized the importance of building loyalty among customers as well as employees. In the mid s, Walton gave up his job and decided to set up his own retail store.
He purchased a store franchise from Ben Franklin in Newport, Arkansas. It was here that he learnt his first lessons in retailing — offering significant discounts on product prices to expand volumes and increase overall profits. The business was successful and Walton soon acquired a second store within three years.
Walton not only looked for opportunities to open stores in other small towns but also explored the possibility of introducing innovative practices such as self-service. As the need for people to manage his stores increased, Walton tried to attract talented and experienced people from other stores. By the y late s, the retail chain had established a pharmacy, an auto service center, and several jewellery divisions.
Customers could buy goods at wholesale prices by becoming members and paying a nominal membership fee. No Wal-Mart suffered a setback in , when Walton died after a prolonged illness. But it continued its impressive growth in the s, focusing more on establishing its stores overseas.
In , Wal-Mart expanded its operations in Mexico by entering into a joint venture with Cifra. Two years later, the company acquired Woolco stores from Woolworth, Canada. By , Wal-Mart had become the largest volume discount retailer in Canada and Mexico. In January , Wal-Mart expanded its German operations by buying 74 stores of the hypermarket chain, Interspar. The stores were acquired from Spar Handels AG, which owned multiple retail formats and wholesale operations throughout Germany.
By , Wal-Mart had emerged as the largest company in the world in terms of revenues. Analysts felt that Wal-Mart had come a long way since , when the company generated annual revenues of more than a billion dollar for the first time. By , the company was doing a billion dollar business in a week and by , it was crossing the billion dollar mark in every 1. The company was able to offer a vast range of products at the lowest costs in the shortest possible time.
The company procured goods directly from manufacturers, bypassing all intermediaries. Wal-Mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that the products being bought were not available elsewhere at a lower price. That is the job. And your customer deserves the best prices that you can get. He always knows what he can sell, and we want his bottom price. Our truck will pick it up at your warehouse. Now what is your best price?
By making the process transparent, the retailer could be certain that the manufacturers were doing their best to cut down costs. Once satisfied, Wal-Mart believed in establishing a long- op term relationship with the vendor. However, the company, generally, preferred local and regional vendors and suppliers. Over 80, items were stocked in these centers.
According to rough estimates, Wal-Mart was able to provide replenishments within two days on an average against at least five days for competitors. Shipping costs for Wal-Mart worked out to be roughly 3 percent as against 5 percent for competitors.
No Each distribution center was divided into different sections on the basis of the quantity of goods received and was managed the same way for both cases and palletized goods. The inventory turnover rate was very high, about once every two weeks for most of the items. Goods meant for distribution within the US usually arrived in pallets, while imported goods arrived in re-usable boxes or cases. In some cases, suppliers delivered goods such as automotive and drug products Do directly to the stores.
The distribution centers ensured a steady and consistent flow of products to support the supply function. As Wal-Mart used sophisticated barcode technology and hand-held computer systems, managing the center became easier and more economical. Every employee had an access to real- time information regarding the inventory levels of all the products in the center.
They had to just make two scans — one to identify the pallet, and the other to identify the location from where the stock had to be picked up. Different barcodes were used to label different products, shelves and bins in a center.
The hand-held computer guided an employee with regard to the location of a particular product from a particular bin or shelf in the center. When the computer verified the bin and picked up a product, the employee confirmed whether it was the right product or not. The quantity of the product required from the center was entered into the hand-held computer by the employee and then the computer updated the information on the main server.
The hand-held computer also enabled the packaging department to get accurate information about the products to be packed. It displayed all information about the storage, packaging and shipping of a particular product thus, saving time on unnecessary paperwork. This enabled the company to satisfy customer needs quickly and improve the level of efficiency of the distribution center management operations.
Each distribution center had facilities for maintaining personal hygiene such as shower bath and fitness centers. It also had provision for food, sleep and personal business. The distribution center could also be used for meetings and paperwork. The truck drivers of Wal-Mart sometimes availed these facilities. The distribution centers were serviced by more than 3, company owned trucks. These dedicated truck fleets allowed the company to ship goods from the distribution centers to the stores within two days and replenish the store shelves twice a week.
The truck fleet was the visible link between the stores and distribution centers. The major role of the supply chain management is to assure that the demand of customers is met with the supply of the products. It has to be assured that the companies never produce extra or insufficient products. Here we have everything you should know about the supply chain roles and responsibilities. Supply chain management is an integral part of the business organizations and important for the success of the company.
Due to the rapid advancement in technology, most of the business organizations are available online. The market is becoming competitive and thus increasing the role of supply chain management.
Due to this reason, demand for supply chain management qualification is growing worldwide. One of the most important supply chain roles and responsibilities is to manage the customer service. The customers should always get what they are looking for. Whether it is a product, solution to their issues or answers to their questions. The first and most important thing managers have to do is to reduce the production cost of the items.
It is done by:. It is a fact that the production cost of the products has to be reduced but at the same time, the quality of the items has to be enhanced.
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