Operations and Supply Chain Management of the Davids Tea Company - Case Study Example

DAVID’S TEA COMPANY Table of Content Executive Summary…………………………………………………………………... 3 Introduction ……………………………………………………………………………4 Background Information……………………………………………………………… 4 Operations and Supply Chain Management of the David’s Tea Company………….…5 Marketing Strategy Applied by the David’s Tea Company…………………………… 5 David’s Tea Inventory Management…………………………………………….…….. 6 Network Planning ……………………………………….. …………………………….7 Supply Contracts……………………………………………………………………….. 8 Value Information………………………………………………………………...........8 Supply Chain Integration……………………………………………………………….8 David’s Tea Distribution Strategies …………………………………………………….8 Conclusion ……………………………………………………………………………...9 Recommendations………………………………………………………………………9 Bibliography…………………………………………………………………..……….11 Executive Summary David’s Tea Company was started by Seagal in 2008 with its first shops located in Toronto. The Company has expanded its shops to approximately 40 locations in the current hotel industry. It is considered among the companies that have been successful over the last six years owing to the fact that it has applied proper and appropriate business operational strategies: Some of strategic modes of operation have been ascribed to its mode of pricing, selection and provision of quality tea products as well as the distribution strategies. However, it is evident that the current hotel industry is characterized by high level of competition; the recommendations section of this discussion provides a way forward that can be applied to over-come the challenges that may be posed by threats of future business competition. Introduction The concept of supply chain management as part of business processes entails control of the flow of goods and other services. Basically, it involves activities directed towards the storage of raw goods, inventory management as well as goods that have been finished. Some business stakeholders have also described supply chain as the relationship that occurs between the processes involved in provision of goods and services that are provided to the end user (Customer). This discussion shall focus on the Operations and the Supply Chain Management Processes of the David’s Tea. Specifically, it shall focus on the operational strategies of this company, describing its processes of inventory management, strategies alliances, and outsourcing as well as procurement strategies among other facets of supply chain management within the organization. 1 Background Information The Company was started by David Seagal when he was only on his twenties. David’s Tea Company focuses on provision of unique blends of tea as well as customary blends. The first shop opened by the Company, is located in Toronto and was opened in 2008 by David and his colleagues who are the major shareholders of the Company. David’s Tea has engaged itself in various research activities geared towards determining effective ways through, which it can provide quality services to its clients. The Company focuses on provision of over 120 different types of tea leaves that comprises the company’s seasonal and permanent blends of tea In addition it focuses on making efforts directed towards introducing new blends of tea to the Company’s premises on a weekly basis. The Company focuses on creating and maintaining relationships with its clients. Operations and Supply Chain Management of the David’s Tea Company The company has applied various modus operandi to undertake its services. To begin with, the Company has applied the selection, employment and recruitment as well as the maintenance of staff in its premises. Employees at David’s Tea are equipped with proper skills that enable them operate and provide quality services to the Company’s employees. This has facilitated the efforts of the company directed towards developing and maintaining proper customer-relationships. In addition, the Company has undertaken initiative directed towards expanding its services towards expanding its services to other parts of Canada. Since the year 2008, the company has extended its services to other parts of the Canada to approximately 40 locations. In 2012, the Company was ranked among the most successful companies owing to the fact that it opened approximately 25 stores, indicating its high level of success. 2 David’s Tea Inventory Management The Company keeps a stock of a variety of approximately 120 different tea leaves; these are usually offered as unique tea blend at an affordable price to the clients in various parts of Canada. The Company offers 35 blends of tea products in a permanent dimension, while 25 blends of tea offered by the Company are provided on a seasonal basis. Currently, the company has not placed its shares in the stock market for purchase. In addition, the management team led by Seagal has not shown any intention to sell some of its shares to interested stakeholders. Network Planning The company owns over 40 tea shops distributed strategically in various parts of Canada; majorly in the cities. The shops are organized in a manner that they offer similar products, taking into consideration the objectives and the aims of the Company. Moreover, the Company has made initiates directed towards developing and maintaining networks with its client in various parts of Canada. For instance, David’s Tea Company has currently made efforts directed towards engaging its clients in social, media, print media and other forms of media i.e. Television programs. Recently the company published articles that inform its clients of the specific products offered in each of its shops across Canada.3 However, there is no intention so far by the Company’s management team to sell or engage in partnerships with other stakeholders. Supply Contracts The Company involves itself into various agreements with farmers around the world that produce tea leaves to supply it with the tea leaves. On the other hand, it also operates under specific terms of agreement with regard to shipping of tea products to various parts of the world, especially the United States of America and other parts of Canada. For instance; it provides free shipping of tea products amounting to 50 dollars or more to the United States or other parts of Canada. This shipping takes a specific period of time i.e. 1-2 business days depending on the location for example shipping to British Columbia takes approximately 5-7 days while shipping to Georgia takes 6 days. This could be attributed to the current success that has been exhibited by company owing to the fact that it has extended its services to other parts of the world. Value Information David’s Tea Company has been successful due to the fact that the company’s management has made efforts directed towards creating awareness of its products among its clients. For instance, a recent research indicated that the Company has published an article that informs various clients of the specific services and products offered among its shops. Moreover, the success of the Company can be attributed to the awareness creation that its management has made over different social networks; the Company runs its own web page that can be accessed by different users all over the world. It also has a facebook and twitter account where it interacts with its clients. Consequently, the success of the company can also be attributed to the fact that it undertakes research geared towards identification of new and quality tea products in various parts of the world. 4 Supply Chain Integration David’s Tea Company operates under a relatively less complex supply chain; its supply chain is embedded on the various tea leave that it purchases from farmers or tea producers in different parts of the world. The tea leaves are kept in a store where only the management team access, especially if they are new blends of tea; the storage of new brands is majorly undertaken in order to avoid replication by its competitors. The supply chain of the Company is part and parcel of its operational process and is the basis of its success; that is, the company has been successful in identifying and accessing over 120 varieties of tea leaves that have facilitated its success. In addition, its employees are also actively involved in the supply chain process and are usually subjected to weekly meetings and refresher trainings geared towards making employees aware of the different brands of tea offered and how they are pertinent with regard to improving health. David’s Tea Distribution Strategies The Company employs a distribution strategy that involves locating its shops and tea centers in strategic regions in various parts of Canada. For instance: The Company has one of its shops strategically located in Vancouver, specifically along the Vancouver West 4th Street; this is a region that is highly populated with urbanites that are tea lovers. Some of its tea shops are located in Park Royal Mall, West Vancouver, Oakridge Center Mall, Guildford Center and Brentwood Mall. The manner through, which the Company chooses locations for distribution of its services, indicates a scenario whereby it attempts to encourage its customers to purchase their tea products as they perform shopping. These areas are also characterized by high traffic along the streets indicating that the company intends to attract a large number of clients. It is possible that the mode through, which the David’s Tea Company selects its distribution locations enables it to select and sample the needs of the clients thus, facilitating their efforts directed towards provision of specific products to their clients.5 It is also possible that it enables the Company to create awareness regarding its products to various clients as well as new customers. Conclusion An analysis of the operations and the supply chain management applied by the David’s Tea Company indicates different pertinent issues. The first issue emerging from the analysis is that the company employs various modes of operations that have facilitated its success in the current competitive hotel industry. The first mode of operation applied by the company is based on its unique pricing and product distribution strategy that has enabled it attracts a large number of clients over time. Moreover, it focuses on research and innovation as an imperative mode of operation that has enhanced its efforts directed towards identification and provision of new and quality tea products. These can be attributed to its success and its high level of competitive advantage. Recommendation Despite the fact the company has been successful over the last six years; it is obvious that the ever changing business environment characterized by high rates of competition could jeopardize its success in the future. This calls for the application of proper and efficient operational strategies in order to maintain and improve its success. For instance; the company can focus extension of its services and thorough marketing that does not only focus on urban centers but also in rural and remote areas. The Company has not shown any interest in forming a strategic alliance with any other company; however, research has shown that strategic alliance with regard to business operations forms an imperative strategy that can be applied by businesses to facilitate their success. Bibliography Dow Jones & Company. "A Battle in Brewing." The Wall Street Journal. http://online.wsj.com/news/articles/SB10001424127887324436104578579683491449180 (accessed April 4, 2014). "Adding to cart...." DavidsTea. https://www.davidstea.com/ (accessed April 4, 2014). "Davids Tea Marketing Plan." Davids Tea Marketing Plan. http://www.slideshare.net/KyleBuyers/davids-tea-marketing-plan (accessed April 3, 2014). David, Simchi-Levi, Kaminsky Philip, and Simchi-Levi Edith. Designing & Managing the Supply Chain. Concepts, strategies & case studies. Toronto: McGraw-Hill Irwin , 2010. "Retail Case Study #1: How David’s Tea uses Twitter to generate more sales." At Work with Kim Vallee. http://kimvallee.com/how-retailer-can-use-twitter-generate-sales/ (accessed April 4, 2014). "Steeped in success." Canadian Business. http://www.canadianbusiness.com/business-strategy/steeped-in-success/ (accessed April 4, 2014). "Supply Chain and Operations Management." Supply Chain and Operations Management. http://www.carlsonschool.umn.edu/undergraduate/academics/majors-minors/supply-chain.html (accessed April 4, 2014). Read More