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Got Milk - It’s Good for You – Unless It Is Contaminated
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Got Milk - It’s Good for You – Unless It Is Contaminated

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  • 1. {got milk?It’s Good for You – Unless It Is ContaminatedDavid HewittChris GrovesJonathan Hannahs
  • 2. Chinese people have nottraditionally consumed milk.Synopsis
  • 3. China now consumes 25 million tons of milkyearly. Putting it ahead of both France andGermany globally.Synopsis
  • 4. Demand has outpaced supply which hascaused profit seekers to enter the market.Synopsis
  • 5. In 2008, melamine, an additiveused to make plastic, wasdiscovered in the milk supplyof China’s 3rd largest dairyproducer, Sanlu.Synopsis
  • 6. Melamine was added to themilk to make it test higher forprotein content, thus gettinghigher prices in the market.Synopsis
  • 7. 4 infants died from melamineingestion and over 53,000 infantsfell ill because of thecontamination..Synopsis
  • 8. China’s 4 largest dairyorganizations, accounting foralmost 50% of the country’sdairy production, pulled theirproducts from shelves.Synopsis
  • 9. China’s 4 largest dairyorganizations, accounting foralmost 50% of the country’sdairy production pulled theirproducts from shelves.SynopsisOver 20 countries banned not only Chinese dairyproducts but also candies, cookies, and chocolates.
  • 10. The scandal has caused a lossof confidence in China’s dairyindustry that could take yearsto repair.Synopsis
  • 11. SynopsisDairy Supply Chain in ChinaSmall Dairy Farmer Milking Station Middlemen TransportLarge Dairy Production& Distribution FacilityGroceryConsumer
  • 12. SynopsisDairy Supply Chain in ChinaAs the market heated up, new privately ownedmilking stations popped up, often right beside theestablished stations, offering higher prices for themilk.
  • 13. SynopsisDairy Supply Chain in ChinaCorners were cut at the milkingstations and with themiddlemen because testing wasnot typically done until it wasdelivered to the large dairyproducers.
  • 14. SynopsisIt was revealed that officialsknew about the contaminationproblem for months beforeinforming the public.Numerous dairy officials weresent to prison and 2 primarymiddlemen were sentenced todeath.
  • 15. SynopsisStarbucks has now launched anew line of coffees that aregrown by farmers in China andit hopes to bring the product toconsumers worldwide.Worldwide launch is dependenton how fast farmers can ramp-up production to meet demand.
  • 16. SynopsisCould this be the start ofanother issue of Chinesebusinesses cutting corners tomeet demand?
  • 17. Question 1: Explain why the supply chaincan dramatically impact a company?
  • 18. Question 1: Explain why the supplychain can dramatically impact acompany?A supply chain is a system of organizations,people, technology, activities, information andresources involved in moving a product orservice from supplier to customer.
  • 19. Question 1: Explain why the supplychain can dramatically impact acompany?In recent years, supply chainmanagement has grown inimportance as business looksto gain better efficiencies intheir supplier network andoutsource more of theirproduction to othercompanies both locally andglobally.
  • 20. Question 1: Explain why the supplychain can dramatically impact acompany?Companies such as Dell have developed acompetitive advantage through their supplychain management by working with theirsuppliers to enable the company to carry verylittle inventory and source parts as the productis ordered by the customer.
  • 21. Question 1: Explain why the supplychain can dramatically impact acompany?Dell often requires theirsuppliers to locate close tothe company’s factories anddeliver products as they areordered.
  • 22. Question 1: Explain why the supplychain can dramatically impact acompany?Retail giant Walmarthas been able to gainbetter pricing fromcompanies such asProctor & Gamble byintegrating their supplychain so that salesinformation is passeddirectly to Proctor &Gamble.
  • 23. Question 1: Explain why the supplychain can dramatically impact acompany?Walmart has gained a sustainablecompetitive advantage over its competitorsbecause of the price advantages gained in afully integrated supply chain.
  • 24. Question 1: Explain why the supplychain can dramatically impact acompany?Supply chains can not only have a positiveeffect on a company’s bottom line but canalso affect the company in negative ways.Consumers hold the brand, not itssuppliers, responsible for the quality of aproduct.
  • 25. Question 1: Explain why the supplychain can dramatically impact acompany?As companies source globally,supply chain disruptions canoccur which can affect theprofits of a company if theysource materials from onesupplier or one region.
  • 26. Question 1: Explain why the supplychain can dramatically impact acompany?Companies must ensure product qualitywithin the entire supply chain. Fromrestaurants to car manufacturers to shoecompanies, the consumer holds the brandresponsible for the entire production of theproduct from raw material to store shelf.
  • 27. Question 2: List all of the products thatcould possibly be affected by a problem inthe U.S. Milk supply chain.
  • 28. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Milk
  • 29. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Cheese
  • 30. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Butter
  • 31. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Yogurt
  • 32. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Cottage Cheese
  • 33. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Boxed Cereals
  • 34. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Cereal Bars
  • 35. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Sandwich Breads
  • 36. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Crackers
  • 37. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Lunch Meats
  • 38. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.Vegetarian “Meat”Products
  • 39. Question 2: List all of the products thatcould possibly be affected by a problemin the U.S. Milk supply chain.If there were disruptions in the U.S. milksupply, the price of meat could also fall if dairyfarmers were forced to slaughter the cattle formeat instead of milking them.
  • 40. Question 3: How can a CRM system helpcommunicate issues in the supply chain?
  • 41. Question 3: How can a CRM system helpcommunicate issues in the supply chain?Customer relationshipmanagement involvesmanaging all aspects of acustomer relationshipwithin an organization toincrease customer loyalty,retention, and anorganization’s profitability.
  • 42. Question 3: How can a CRM system helpcommunicate issues in the supply chain?Customer contact is oftenone of the first signs ofissues with a productquality once the producthas reached market.
  • 43. Question 3: How can a CRM system helpcommunicate issues in the supply chain?Because a CRM system can track customer complaints, acompany can use the CRM system to help pinepoint a qualityissue within the supply chain.Understanding where complaints are originating, with whatproducts, and what the issues are, can quickly uncoverproduct problems for a company and those issues can beisolated to a specific supplier within the supply chain.
  • 44. Question 3: How can a CRM system helpcommunicate issues in the supply chain?In order for a company toquickly understand issueswithin the supply chain,the company must closelymonitor its CRM systemand identify productquality issues quickly.
  • 45. Question 4: How could BPR help uncoverissues in a company’s supply chain?
  • 46. Question 4: How could BPR help uncoverissues in a company’s supply chain?Business process reengineering (BPR) is theanalysis and redesign of workflow within andbetween enterprises.The purpose of BPR is to make all businessprocesses the best-in-class.
  • 47. Question 4: How could BPR help uncoverissues in a company’s supply chain?Michael Hammer and JamesChampy published their best-selling book, Reengineering theCorporation, where the authorspromoted the idea of radicallyredesigning the enterprise bywiping the slate clean.
  • 48. Question 4: How could BPR help uncoverissues in a company’s supply chain?New information technology,including the ability for peoplethroughout the supply chain tocommunicate in real time andthe ability for controls andmonitoring to be institutedthroughout the supply chain,is often a driver of processreengineering within theorganization.
  • 49. Question 4: How could BPR help uncoverissues in a company’s supply chain?By reengineering workflows with better quality controlswithin the production process, companies can more easilyuncover issues within the supply chain at their source.Through breaking down the processes of the business andorganizing around outcomes, companies can uncover andremove inefficiencies in their processes.
  • 50. Question 4: How could BPR help uncoverissues in a company’s supply chain?In the insurance industry, claims typicallytook 31 days to process from the time ofthe accident to the resolution. Progressivewent through the BPR process and slashedthe process from 31 days to 4 hours byoffering a mobile claims process where thecompany went directly to the site of theaccident, processed the claim on site, andissues a check or arranged repair withinone of its shops.
  • 51. Question 4: How could BPR help uncoverissues in a company’s supply chain?How could BPR help the Chinese dairy industry?China’s dairy industry could pinpoint areas in the productionprocess in which suppliers are cutting corners and designquality checks at those points so that tainted milk doesn’tenter the larger supply. By reengineering the process to insurefor quality control, the dairy industry can improve itsreputation and work towards eradicating such lapses inproduct quality in the future.
  • 52. Question 5: What are the pros and cons forStarbucks of outsourcing the growing of itscoffee beans to Chinese farmers?
  • 53. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Pros:Starbuck has beenclosing stores in the U.S.to cut costs. Starbuckcould cut costs bysourcing its coffee beansfrom China, wherelabor costs are lower.
  • 54. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Pros:Coffee is often priced bythe brand name of thecoffee. Starbuck coulddramatically decrease thecost of its supply bybuying a more genericAsian blend and creating amarket for its coffees.
  • 55. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Pros:Starbucks couldsource beans for itsAsian stores closerto where they arelocated if it were tobuy beans fromChinese farmers.
  • 56. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Pros:Starbuck has plans toopen 1000 new stories inChina over the next fewyears and sourcing theircoffee from within Chinawill be favorable for thecompany with theChinese government.
  • 57. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Cons:Chinese food products havehad issues with quality.Because the demand forcoffee is outpacing itssupply, much like the casewas in the dairy industry,there are opportunities forsuppliers in the productionof Chinese coffee to cutcorners.
  • 58. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Cons:Starbucks has built areputation to source fair-trade coffee from smallfarmers in developingcountries. If Starbucksmoves forward with its plan,the Chinese plantationscould more closely resemblecorporate farms.
  • 59. Question 5: What are the pros and consfor Starbucks of outsourcing the growingof its coffee beans to Chinese farmers?Cons:Starbucks has built areputation of superiorquality for its coffee drinks.By branding Starbucks as atrusted provider of premiumcoffee, it has enabled thecompany to charge highmargins for its coffee drinks.China is not known forquality coffee.
  • 60. Conclusions and Recommendations
  • 61. Conclusions and RecommendationsChinese dairyproducers should useBPR to institute qualitycontrol within the dairysupply chain.
  • 62. Conclusions and RecommendationsThe dairy producersshould modernize theircustomer relationshipmanagement systems toquickly spot issues fromcustomer complaintsregarding quality.
  • 63. Conclusions and RecommendationsStarbuck should move cautiouslywhen rolling out the Chinesefarmer’s coffee products. Thecompany should consider gainingexperience with the Chinesefarmers by introducing the coffeelocally before taking the productglobal.
  • 64. Conclusions and RecommendationsStarbuck should work with theChinese government to establishregulatory guidelines for thecoffee industry while it is in itsinfancy.