Supply Chain Management: Tate & Lyle - Case Study Example

 INDEX Introduction Page 3 1.1 Tate & Lyle: An Overview Page 3 2.1 Upstream and Down Stream integration Page 4 2.2 Supply Chain Page 4 2.3 Upstream Supply Chain Page 5 3. The Challenge of Logistics and Control Page 5 3.1 The Challenges Page 5 3.1.1 The Ingredients Page 6 3.1.2 Transportation Page 6 3.1.3 Other factors and logistics Page 6 4 The Control Measure Page 7 4.1 Control Measures- Raw Materials Page 7 4.2 Control Measures - Transport Page 8 5. The Alternative Theory Page 8 Conclusions Page 9 Reference Page 10 1. Introduction To address the diversified characteristics in todays Management protocols, the Gurus have drawn a bottom line that makes the meaning of entire exercise—the profit earned at the end of the day. Since the revolution in industrial sectors the need for more scientific approach to manage the show had kick started the genesis of modern management theory. Pounded under economic jargons, the nascent management science had been throttled for quite a long time. The subject had first winged in the azure on the post world war era, when the rebuilding and reconciliation was became the order of the day. After that, there was no looking back, with all its hue and color, the management science grows from strength to strength and the latest inclusion in their kitty was, among other so many wings, The Supply Chain Management. From the raw material to the finished product, from meadows to malls, the consumables, FMCG, high tech equipments or, to sum up, every thing that is being produced needs to undergo a seamless activity to reach the end user, encapsulated into the supply chain. The system is being maneuvered to optimize the costing and different other parameters . 1.1 Tate & Lyle- The overview. Tate & Lyle is one of the biggest manufacturers of sugar and related products. Based at U.K, Tate & Lyle caters an entire gamut of sugar related product (1).With innovative technology and the astute supply chain management that starts from the sugar cane from the fields to the dining table, the total process in respect of supply chain and logistics has been completed. Here in this dissertation, we are going to discuss these basics pertaining to Tate & Lyle supply chain. Upstream and Downstream Supply Chain The Logistical challenge faced by Tate & Lyle The steps taken to counter the challenge The Alternative procedure as per the theory The viability of the alternative process. All this process will be assimilated then to lead to a resultant theory. It is important in respect of the understanding the total process of logistics management in respect to the specified industry like Sugar Industry . The specific industry type governs the process of the said supply chain and in sugar industry it is important to understand the down stream and upstream integration first. 2.1 Upstream and Down Stream Integration in Tate and Lyle The complex as well integrated process of Up stream and Down Stream supply chain can not be addressed in a few words. The Supply Chain management is –“the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.”- (2) The basic three ingredient of supply chain are The Product Flow The Information Flow The Finance Flow. The product flow is the movement of goods from the supplier to the customer, at different level. Information flow is about passing on the informations on order and relevant delivery and the Finance Flow is related to the cash transaction, credit terms etc. In further investigation, we can reach in another two system that is considered to be the two basic pillars in todays inventory management, Upstream and Downstream Supply Chain Management. 2.2 Supply Chain Upstream Supply Chain Management is about improving the processes by sharing information and improving visibility of demand, demand changes and inventory. This will increase responsiveness to the manufacturing requirements and ultimately to the final consumers. In this unique case of Tate & Lyle in particular and sugar Industry as a whole, the supply chain will start from the fields. Raw Material Production Grocery Processing Distribution for Grocery Retailing The Tate and Lyle story starts with the production of sugar canes. The farmers are in direct touch with the organization and as per recorded history and the convention, here the farmers went home with a handsome profit. In spite of the liberalization, here producers are guaranteed to receive a basic price as intimated by the government. There are some regulatory protocols in the government that prevents Tate & Lyle to manufacture suger based end products, so the processed products are to be supplied to different manufacturers of confectionary and cold drinks. The basic sugar ingredient, sourced in imported sugar cane, makes the issue of particular upstream supply chain in somewhat tricky position. The nsame is not being taken indigenously; as a result, the link is missing in procurement process. Though there are several regulations in different countries in sugar production and the market price is being regulated, the interesting part is to accumulate the raw material from different part of the world, basically the ACP (African Caribbean and Pacific) linage and potentiating the upstream process in a specific direction 2.3 Upstream Supply Chain- The ACP Connection ACP Countries hyave taken the centrestage of some strategic supply of some important array of products including su gar, banana, cut flowers to name a few. The supply chain here depands in some specific factors. The supply Chjain moves in this way: As per the protocol arrangement with EC the sugar is procured from these ACP countries by Tate & Lyle International, the subsidiary of Tate & Lyle specially meant to procure the sugars Another subsidiary, Booker Trade takes care of sugar estates and the mills to have a smooth run around the globe. The raw sugar which is procured under the protocol was then exported in Tate & Lyle to get Refined. This Sugar procurement is for EU countries The Far East market is being taken care of by the refinery of Tate & Lyle International. All of the genesis can be traced back to the sugar protocol of 1935, when the steps were taken to save the industry after the onslaught of great depression. (3) All these relevant documents have manifested a singular directive of Upstream Management of Tate & Lyle- The different subsidiaries, protocol management in different level and the driving force to get the basic raw material from every part of the world to cater the market of EU region-Tate and Lyle has solved so many riddles to get the headway in Upstream Supply Chain management. 3. The Challenge of Logistics and the control measure The challenge in procuring the logistics and the further processing of the same can never been played as per copy book. The theory and the practical sense of functioning makes an yawning respect in each and every company and Tate & Lyle is no exception. 3.1 The Challenges The supply chain strategy requires a ‘whole of business transformation’ to develop cost efficient logistics systems, processes and facilities. Further supply chain objectives include improving waste minimization and recycling efforts. The Challenges are to be described first- 3.1.1 The Ingredients There are two companies in UK who deals with the raw sugar production- British Sugar and Tate & Lyle. Out of that, British Sugar relies almost completely upon the beets as raw material which means that the basic thrust of their business will be in some other fields along with the edible sugars as diverse as electricity production, bioethanol, animal feed and so on. (4) The condition of Tate and Lyle is different so far the logistics management is concerned. The raw materials are to be imported from ACP countries which, predominantly, sugarcane. That’s why, the specific supply chain management encompassing the sugar export protocol, socio economic milieu of the said countries and different tariffs and agreements makes a complex proportion. In 1996, The European Union has published the “Green Paper” to proliferate better bonding, dubbed as Loma Acquis (5). The reason of this discussion is to justify that when a trade expends beyond the boundaries the operating platform and the complexities change from place to place. By choice, Tate & Lyle is forced to operate under these critical condition, Naturally, the logistic and Supply Chain Management has to be different that that of the others. 3.1.2 Transportations The transportation is a strategic point so far the management of sugar processing is concerned. The sugar and the derivatives need to be transported within stipulated time. The OEM group Secureseal very recently won the contact of logistic transportation with Tate & Lyle which will further minimize the inventory loss because of the specialized approach of the transportation company in the sugar segment (6) 3.1.3 Other factors in Logistics Fluctuation of raw material price, different territorial legislation, exchange rate fluctuation leads to the logistic disturbance for all trans national organization and Tate & Lyle can not be immune to that. These factors bear deep seeded impact in controlling the logistics process. 4. The Control Measures Like all identified problems which require an imminent solution, Tate & Lyle has been in constant pursuit to overcome all huddles. As a public limited company, Tate & Lyle is committed to strive hard in each and every respect to gain the confidence of the shareholders and patrons. The control measures basically aim to get the challenge resolved to garner better productivity, be it in the field of sales and marketing or in the area of supply chain and logistics management. In this discussion already two points have been raised pertaining to logistics. Now we shall probe deep into it. 4.1Control Measures- Raw Materials The issues have already been touched; let us probe in a thorough manner. The Ingredients are basically sugarcane that is being produced in ACP Countries. The total no of countries in ACP are 18 and the economics of some of the countries solely depend upon sugar, sometime the export turns out to be one forth of total GDP of some of the countries. Formed on London on 1951, under the umbrella of CSA- Commonwealth Sugar Agreement, this specific group of organizations is being formed to regulate the condition of the sugar export in European countries. As a result, these different loose threads end up to bond a consolidation through the passage of time. The main ingredient is sugar and the basic problems faced by the present countries on the aftermath of the Common Market Organization (CMO) -1995 proposal are nothing but some uncomfortable conditions conjure in this way. “Macro-economic instability; The crippling of national efforts to meet the UN Millennium Development Goals; The closure of countless estates; The complete undermining of modernization efforts already underway within the sugar industry; The failure of smallholders' cooperatives and collapse of local farmers' banks; Massive unemployment, rural instability and urban migration; A dramatic and alarming increase in poverty; Increased crime; National destabilization in all ACP countries and heightened insecurity in the Caribbean region; and environmental degradation.” (7) No prize for guessing, this type of vulnerable social contestation has taken the tool of already vulnerable economy. To sum up, all organization who wish to move their logistics must follow the problems To counter this type of problem which, keep on brewing it needs some measurement. The welfare of these farms is very much important in this aspect. Tate & Lyle has taken this type of developmental program on top priority and the smooth sailing is possible owing to that. 4.2 Control Measure- Transportations Tate & Lyle is in a business which is very much dependent over the time bound movement of logistics. Otherwise, the entire process may go waste as the ingredients will be in stale condition. To counter this problem these measures are to be taken and the organization has responded positively in this aspect. There are these measures that is to be taken To produce the raw materials in situ condition To transport the same with utmost precaution For the first point, Tate & Lyle has formed various subsidiaries in ACP countries. As a result, the sugar is being produced in the same vicinity of the field. Then this sugar can be shipped to the EU countries as the protocol only allows Tate & Lyle to market in a stipulated field. To solve the transport problem a new agent has been commissioned to carry the logistics to the Silverton Refinery for further processing and polishing. The freight forward agent is, as mentioned earlier, Secureseal with the innovative approach to carry this highly perishable commodity. To summarize the issue one thing can be said—the logistic and supply chain management of this type of commodities has undergone various changes and many a time overhauling to meet the competitive demand of the situation. Tate and Lyle should improvise their position to post a befitting reply to the question of logistics handling. 5. The Alternative Theory The Tate & Lyle saga for the pursuit of better product and logistics can be handled in numerable different ways. There are some basics of functioning that should remain unaltered and the fundamentals and safety should not be compromised. The supply chain management can be analyzed by the tools like Operational research or Game Theory (8). As a result, specially this case of Tate & Lyle can be given a paradigm shift if the policies are to be implemented. The usage of information and technology has tremendous potential in analyzing the system of supply chain management. The versatile use of SAP software or other peripheral usage will be greatly effective to solve out the logistics questions The conventional LIFO or Just in Time techniques can also be judged to fathom out the problem. The proper monitoring of logistics and the inventory movement should be taken with highest priority. The economic condition as well as the test of better life is omnipresent and the Tate & Lyle can take a leaf or two out of it. To provide the goodies exclusively chiseled out in Silver Town Refinery, the organization can open the niche facility in different places of APC region. The transportation cost will be curtailed and the organization may immerge as the vanguard in those immerging market like Brazil or India. Instate of sugarcane, Tate & Lyle can venture into their competitors territory. They can make the sugar from beets instead. All these suggestions, backed by thorough research, and study of market viability can do wonders to the coffers of Tate and Lyle. The organization may taker the same as specific project, work on it start a mini scale project, scale it up to culminate to another pilot project- depending upon the viability from logistics and other point of view. Conclusion The market scenario has been brightening up once again as the organizations post a handsome profit, including Tate & Lyle. In 2008 the net sales was £ 2867 million while it zooms past £ 3500 Million in the financial year of 2009. In this era of resurgent economy, the organizations can take the liberty to mark experiments for better. It is the high time for Tate and Lyle, the sugar giant of Europe to take the strides for further growth. The stumbling blocks will be no more and the organization will herald a new dawn in days to come with the scientific approach towards the supply chain and logistics management. *************************** References 1: 1.1 http://www.tateandlyle.com/TateAndLyle/default.htm Sourced on 4th may,10 2 :2.1 http://www.mariosalexandrou.com/definition/scm.asp Sourced on 4th may,10 3 2.1 http://books.google.co.in/books; page-84-87, Supply Chain marketing and Power mapping; Bayer and Supply Power Regime; Rutledge Publication,2003,ISBN- 0-415-257271 Sourced on 4th may,10 4; 3.1.1 http://www.britishsugar.co.uk/RVE537249b2526241a2a527857957025b9a,,.aspx Sourced on 4th may,10 5 3.1.1 http://www.arena.org.nz/REPA.pdf " A peoples Guide to the Pacific's economic partnership agreement"Page-16-17 6 3.2.1 http://www.secureseal-systems.com/usa/press_19.php 7 4.1 http://www.acpsugar.org/SOS.html 8 5. http://en.wikipedia.org/wiki/Game_theory Read More