1. 1
Title: The Location constraints on the different
elements within a supply chain for a whey protein
supplement.
Author: Carys Lauren Cook
Student Number: D00171851
Date: 19th
/October/2015
Lecturer: Tony Lennon
Subject: Operations Management
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Introduction
Virtually all supply chains on the continuum of goods and services are processed
through industries that are categorized as Primary, Secondaryand Tertiary.
(Lennon, 2015/2016) In this report I will discuss the location constraints on the
different elements within a supply chain for a Whey Protein supplement from the
brand Precision Engineered.
Primary Industry
A primary Organisation is one that extracts materials from nature. (Lennon,
2015/2016)
Whey protein is supplied to H&B by leading dairy supplier, Freislandcampina,
based in Denmark. (www.HollandandBarett.ie, n.d.) They believe in “outdoor
grazing” cattle to increase the quality of their products
(www.Freislandcampina.com, n.d.). Once the required amount of protein has been
produced it is shipped to H&B’s manufacturing warehouse in Burton-Upon-Trent,
England.
Primary Industry Constraints
Denmark produces the highest quantity of milk, per year, in Europe
(www.Icos.com, n.d.). Due to the large demand, of protein, required by H&B, local
producers in England cannot satisfy the quantity needed. We may assume that it
would costthe company more to sourcetheir protein from a non-local supplier,
however as a result of a greater quantity of the good being produced, “thelower
per-unit fixed cost is, because the costs are shared over a larger number of goods”.
(www.Investopedia.com, n.d.)
SecondaryIndustry
A secondary industry refers to manufacturing organisations. The main function of
these organisations is to assemble components. (Lennon, 2015/2016)
Once shipment is received, it is transferred to land transportation -i.e. Trucks or
trains, who deliver it to the H&B warehouse. A sample of protein is sent to a
company called Ecolab which is the global leader in hygiene technology services.
(www.ecolab.com, n.d.) The protein is tested to ensure its high quality. Once
approved, it is returned to the warehouse, packaged and labelled. It is then moved
to a holding depotto await shipment to retail outlets. (O'Connell, 2015)
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SecondaryIndustry Constraints
Although testing is carried out in Denmark, H&B preform their own quality checks
with Ecolab. Ecolab and H&B have created a trusting business relationship over a
10 year period, therefore H&B does not attempt to reduce costs by having the
protein solely tested in Denmark. Despite the fact that it could reduce transport
costs. (O'Connell, 2015)
All other components of the protein supplement are locally sourced as opposed
to being sourced in Denmark. This reduces transport costs and results in the
company having more controlover the manufacturing process. (O'Connell, 2015)
Tertiary Industry
The Tertiary sectorincludes organisations involved in wholesale and retail.
(Lennon, 2015/2016) Precision Engineered protein is sold in over 620 H&B stores
across Britain and Ireland (www.HollandandBarett.ie, n.d.). It is transported across
Britain by trucks and is transported to Ireland by sea. New H&B retail units are
chosen based on the location of their competitors. Demand and demographics will
also affect the prime location greatly. (O'Connell, 2015)
Tertiary Industry Constraints
As Ireland is the only European country not connected to main land Europe, the
goods can only be transported by sea.
On many occasions, ships either cannot leave port or enter on the other side. In
adverse weather conditions, there is also a risk of productdamage, however the
company must take this risk to hinder customer dissatisfaction in delayed delivery
of goods. (O'Connell, 2015)
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Conclusion
From an outside perspective it may seem uneconomical to source a productfrom a
distant location, however when one investigates further, the reasoning behind the
sourcing makes financial sense. A Company must calculate the quantity of goods
needed to meet its customer’s requirements, therefore it must have suppliers that
can meet these demands also. H&B is a prime example of a company that deals
with many location constraints along the supply chain however they have
overcome these constraints greatly and have succeeded as a business.
