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Final deliverable

  1. 1. Fall
 10Final DeliverableCaribbean Supply Chain CU Student Team: Amanda Buss 720.352.4000 Janaki Douillard 303.718.7052 Mileta Gebre-Michael 303.931.1094 Ellen Hammock 620.341.8368 Vail Resorts Client Representatives: Kevin Snyder 303.877.7712 Aaron Rubinstein 720.218.2953
  2. 2. Table of ContentsExecutive Summary ............................................................................ 2Presentation ...................................................................................... 3Legal & Regulatory Environment ..........................................................19 Summary ............................................................................................... 19 Research Document ................................................................................. 20 Interviews ............................................................................................. 29As-Is Supply Chain ............................................................................35 Summary ............................................................................................... 35 Research Document ................................................................................. 36 Interviews ............................................................................................. 39Competitor Analysis ..........................................................................45 Summary ............................................................................................... 45 Research Document ................................................................................. 46 Interviews ............................................................................................. 53SWOT Analysis ................................................................................55Cost-Benefit Analysis .........................................................................57Recommendations .............................................................................58 Roadmap............................................................................................... 58 Supporting Research................................................................................. 61Lessons Learned................................................................................68Appendix ........................................................................................71 Appendices ............................................................................................ 71 Meeting Agendas..................................................................................... 74 Meeting Minutes ..................................................................................... 86 Status Reports ...................................................................................... 102 Weekly Task Lists ................................................................................. 128 Email Communication ............................................................................ 136 First Deliverable ................................................................................... 184 1
  3. 3. Executive Summary Research into the current food and beverage supply chain at The Landings St.Lucia, in combination with the legal and regulatory environment of the region, waslargely successful. However, lack of visibility between the home office and the islandproved problematic in all areas of the project. The Landings St. Lucia is aRockResort, Vail Resort’s elite resort line. The Landings is unique in that it ismanaged by Vail Resort, not fully owned. Lack of a streamlined food and beveragesupply chain at this site can be largely attributed to this fact. The Landings St. Lucia has extremely volatile seasonality that hugely impactsstandardizing forecasts, as well as formalizing a logistics processes to optimize thesupply chain. Lack of visibility is a byproduct of the absence of formal purchasingand logistics processes and inadequate communication. The purchasing process isinefficient due to the want of a well-developed forecast and adequate marketresearch. Forecasting would include an understanding of food and beveragedemands based on seasonality, storage and occupancy at the resort. Our research revealed that international logistics are legally complex and timesensitive, especially for food products. A reliable freight forwarder is vital inmaintaining the quality of food shipments, and a knowledgeable customs broker iskey in providing the correct documentation to move the products seamlessly throughcustoms. Research also revealed that The Landings only sources goods locally, dueto volume constraints and shipping costs. Though our analysis revealed that TheLandings’ current use of local vendors is the most inexpensive means of procurementat this time, more research on smaller freight forwarders needs to be conducted toexamine their cost efficiency. The prospects of building on site storage, and theintroduction of a multi-stop ocean route could also prove cost-effective once moreproperties are in operation in the region.2
  4. 4. PresentationSlide 1Amanda:I want everyone to imagine yourself on your dream island vacation. You’re relaxingon the beach, pina colada in hand, without a care in the WORLD! You’re indulgingyourself in the rich local culture and the last thing you’re worried about is whereyour food is coming from. That’s what we do. 3
  5. 5. Slide 2Amanda:Over the past semester we have been working with VailResorts on a food andbeverage supply chain project servicing The Landings St. Lucia.Introductions(In order)4
  6. 6. Slide 3Amanda:To start out, we will give you a brief breakdown of this presentation. First we willpresent an overview of the project purpose. Then provide background that will putthe project in perspective, will detail the big picture of our issues, and how theseissues are interrelated in the dominos effect. Then we will present our findings thatwill conclude the roadmap to successfully implementing an efficient food andbeverage supply chain. 5
  7. 7. Slide 4Amanda:We were tasked to research and document the F&B supply chain at St Lucia,compare sourcing products on or off island, and gain an understanding of the legaland regulatory environment for importing to this region.However this process was impeded by one giant roadblock– LACK of visibility, likea lighthouse in the fog.6
  8. 8. Slide 5Amanda:Some background on The Landings is that it is managed RockResorts, VailResortselite 5 star line. A managed property is different from an owned property in thatVailResorts is only responsible for booking occupants, maintaining the facility, andproviding amenities.Another unique characteristic of The Landings is subject to a drastic difference inoccupancy between its peak and low seasons, due to hurricane seasons and otherclimate factors. The fact that St. Lucia is such a remote location with developinginfrastructure, makes communication very challenging at times. Detrimental weathercan also affect communication, much of our research of the as-is supply chain wasdelayed for weeks when Hurricane Tomas hit and our island contacts stoppedresponding to us. 7
  9. 9. Slide 6Mileta:Communication, purchasing, legal/regulatory constraints, and logistics constitutethe principal elements of any supply chain. Without all of these components in sync,the supply chain doesn’t function and directly affects the customer’s experience of alifetime.Each of these dominos will be elaborated on in detail.8
  10. 10. Slide 7Mileta:FEAR NOT . . . Through the fog, we glimpsed the 1st ray of light.We found that as an industry average for property managed sites, communicationchannels are strained. We believe that VailResorts can exceed the norm by focusingon communication as the initial step in a standardized supply chain.The strained communication from Hurricane Tomas added more run around infinding figures for market basket reports, volume breakdown by each productcategory, and order frequency.These crucial elements are needed to compile a cost benefit analysis as well ascreating a forecasting method to assist in streamlining the supply chain. 9
  11. 11. Slide 8Mileta:Forecasting is the first step in planning a streamlined process of purchasing products.With being able to predict the quantity and quality of desired products, the resort cango into researching which vendors have the lowest costs for the highest qualityproducts. Once these are determined, negotiations can be made between vendors.10
  12. 12. Slide 9Mileta:KEY STASTICSMeat: 20-40% of chicken and pork products must be sourced on-island using localvendorsSeafood: closed season for lobstersLT 30: all cattle used for beef production cannot be more than 30 months of age, andimported cuts must be bonelessProduce: citrus fruits cannot be importedMisc: No honey or Coca-Cola due bottling plant on-island 11
  13. 13. Slide 10Ellen:The next step in building any supply chain is to standardize the logisticsprocess. To this end, we investigated where The Landings currently sourcesits goods and discovered that they do not import any of their food andbeverage products at this time.While local venders are the least complicated avenue for procurement, wewanted to investigate their cost efficiency. We explored two options forimporting goods and leveraging their corporate partnerships with USFoodservice and FedEx.The first would be to ship commodities in ocean containers.The second is to import product via air.12
  14. 14. Slide 11Ellen:Our investigation into the local vendors revealed that after meeting quotas,they were importing the majority of their goods from the US, and passing onthe costs of transportation and customs fees to their clients. This averaged a30% markup on the cost of goods. 13
  15. 15. Slide 12Ellen:Delving into importation, we researched utilizing ocean containers for theshipment of dry goods, operating supplies, and all other goods that do notrequire refrigerated packaging. However, this option had one majorflaw…volume.We analyzed 9 months of The Landings highest volume orders anddiscovered they can only fill 25% of a 40-foot ocean container by weight. TheLandings also lacks the on site storage necessary to make this a realisticoption.Moreover, Vail Resort’s current shipping partners- CH Robinson and FedEx-do not fully service St. Lucia by sea at this time.However, more research on smaller local freight forwarders that would bewilling to ship less-than container loads needs to be done before ruling thisoption out entirely.14
  16. 16. Slide 13Ellen:The second option- using FedEx Express- is illustrated here. We investigatedair shipment due to The Landings low volume orders. We compared the costof goods from local vendors (CLICK) to those sourcing internationally fromUS Foodservice and FedEx Express (CLICK). As you can see, the cost ofimportation is substantially greater than sourcing locally, largely due toshipping costs. 15
  17. 17. Slide 14Janaki:This chart depicts the total costs of sourcing goods on island, via ocean, and via air.These numbers were taken from the volume purchased over a one year period fortheir most common dry goods purchases at the Landings.This shows local vendors are only marginally cheaper than importing via oceancontainer, but we’re looking at a full year’s volume which is not realistic becausecurrent storage units can’t even hold a month’s supply of dry goods. Our competitoranalysis revealed that Sandal’s resorts in the Caribbean aim to keep at least 30 daysworth of dry food goods on hand at all times.There is the possibility that a local freight forwarder would be willing to providepricing for partial container loads. This would be the most cost efficient option ifavailable. But until that research is completed we can only suggest continuing topurchase through local vendors.16
  18. 18. Slide 15Janaki: In order to ensure clear skies and a sustainable supply chainimplementation, Vail should focus on these key areas which compose our roadmapfor supply chain success:• Communication- Create something like a SharePoint that will allow cross- functional information sharing providing necessary departments with figures needed to develop a forecasting methodology• Purchasing- This standard forecasting serves as the groundwork in matching supply with demand across the seasonality experienced at the Landings. This will limit weekly purchasing and emergency trips to the local grocery. Forecasting allows us to find the best quality products at the lowest overall price.• Legal/Regulatory-There are many restrictions in place that aim to support the local economy of St. Lucia and if importation becomes feasible it is important that we hire a customs broker to navigate these regulations.• Logistics- Research needs to be done on local freight forwarders to determine if they may be able to ship less than full container loads. This could make importing the most cost effective method.Together if all these components are working in harmony we will be able to providethe experience of a lifetime to our customer’s. 17
  19. 19. Slide 1618
  20. 20. Legal & Regulatory EnvironmentSummary Understanding the legal and regulatory environment surrounding the importationof goods into protectionist countries is a tedious and time-consuming exercise. Much ofthe duty and tax implications are specific to nearly every individual commodity eligiblefor import. It is critical to take advantage of all services provided by a trade network,specifically customs’ brokerage, in order to smooth over the lack of transparency in theregulatory environment. A custom’s broker is well versed in legal jargon and canefficiently provide estimates for the cost implications of import license fees, custom’sfees, duties, and taxes. Documentation is the major source of bottlenecks in importation,and ensuring that all required documents are filled out accurately is vital toimplementing a sustainable supply chain. Despite the fact that specific duty and tax rates are not readily available, manygeneral restrictions were unveiled. St. Lucia is an extremely protectionist country, whichonly grants clearance to imported goods if the quantity produced on island is notsufficient to meet demand. A consultation with a custom’s broker with experience in theCaribbean, or extensive research and communication with on-island procurementcontacts, can guarantee that these restrictions are known before a purchase order is evendrafted. In regard to freight forwarding, there is only one shipping lane to St. Lucia,making transport by sea fairly homogenous in timing and price. The cost of shipping byair will vary depending on corporate partnerships with freight forwarders, and mayrequire coordination with the food distributor for special packaging. Overall, developing a strong relationship with a trade network will be critical tothe importation of the best product at lowest price, and ensuring adequate product isalways on hand at The Landings St. Lucia. 19
  21. 21. Research DocumentI. Regulatory/Economic Background A. Population is about 140,000 B. Independence 1979 C. Land: 616 sq km 1. Ports and terminals: Castries, Cul-de-Sac, Vieux-Fort, Soufriere Bay a. Natural Harbor: Castries 2. Agricultural island—tropical commodity crops 3. Natural Resources: forests, sandy beaches, minerals (pumice), mineral springs, geothermal potential a. Use of land: arable land & permanent Crops = 30% D. Economy 1. Tourism Main Source of foreign exchange a. Unemployment high b. Medium of exchange: East Caribbean Dollar c. Exchange Rate: $1 USD = $2.7169 ECD (as of 10/4/2010) E. Mains water: chlorinated- may cause mild abdominal upsets (bottled water advised for first few weeks of stay) F. Weather Patterns 1. St. Lucia is on the Atlantic hurricane belt. Hurricane season runs from June to November 2. High tourist season runs from Mid-December to Mid- April a. Tourism can peak outside of high season for various holidays (e.g. Thanksgiving)II. Products Imported: 20081 A. 85% from Brazil B. 5-7% from US C. 3-5% other Caribbean Countries1CARICOM. CC Regional Statistics Caribbean Community Secretariat. Oct 12, 2010.
  22. 22. III. Islands of Opportunity A. Caribbean Region 2 1. 3rd Largest Market for US Exports 2. Caribbean Basin initiative—trade programs to facilitate economic development and export diversification 3. Caribbean Community (CARICOM)- deep regional integration through harmonized tariffs and duty free trade 4. Assistance a. Maria Elena Portorreal Senior Commercial Specialist Phone: 809-227-2121 ext. 225 E-mail: b. Kent Hippolyte Consulate General of Saint Lucia 3700 Cocoplum Circle MIAMI, FL 33063 Phone: (305) 586-3076 Fax: (954) 977-7660IV. Import Requirements3 A. Eligible Product 1. Fresh/frozen poultry and poultry products, except as restricted in the Ineligible Product section below. 2. Boneless beef and boneless beef products derived from cattle less than 30 months of age produced under an approved AMS Export Verification (EV) Less Than 30 (LT30) months of age program. **NOTE: See section F Below** i. Information about the program for St. Lucia and a list of LT30 approved establishments can be obtained from the AMS (Agricultural Marketing Service) Web site. ii. If FSIS (Food Safety Inspection Service) inspection personnel become aware of concerns that an AMS approved LT30 establishment is not properly executing its Quality Control Program, export certification should not be issued for the product in question and AMS should be notified at Inspection personnel should include2 “Islands of Opportunity.” U.S. CommercialService. October 5, 2010. “Regulations and Policies.” US Department of Agriculture. October 4, 2010. 21
  23. 23. their immediate supervisor on messages to AMS. The following information should be included in the message: • Establishment name, address, and establishment number. • Product type, product code, and quantity of product. • Date of production, lot number, and shift. • Date and nature of observation. • Name of country product is intended for export. • Export certificate number (if applicable). • Any other information to verify claim. • Name of inspection official. 3. Veal and veal products are not subject to the LT30 program. Fresh/frozen pork and pork products are eligible effective July 8, 2009. 4. All federally inspected establishments are eligible to export to St. Lucia. Beef meat must originate from AMS EV approved establishments. B. Ineligible Product 1. Poultry and poultry products raised, processed, or stored in states where low pathogenic or high pathogenic Avian Influenza has been reported. 2. Beef offal products. C. Documentation Requirements 1. St. Lucia Document Requirements a. First- send list of desired items for import to Ministry of Agriculture in order to receive import license b. Invoices c. Documents of Title (Airway Bill/ Bill of Lading) d. Shipper’s Export Declaration e. Packing Lists f. Certificates of origin (For goods manufactured in another Caricom country) g. Phytosanitary certificate h. Bill of Sight (in the absence of proper Invoices) i. Determine tariff rate & fees before exporting 2. Certification of fresh or frozen poultry and poultry products - Obtain FSIS Form 9060-5 (05/06/1999), Meat and Poultry Export Certificate of Wholesomeness. The following statement must be typed in the "Remarks" section of FSIS Form 9060-5 or on USDA22
  24. 24. letterhead: a. "Poultry, poultry meat products, and processed viscera of poultry, originated from birds which were raised, slaughtered, processed, and stored in States where no highly pathogenic avian influenza has been reported or in establishments in which there has been no evidence of notifiable low pathogenic avian influenza in the 21 days prior to slaughter, as defined by the OIE."3. For boneless beef and boneless beef products. In completing the FSIS Form 9060-6, Application for Export, the following statement must be included: "The product meets EV requirements for St. Lucia." Obtain FSIS Form 9060-5, Meat and Poultry Export Certificate of Wholesomeness. The following statements must be included in the "Remarks" section or on a FSIS Letterhead Certificate: a. "The United States meets or exceeds the BSE guidance of the OIE pertaining to meat and meat products." b. "The United States has prohibited the feeding of ruminants with ruminant origin meat and bone meal (MBM) and greaves since 1997, and this prohibition has been effectively enforced." c. "The meat and meat products should be deboned skeletal muscle (boneless beef) from cattle less than 30 months of age, which were not subjected to a stunning process, prior to slaughter, with a device injecting compressed air or gas into the cranial cavity, or to a pithing process, and which were subject to ante-mortem and post-mortem inspections and were not suspect or confirmed BSE cases." d. "The meat and meat products were not derived from or contaminated with mechanically separated meat (MSM) from the skull or vertebral column, or the following specified risk materials: tissue from the brain, eye, spinal cord, trigeminal ganglia, and dorsal root ganglia from cattle 30 months of age or older, and the tonsils and distal ileum of the small intestine of any cattle, regardless of age."4. Please note the title of the letterhead certificate has been modified to include "veal" because shipments of veal have been detained due to the fact that it was not included in the title of the letterhead certificate.5. All shipments of fresh/frozen pork and pork products must be 23
  25. 25. accompanied by FSIS Form 9060-5, Meat and Poultry Export Certificate of Wholesomeness. D. Documentation Procedure A. Under the Customs Control and Management Act No. 23 of 1990 persons importing goods by air are required to submit a customs entry within seven (7) days of importation of those goods, by sea this document must be submitted within fourteen (14) days of importation. Exempt from the above are fresh fish (including shell fish) caught by St. Lucia fishermen and imported by them in their vessel, passenger’s accompanied baggage. St. Lucia Customs and Excise Department reserves the right to refuse to accept any entry of goods if they are dissatisfied that those goods were imported at the time of presentation of the customs entry. Where an error is found on the submitted entry an importer may be granted a period of ten (10) days to account for it. If after final submission the department is still dissatisfied with the entry the person will become liable to penalties under the law. E. LT30 Program for Beef 1. Requires that any animals involved in the meat production process are under 30 months of age at time of slaughter (in order to protect against disease) a. Limited vendors process meat according to these standards and suitable options may only be marketed on specific days of the week b. US Foodservice may not have product that upholds these standards and will have to utilize outside vendors i. Burger orders under these restrictions require a 3 week lead period to find a suitable vendor and place the orderV. Absolute Constraints4 A. Customs 1. Most common customs-related problems: a. Misclassification b. Duties Higher than anticipated c. Customs Office wont clear the shipment to your buyer/importer d. Customs office invoking health, sanitary, or safety issues4 “Help With Trade Problems.” October 4, 2010.
  26. 26. e. Labeling issues involving a certificate of origin, weight, ingredients, marks, etc. f. Inadequate documentation provided by the exporter g. Issues involving the import or packing regulations of the receiving country 2. Harmonized system and schedule B numbers a. Harmonized System (HS) numbers are used to classify products for customs purposes. By international agreement, most countries recognize the same first 6 "harmonized" digits. b. Schedule B System- classify exported products in the US i. Same as HS numbers as for the importing country’s classification code ii. Must know both • Determine applicable import tariff rates, preferential tariff under Free Trade Agreement • Schedule B needed to complete Shipper’s Export Declaration • HS # needed when shipping documents iii. U.S. Census Bureau Foreign Trade Division • Specialist in Non-Durable Goods 301-763-3484 B. Tariffs 1. A tariff (or duty, the words are used interchangeably) is a tax levied by governments on the value of imported products. Sales and state taxes, and in some instances customs fees, will often be levied as well. The tariff is assessed at the time of importation along with any other applicable taxes/fees. a. To get a duty rate, one needs to have the complete product number (HS number and country-specific suffix) used by the importing country. Since this is sometimes difficult, companies can use the Schedule B number to approximate. C. Import Licenses5 1. Import licenses will be issued for meat on the following conditions: a. USDA Meat & Poultry certificate of Wholesomeness required b. Bone-in beef not allowed into St. Lucia (only boneless beef allowed) c. Poultry and Pork allowed upon proof that a certain percentage was sourced locally5 Clement, William. Corporate Contact- FedEX. Email correspondence. November 24, 2010. 25
  27. 27. d. Invoices must be supplied 5 days and USDA certificates 3 days prior to shipment arrival into St. Lucia 2. Licenses cost EC$55.00 (USD$20.24) per application- which has to be paid directly to vendor broker by shipper or consignee D. Seasonality of Fish a. Lobster is the only seafood with a closed season E. Protectionist Ideals6 - clearance to import only granted if quantity produced on island is not sufficient to meet demand 1. No importation of citrus fruit 2. No importation of honey 3. Restrictions on importation of Beer and Coca-Cola products because there are bottling plants on the island 4. No restrictions on importation of dairy, dry goods or operating supplies 5. Meat a. Beef i. Only boneless beef ii. Majority of beef comes from United States iii. Documentation of age of cattle and location of slaughter required b. Chicken i. Must purchase 20-40% from local suppliers F. Typically local wholesalers provide entire chickens rather than cuts, which is less desirable for a resort c. Pork i. Use local wholesalers to supply cuts that are available on island d. Strict restrictions exist because St. Lucia does not have the infrastructure to control outbreak if meat is contaminated.VI. Flexible Constraints A. Freight Forwarder: An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. Whether an exporter is large or small, the weight of the cargo light or heavy, a freight forwarder can take care of cargo from “dock to door,” thus freeing the exporter from dealing with many logistics-related details 1. Competitive Advantages6 Vitalis, Eustace Chinie. Agricultural Economist. Phone interview. November 17, 2010.26
  28. 28. a. Current supply avenues to desired destination b. Shipment date guarantees c. High safety standards d. Volume Pricing B. Customs Broker: acts as the importer’s agent and ensures that proper duties, taxes, and documents are filed to satisfy legal requirements to enter goods into the sovereign stream of commerce. 1. Importer will sign a power of attorney that gives a customs broker the right to speak for them in legal matters and in the customs clearing process. 2. If the custom’s broker should commit a fault and such that further imports are prohibited into a specific country, the ban falls on the importer and working through a new broker will not nullify the ban 3. Competitive Advantages- alleviates many burdens associated with clearing customs through their: a. Knowledge of document requirements b. Capability to file and send entry documents electronically c. Knowledge of duties and taxes across countries d. Network of contacts Note: Many Freight Forwarders are associated with a customs brokerage department under the same corporate umbrella, the combination of services provided forms a trade network. Both CH Robinson and FedEX provide full trade network service.VII. Safety Procedures A. CH Robinson7 1. Temperature Control a. More food and beverage experience than any other provider b. Diverse range of customer relationships offers knowledge that can be applied directly to each individual business c. A single point of contact for all temperature controlled truckload and LTL shipments d. Full visibility to track and trace freight on their customer website, CHRWonline e. 24/7 personal commitment to your freight7 “Temp Controlled.” C.H. Robinson Worldwide, Inc. October 21, 2010. 27
  29. 29. f. Access to one of the largest pools of temperature controlled capacity in North America and Europe, including the aggregated equipment of small- to medium-sized refrigerated carriers, so they can quickly secure the equipment you need 2. Because CH Robinson started out as a produce company, and 50- 60% of there revenue is still derived from the transport of produce, they hold safety as an utmost priority to ensure that superior food quality will be maintained. B. FedEX upholds government and USDA standards.28
  30. 30. Interviews The following are interviews that pertained most directly to the legal and regulatory environment of St. Lucia. They are listed in order from earliest to latest since the timeline of the project helps explain the progression of questions asked to each interviewee.Interview - FedEX (Bill Clement)Date & Time: 10/22/2010 3:00pmAttendees: Amanda Buss & Janaki Douillard Questions Answers1. What is the difference between customs Sometimes they are one in the same. FedEx broker’s service and freight forwarding? is a closed loop system so they are not covered under separate authorities. This closed loop allows for expedited service. A Freight Forwarder is a 3rd Party that you signed a power of attorney with and then they are contacted to assist with warehousing and distribution.2. Do you pick up product at distribution Determined when customer is set up and location or require drop off? contract signed3. Do you currently have a distribution Yes, by air and sea channel to St. Lucia? Air and Sea?4. When do you take ownership of products Determined when customer is set up and being shipped? contract signed5. What container size increments do you They provide 20’ or 40’ containers. Extended provide? At what price? High Q. We need to determine if we can fill a container by ourselves. Also need to consider the cost tradeoff between frozen meat transport and storage as opposed to fresh overnight meat delivery with less storage requirements. Also provide refer containers, but much more expensive. 29
  31. 31. 6. How does FedEx stand out among the It is all controlled, and they are licensed and rest with regards to safety and regulated. FedEx’s standards will be uphold maintaining the condition of perishable or exceed the government requirements. Bill items? Clement is going to provide us with a list of the food products they are capable of transporting to St. Lucia, both by sea and air.7. Have you had experiences with rejected Frozen meat because the paperwork was products? Which products? wrong so then it would take 3-4 days and the meat could spoil. This is usually due to incorrect documentation. Rejected products are the responsibility of the shippers and/or recipients, as they are the ones responsible for provided thorough and accurate paperwork.8. Please provide any knowledge specific to a. Ken, who is the local St. Lucia contact, St. Lucia tariffs for the above categories would need specific commodities to give us tariff information b. Hotels are sometimes entitled to duty-free concessions, or they could be taxed more heavily. c. The tariffs are discovered as a part of the broker relationship since they sign the power of attorney they are required to keep you informed of the changed in the entire legal/regulatory environment. When they sign the power of attorney they have more of a lawyer or retainer relationship with the client.9. How do foreign tax structures affect costs Tax is generated by sovereign country and of importing goods? determined as a percentage of the declared value of a product. There are differences in formal entry and informal entry. There will be an import tax on most food items and if there are any auxiliary charges they will be line items. There may be a value added tax.10. What background information and FedEx trade networks keep clients updated resources do you use when making the with changes in tax rates and tariffs of cost estimates related to regulatory costs? sovereign country, utilizing broad network of people domestically and across nations. 30
  32. 32. 11. What common bottlenecks occur in the Sometimes there is are a series of agencies customs process? that need to check the products and one must happen before the other which lengthens the time in customs. has listings of helpful information. All documentation must be correct and there must be an original copy accompanying the shipment. As long as paperwork is correct, items should clear within 1 day.12. Since the USDA inspects products before Clearing foreign customs is entirely they are shipped, does this expedite the dependent on the documentation that is with process of clearing foreign customs (St. the shipments, all of the legal matters must be Lucia)? complete before the process can begin. This is the shipper’s responsibility and they must be sure to have accurate Health Certificates and Sanitation Certificates, etc. Bill Clement told us that he will provide us with the information on which certificates are required for St. Lucia13. Do you provide tracking capabilities? The record will indicate the date the container was put on the vessel, an expected delivery date, and pick up again once the container reaches receiving port. There is no visibility once the container has set out on the ocean. FedEx only guarantees shipment within a certain timeframe for express air shipments.14. In the past, have you coordinated leaving They will need to look at zoning regulations a container at a location for a period of to see if St. Lucia will allow on-site time so your customer can use it as a type containers. This set-up has a daily, weekly, or of temporary storage in high seasons? monthly pricing that Bill Clement will email How much might something like that to us. cost? 31
  33. 33. Interview - CH Robinson (Brandon Workman and James Dockery-Johnson)Date & Time: 10/28/2010 3:00pmAttendees: Amanda Buss Questions Answers1. What is the difference between customs a. Freight Forwarder is a third party that broker’s service and freight forwarding? arranges transportation directly with asset-based providers b. A customs Broker acts as the importers agent, requiring a signed power of attorney, and ensures that proper duties, tariffs and documents are filled to satisfy importers legal requirements to enter goods into the stream of commerce2. Which do you provide? Both, would probably take on more of an advisory role for St. Lucia3. Do you currently have a distribution a. Yes, but St. Lucia along with all the channel to St. Lucia? Air and Sea? other OECS (Organization of Eastern Caribbean States) is a very capacity constrained region. Each island normally has only 3-5 providers in most verticals (ie wholesale, retail, etc) b. CH Robinson does not have any contacts on the island of St. Lucia proper, nor do they currently ship to that island at this time.4. When do you take ownership of products Custodial ownership depends on mode and being shipped? relationship5. What container size increments do you a. The provide FCL and LCL (Full provide? At what price? Container loads, less than container loads: partial or single pallets) b. Would more than likely be sharing containers with competitors, which can impose a new set of problems. c. Rate is dependent on business relationship and type. Most customers have 30 day credit terms. d. Ocean rates are set pricing lists. 32
  34. 34. 6. How does CH Robinson stand out among CH Robinson’s background is in produce, 50- the rest with regards to safety and 60% of revenue come from moving food and maintaining the condition of perishable beverage products. They are very sensitive to items? food safety.7. Please provide any knowledge specific to a. Tariffs in St. Lucia are between 0-40% St. Lucia tariffs for the above categories depending on commodity. Fresh meat is much more regulated than frozen and will absolutely require a licensed customs broker to file paperwork correctly and provide accurate regulatory information. b. Customs broker would complete customs documents, itemized by commodity and quantity.8. How do foreign tax structures affect costs Import Taxes are structured like tariffs and of importing goods? will be higher for products that are readily available on the island.9. What background information and Licensed customs brokers have access to hard resources do you use when making the and soft resources not readily available to the cost estimates related to regulatory costs? public because of their complexity. This information requires extensive training to understand and apply correctly.10. What common bottlenecks occur in the a. Bottlenecks usually due to customs process? documentation b. First step- File Entry: notify that body (government) that you plan on entering goods into their country. Important because there are Caps on certain items and need approval to even send items. File entry before the order physically crosses port waters. c. Once the file entry goes through, shipper has 10 days to file customs entry documents and pay duties and taxes. Entry documents can only be filed once order has crossed port waters. d. Customs brokers can electronically file all documents 33
  35. 35. 11. Since the USDA inspects products before No this is a required step of the process and they are shipped, does this expedite the each nation has their own set of policies. process of clearing foreign customs (St. USDA is benchmark, but further inspection Lucia)? will ensue regardless of passing USDA standards.12. Do you provide tracking capabilities? a. Yes, can currently track steam ship and other modes of transport via separate systems. b. In the 2nd year of a 4-year roll-out process of merging the two systems, so that complete transport route can be tracked via one streamline GUI.13. What is your estimate for number of days a. About 15 days for transport from Miami to St. Lucia b. There is only one steam ship line that “dock to door”? services St. Lucia, timing will be the same across competitors14. Do you deliver the products to the Both. Will want to find out how the island physical door? Or picked up at port? works, some trucking companies have a power over others in many instances and saving money will not necessarily save time.15. Does CH Robinson provide its own a. Customs brokerage is a flat rate, all fees brokerage system? Does this impose are based on transactions additional fees? b. Volume pricing will be applied to freight forwarding tasks16. Can you provide any additional resources a. FTA- look up their relationship with for our general understanding of the Caribbean nations regulatory environment related to b. US Customs and Border Control, to importing F&B products to St. Lucia? understand variation in policy even across ports within a developed nation 34
  36. 36. As-Is Supply ChainSummary
 Though research into the current food and beverage supply chain for TheLandings St. Lucia was a very long and arduous process, after much toil we gained aclear picture of the restraints in which the resort operates, in addition to some clarityinto the resort’s own food and beverage supply chain. Research revealed that TheLandings sources all of its goods on island, and does not utilize any of Vail Resort’scorporate partnerships. Though government regulations restrict numerous productsfrom importation, the real factor limiting international procurement was TheLandings lack of volume. Stark changes in occupancy at the resort between peak andlow seasons created numerous challenges in forecasting, an essential componentneeded in properly calculating international orders. In addition, the resort lacks thenecessary storage capacity to accommodate large product orders. Further investigation into The Landings five main vendors revealed that aftermeeting quota requirements, the companies were importing the majority of theproducts from abroad, and passing on the transportation and customs costs to theirclients. Accordingly, research was conducted into the cost of sourcing similarproducts to those currently used at the resort from US Foodservice, Vail Resort’smain food supplier. To adequately compare the costs, we researched two methods oftransporting the goods as well as the customs fees associated with the correspondingproducts. Analysis of the costs revealed that international procurement is notcurrently a cost-effective option. 35
  37. 37. Research DocumentI. The Landings St. Lucia Background8 A. Location and Resort Information 1. Rodney Bay, Gros Islet St. Lucia, West Indies 2. 200 condos and villas 3. Private marina 4. Three in-house restaurants B. Occupancy 1. Peak: Christmas - March/April 2. Slow: August – September (hurricane season) 3. Hot Season: May – August 4. Ideal rental pool of 80-90 rooms 5. Currently have 44 rooms signed for December, and budgeted for 70-80 6. Buy-out during January and July C. Suppliers 1. All local vendors 2. Higher cost on imported goods 3. Do not use any third party logistics in procurement 4. Meat quality questionable 5. Main vendors a. Brydens: dry goods, liquor, frozen b. Peter and Company: dry goods, liquor, frozen c. Admac: diary d. Crown Foods: frozen e. J. A. Foods: dry goods, frozen 6. No current issues with local suppliers 7. Forecasting used in high season 8. Lean times during high season are next day D. Storage9 1. Limited storage at resort 2. Dependent upon weekly deliveries 3. Possibility of paying for a container to be left on-site to compensate for storage limitations; built on-site storage in future8 Smock, Adam. Food and Beverage Manager- The Landings St. Lucia. Phone interview. October 25, 2010.9 DeLouise, Thomas. Corporate Director of Operations- Vail Resorts. Phone interview. October 15, 2010.36
  38. 38. II. Vendors A. Brydens10 1. Service Antigua, Barbados, Grenada, Guyana and St. Lucia 2. Headquartered in Bois D’Orange, Barbados 3. Annual sales of $49 million 4. Industries: automotive, liquor, food and beverage, hardware, house hold goods, personal care, pharmaceuticals, tobacco 5. Source countries for products a. Food products: Trinidad b. Wines: Italy, Chile, France c. Tobacco: Trinidad d. Frozen foods: United States, United Kingdom, New Zealand e. Dry Goods: United States B. Peter and Company11 1. Company owned by Goddard and Sons 2. Service Barbados and St. Lucia 3. Headquartered in St. Lucia 4. Distribution center in Castries 5. Products: dry goods, frozen, household goods, liquor C. Admac 12 1. Service and headquartered in St. Lucia 2. Distribution center in Castries, St. Lucia 3. Deliver goods to resort by truck 4. Products: dairy, fresh fish, meat, coffee, dry goods D. Crown Foods13 1. Service and headquartered in St. Lucia 2. Distribution center in Gros Islet, St. Lucia 3. Deliver goods to resort by truck 4. Products: wide range of meat products, dairy, vegetables, fruit, pasta, pastries, desserts10 Regis, Glenroy. Chief Financial Controller- Brydens. Email correspondence. November 17, 201011 “Peter & Company Ltd.” Goddard Enterprises Ltd. November 2, 2010. “Provisioning - Specialist.” Superyacht Services Guide to the Caribbean. November 2, 2010. “Our Products.” Crown Foods Ltd. November 2, 2010. 37
  39. 39. III. St. Lucian Hospitality Industry14 A. Caribbean region spends $10 billion annually importing food goods B. Most products on the island are imported, but duties are levied on all third-party imports as well C. Resorts must be conscious of which vendors they buy from, as crossing the wrong vendor can lead to being cut off completely 1. Large issue of timely payment with vendors D. Link between agricultural sector and hospitality industry 1. Imported agricultural goods can be produced locally 2. Desire to reduce import bill and stimulate domestic economy a. Generate interest in local food production by illustrating cost savings to hospitality sector b. Concern over reliability and consistency in ability to produce goods locally E. Key produce consumed in hotel industry 1. Fruits a. Melons: honeydew, cantaloupe, watermelon b. Pineapples 2. Vegetables a. Romaine lettuce b. Tomatoes c. Cabbage: red and green d. Squash e. Zucchini F. Growth of local agricultural industry 1. Sandals Resorts created a production schedule of items that can be grown on-island after determination of unrealized potential in local production. 2. Realized cost savings of $1 million in first year of buying produce locally 3. Realization of huge cost savings drove demand for local produce a. Longer shelf life b. Fresher c. No storage costs 4. Today, strict protectionist practices exist to protect the industry14 Vitalis, Eustace Chinie. Agricultural Economist- Sandals Resort. Phone interview. November 17, 2010
  40. 40. InterviewsThe following are interviews that pertained most directly to the current ‘as-is’environment of The Landings St. Lucia. They are listed in order from earliest tolatest since the timeline of the project helps explain the progression of questionsasked to each interviewee.Interview – Nick Hagel, Vail Resorts Senior Manager-ProcurementDate & Time: 10/19/10 2:30pmAttendees: Ellen Hammock Questions Answers1. Please list your main • Cheese: DCI (organic producer) suppliers for all of the • Coffee: Starbucks categories. • Dry Goods: US Foods • Frozen: US Foods • Milk and ice cream: Robinson Dairy • Meat: US Foods • Prepared Goods: US Foods • Produce: US Foods • Seafood: Seattle Fish2. How were these suppliers Broadline Distribution selected? Convenience? • Select suppliers to leverage spend Price? Accessibility of • Use of same suppliers throughout supply chain goods? Please specify for creates continuity and consistency each category. • Establishment of controls and compliance3. What is the seasonality of Peak: Thanksgiving, Christmas – Easter the resorts? • Deliveries daily during peak • Pricing programs established in fall to lock in prices for winter Mud season: spring4. What is your protocol for • File claim with U.S. Foods domestically goods that are not up to • St. Lucia: claim filed with freight forwarder code/health standards? • CH Robinson offers insurance on goods • Use air shipping more than ocean freight in distribution to St. Lucia5. Have you experienced • Chef determines the menu, and thus all any distribution products that need to be ordered. Need to first bottlenecks getting goods establish practices and controls with chef to the resorts? If so, how • Create standards for foods that US Foods or were they remedied? other distributor can follow • Monitor weather: path closures in Colorado, hurricanes in St. Lucia • Increase storage 39
  41. 41. Interview – Conference Call with Thomas DeLouise and Nick HagelDate & Time: 10/26/10 10:00-11:00amAttendees: Ellen Hammock & Janaki Douillard Questions Answers1. What does this project The end result of this project is to create a roadmap that need to do for it to be can be followed when implementing a food and successful in your beverage supply chain at a new resort. This data will eyes? include what products can be sourced on an island and which will need to be imported, as well as the regulation and taxation that is applicable on the island.2. What has been/is St. Lucia is all about being politically correct and your involvement building relationships. You have to be conscientious of with St. Lucia? suppliers and buying local. The citizens are very nationalistic and have stringent protectionist practices. You have to make sure not to cross the wrong supplier or they will cut you off. Most of the products on the island are imported, but duties are levied on all third- party imports. There is very little storage at the resort. We are currently considering leaving containers on site, but additional storage is not in operation today. Freight is the cheapest option for getting products to the island, costing $4000 a container. Tropical Shipping (I believe) is the current freight forwarder. Amijet is another option, but costs are based on weight resulting in much higher expenditures. St. Lucia is also extremely seasonal. Peak season is December to April or May, and slow season is August to September (hurricane season). Slow season is characterized by single digit occupancy. May-August is also slow because of the extreme heat and humidity on the island. During peak season, containers do not go in more than once a week. The Landings currently sources most of its products locally, which are more expensive and can be of a lower caliber, especially meat.3. What will happen if There will be backlash from the local producers. St. we move away from Lucia is extremely political and we will have to be very local products in an careful in negotiating which products we will and will attempt to acquire not source from them. lower cost, higher quality products?40
  42. 42. 4. Could you please get Tempo Miami is in a transition period and its supply me in contact with the chain is subject to change. Nick Hagel will arrange a F&B Manager at meeting to walk through one of the Colorado resorts Tempo Miami, or food and beverage supply chains. their purchasing manager to discuss specifics of their supply chain?5. Pat Pascal has been A conference call between Adam Smock (F&B unresponsive thus far. Director), Pat Pascal (Executive Chef), Thomas Do you have any DeLouise (Corporate Director of Operations) and Ellen other means of Hammock will be scheduled for next week to discuss contacting her? the suppliers and products used at The Landings, in addition to which suppliers are absolute constraints moving forward.6. How would you prefer Email is the best way of getting a hold of Thomas to be contacted in the DeLouise. future, especially with regard to time- sensitive material? 41
  43. 43. Interview- Glenroy Regis- Chief Financial Controller with BrydensDate & Time: 11/16/10 9:00amAttendees: Mileta Gebre-Michael Questions Answers1. What is the breadth of products you Foodstuff, spirits, wines, tobacco, frozen could provide? food2. Where are these products sourced? Trinidad-Food stuffs Are these products imported and Wines: Italy, Chile, France from where? (Please specify by each Tobacco Trinidad product category i.e. operating Frozen Foods- USA,UK, New Zealand supplies, dry goods, frozen, meat, Dry Goods-USA etc)3. Is there a mark up fee for each Yes product category? If so how much?4. How are the goods transported from Mainly containers their origins to St Lucia?5. How are these goods transported We have our own fleet of vehicles (30) from the port at St. Lucia to the Landing Resort?6. What are the costs associated with Duties, container charges, de-stuffing getting the products through charges, transportation. customs, transportation, shipping etc?7. How often are orders placed? We formalized ordering systems that factors sales, lead time etc.8. Where is Brydens headquartered? Bois D’Orange in the north of the island Where are your distribution centers located?9. How is safety and quality of We have standards products ensured?10. Do you have a sales report Unwilling to send breakdown by volume for each product category for The Landing at St. Lucia? If so please provide a soft copy as well as a product price list.42
  44. 44. Interview - Eustace Chinie VitalisDate & Time: 11/17/10 2:00pmAttendees: Ellen Hammock & Mileta Gebre-Michael Questions Answers1. Can you give us 1. Agricultural Economist some background on 2. Link between agricultural sector and tourism your experience with a. Imported goods can be produced locally; Sandals? substituted or produced on island b. Reduce import bill 3. Payment to farmers major issue; require timely payment 4. Reliability and consistency of goods issue in Caribbean2. What type of foods a. Create production schedule for items that can be can be produced grown on island more cheaply on a. Fruits: melons, pineapples island? b. Vegetables: romaine lettuce, tomatoes, cabbage (red and green), squashes b. Saved $1 million in the first year producing the above goods on island c. Created demand for local produce a. Longer shelf life b. Fresher c. No storage costs3. Could you discuss 1. Provide list of desired import items to Ministry of the importation Agriculture process for goods that 2. Send list to suppliers in US if receive approval cannot be produced 3. US supplier states whether they can or cannot ship on island? that specific good (i.e. cut of meat) to St. Lucia4. What type of policies Importation is more or less a gentleman’s agreement govern this? • File with marketing department of Ministry of Agriculture for import license • Only get clearance to import if quantity produced on island is not sufficient to meet demand • No formal contracts exist binding farmers to users (resorts); farmers always look for best price 43
  45. 45. 4. Could you elaborate 1. Caribbean spends $10 billion annually importing on the process of food goods importation? 2. Not self-sufficient in producing diary products or meat a. Cheaper to import meat b. No restrictions on the importation of diary products 3. Restrictions a. Lobster only seafood with a closed season b. Cannot import citrus fruits c. Cannot import honey d. Restrictions on importation of beer and Coca-Cola because bottling plants on island e. No restrictions importation of dairy, dry goods or operating supplies f. Beef • Only boneless beef • Most comes from United States • Need documentation of age of beef and location of slaughter g. Chicken • Have to purchase 20-40% from local suppliers • Typically local wholesalers only provide whole chicken, not cuts, which resorts do not demand h. Pork • Do not have facilities to supply all cuts on island • Use local wholesalers to source specific cuts i. Restrictions exist because do not have infrastructure to control outbreak if meat is contaminated44
  46. 46. Competitor AnalysisSummary The Caribbean is one of the most visited vacation destinations due to itsbeautiful beaches, remote location, and warm climate. Tourism constitutes themajority of island nations’ GDP, and successful generation of revenue in this regionis attributed to the ability to manage the volatile inflow of travelers, a byproduct ofdrastic changes in weather throughout the year. Resorts that focus their efforts oncreating a competitive advantage by reducing costs through logistics and supplychain management prove most successful. The most effective way of reducing supplychain costs is to collaborate with suppliers, necessitating effective and timelycommunication, as well as vamping up strategic planning to utilize just-in-timepurchasing. The information pulled from academic journals, articles, as well asinterviews with contacts at world-renowned resorts offers valuable insight into thisarena. Our research shows that utilizing a forecasting model that incorporatesoccupancy, as well as historical data, increases the accuracy of purchasingpredictions. Cost deduction is achieved by only purchasing the amount of product tobe consumed within specific time intervals, reducing waste product. This costreduction allows resorts to focus on ensuring the procurement of the highest qualityproducts at the lowest price. Reducing order costs by increasing quantity of productsordered and decreasing the frequency of orders distinguishes the elite resorts from thecompetition. 45
  47. 47. Research DocumentI. Competitor Environment A. Leading Industry: Tourism15 1. 5xs number of resorts, restaurants & bars 2. Not enough of local population B. 9/11 1. Huge decrease in tourists 2. Leverage costs C. Business Environments 1. Major Economies: Jamaica, Dominican Republic, Trinidad & Tobago, St. Lucia, St. Kitts & Nevis 2. Caribbean Tourism Organization: data rich with updated statistics a. 3. Caribbean Hotel Association: organizes major players in hospitality a. Doing Business in the Caribbean A. Overview16 1. Thousands of islands 2. 5 colonial masters with distinct languages 3. Disparate legal systems 4. Different levels of development 5. Thousands of square miles of open sea B. CARICOM 1. 32 members 2. Caribbean free trade bloc and principal voice 3. Organized to set foreign investment, energy, tourism & agriculture dollars C. US-Side Advocates 1. U.S. Commercial Service aims to place U.S. exporters in Caribbean Markets 2. Compile market research, events & business matching15 “Caribbean Living and Lifestyles.” Caribbean Property Magazine. .Brown, Greg. “Guide to doing Business in the Caribbean.”
  48. 48. D. Free Trade Advantage 1. DR CAfta trade deal easier to sell into Dominican Republic 2. Foreign Investments heavily attracted in large economy countries.III. Hotels & Resort: Food & Beverage A. Forecasting 1. Yield/Revenue Management a. Help hotels decide on most profitable mix of transient business b. Can increase revenue i. Airline industry increased 0.5-3.0%17 ii. 10-11% increase in 34 out of 41 hotel food and beverage outlets 2. Dimensions: a. Reservation Arrival b. Occupancy c. Historical data 3. Benefits a. Leverage Costs i. Purchasing ii. Kitchen staff preparation iii. Labor costs b. If occupancy is down during a low season- leverage costs with appealing to locals 4. Forecast examples18 a. Total number of arrivals for a day and then break that number into length of stay and rtae classes using historical proportions b. Forecast the total number of arrivals for a particular day in each rate class, and then break that number into lengths of stay using historical proportions17 Weatherford, Larry R. “A comparison of forecasting methods for hotel revenue management.International Journal of Corecasting. Volume 19 (3) July-Setpember 2003. Pgs. 401-41518 Thompson, Gary M. “Revene Management Forecasting Aggregation Analysis Tool”. The centerfor Hospitality Research. Cornell University School of Hotel Administration. 47
  49. 49. c. Forecast total number of arrivals for a given day in each length of stay and then break that number into rate classes using historical proportions d. Independent forecasts of total number of arrivals for a day for each length of stay and rate class. B. Storage 1. Inventory significant effects on profit reporting & asset valuations19 a. Directly affect cash flow, production levels, & customer service b. Inventory turnover ratio: i. High- not buying enough stock ii. Low- buying too much and sinking cash into expense 2. Manager must apply dollar amount to stored goods to a dollar figure a. Costs incurred b. Waste & inefficiency of discarded food C. Cold Storage 1. Risk of Food poisoning & food spoilage a. Cold Chain20 b. Temperature-controlled supply chain: uninterrupted series of storage and distribution that maintain a given temperature range c. Used to help extend and ensure shelf life of products such as fresh agricultural produce, frozen d. Global temperatures and climate change increase—cold units drastically affected e. Further prevent food born illness 2. Temperatures 21: 2-5 a. Freeze Point: 0 degrees Celsius b. Cold Storage: 8 degrees c. Room Temperature: 25 D. Quick Facts 1. Economics of Food Preservation19 Ojugo, Clement. Practical Food & Beverage Cost Control. 2nd Edition. NY. 201020 A.R. Trott, T. Welch. “Refrigeration of foods. Cold storage practice.” Refrigeration and AirConditioning, (Third Edition), 2000, Pages 162-169.21 Li Guo, Ying Ma, Da-Wen Sun, Peng Wang. “Effects of controlled freezing-point storage at 0 °Con quality of green bean as compared with cold and room-temperature storages.” Journal of FoodEngineering, Volume 86, Issue 1, May 2008, Pages 25-29.48
  50. 50. a. Produce & Ingredients b. Equipment & supplies c. Fuel consumption d. Capital outlays e. Time & energy f. Cost of Similar food preserved commercially g. Large capital outlays 2. Freezing Costs a. Benefits i. Simple to do ii. Keeps food more like fresh produce b. Disadvantage i. Cost to buy and operate a freezer • Divide over 20 years if new vs 9 used • Lost interest on cash outlay for freezer • Maintenance & repair • Electricity needed to reach and maintain 0 degrees F • Packaging materials • Water & fuel to prepare food for freezing • Added ingredients (sugar or ant darkening agents) ii. US DEPARTMENT OF AGRICULTURE E. Shelf Life of GoodsProduct Refrigerator (40 °F) Freezer (0 °F)EggsFresh, in shell 3 to 5 weeks Dont freezeHardcooked 1 week Dont freeze wellHot dogs & Luncheon MeatsHot dogs, opened package 1 week 1 to 2 monthsUnopened package 2 weeks 1 to 2 monthsLuncheon meats, opened package 3 to 5 days 1 to 2 monthsUnopened package 2 weeks 1 to 2 monthsBacon & SausageBacon 7 days 1 monthSausage, raw from chicken, turkey, pork, beef 1 to 2 days 1 to 2 months 49
  51. 51. HamHam, fully-cooked vacuum sealed at plant,undated, unopened 2 weeks 1 to 2 monthsHam, fully-cooked, whole 7 days 1 to 2 monthsHamburger, Ground & Stew MeatHamburger & stew meat; Ground turkey, veal,pork, lamb & mixtures of them 1 to 2 days 3 to 4 monthsFresh Beef, Veal, Lamb, PorkSteaks 3 to 5 days 6 to 12 monthsChops 3 to 5 days 4 to 6 monthsRoasts 3 to 5 days 4 to 12 monthsSoup & StewsVegetable or meat added 3 to 4 days 2 to 3 monthsMeat LeftoversCooked meat and meat casseroles 3 to 4 days 2 to 3 monthsGravy and meat broth 1 to 2 days 2 to 3 monthsFresh PoultryChicken or turkey, whole 1 to 2 days 1 yearChicken or turkey, pieces 1 to 2 days 9 monthsCooked PoultryFried chicken 3 to 4 days 4 monthsPieces, plain 3 to 4 days 4 monthsChicken nuggets, patties 1 to 2 days 1 to 3 monthsPizzaPizza 3 to 4 days 1 to 2 monthsStuffingStuffing-cooked 3 to 4 days 1 monthBeverages, FruitJuices in cartons, fruit drinks, punch 3 weeks unopened 8 to 12 months 7 to 10 days opened50
  52. 52. Fish Lean fish (cod, flounder, haddock, sole, etc.) 1 to 2 days 6 months Fatty fish (bluefish, mackerel, salmon, etc.) 1 to 2 days 2 to 3 months Cooked fish 3 to 4 days 4 to 6 months Smoked fish 14 days or date on vacuum 2 months in vacuum package package Shellfish Shrimp, scallops, crayfish, squid, shucked clams, 1 to 2 days 3 to 6 months mussels and oysters Live clams, mussels, crab, lobster and oysters 2 to 3 days 2 to 3 months Cooked shellfish 3 to 4 days 3 months Dairy Butter 1 to 3 months 6 to 9 months Cheese, Hard (such as Cheddar, Swiss) 6 months, unopened 6 months 3 to 4 weeks, opened Cheese, Soft (such as Brie, Bel Paese) 1 week 6 months Cottage Cheese, Ricotta 1 week Doesnt freeze well Cream Cheese 2 weeks Doesnt freeze well Margarine 4 to 5 months 12 months Milk 7 days 3 months Sour cream 7 to 21 days Doesnt freeze Yogurt 7 to 14 days 1 to 2 months22 F. Purchasing Process 1. Acquisition of appropriate goods and or services a the best possible total cost of ownership 2. Documentations ensures best practice and regulatory authority rules are compiled closely 3. Adapt to meet requirements of Caribbean 4. Minimize fraud and open competition22 “Cold Storage Chart.” U.S. Deparment of Agriculture and the US food and Drug Administration. 51
  53. 53. 5. Decisions include: a. Delivery & handling b. Marginal benefit c. Price fluctuations d. Cost benefit analysis & cost utility analysis e. Level of risk 6. Systems a. Just In Time i. Timing purchases of consumables so as to keep inventory costs low ii. Framework agreement setting terms & price created between supplier and purchaser b. Bidding i. Depending on policy or legal requirements: quotes from multiple vendors ii. Prepare supply, expediting, shipment, delivery & payment base don contract52
  54. 54. InterviewsThe following are interviews that pertained most directly to the competitiveenvironment of the Landings St. Lucia. They are listed in order from earliest to latestsince the timeline of the project helps explain the progression of questions asked toeach interviewee.Interview - The Ritz-Carlton, Denver Executive Chef: Justin FieldsDate & Time: 10/26/10 7:30-8:00amAttendees: Mileta Gebre-Michael Questions Answers1. Ownership? 1. Ritz Carlton manages property 2. Operate with approved vendors based off: a. Contracts b. Volume based discounts c. Lowest shipping and freight costs2. Forecasting? 2. All volumes based on forecasting 3. Factors: a. Percentage of occupancy within the hotel a. 220 rooms with 2 people per room b. Days of the week- Friday & Saturday higher traffic c. Seasonal Times a. Peak: July to mid-November i. 81% Occupancy drops to 40% b. Late November to January i. 50-60% occupancy d. Banquets e. City wide events 53
  55. 55. 3. Product 1. Dairy Categories? a. Vendor: Leeds Robinson Dairy i. Handles 80% of orders ii. Amount: 400-500 lbs per order a. 4-5 cases of butter b. 4 cases of milk iii. Ordered and Delivered 3 times a week b. Vendor: Shamrock i. Handles 20% of orders ii. Amount: 50-100 lbs a. Specialty cheeses iii. 4 times a week 2. Meat c. Vendor: K&M Meat brokers i. All steaks come from same ranch a. Prime prices for meat—company finds best prices b. Specifications—prime meat ii. US Inspector on hand iii. Amount: 800-1000 lbs per order iv. Ordered and Delivered 3 times a week 3. Seafood d. Vendor: North East Food i. Amount: 25 lbs ii. 6 days a week a. Keep 2 days in house b. If wanted specialty fish from Hawaii—ship fish over night i. 40% of cost of fish was shipping 4. Produce e. Vendor: Shamrock- Freshpoint i. Handles 95% of orders ii. Amount: 800 lbs per order iii. Delivered and ordered 4x’s f. Vendor: Fresh Guys- i. Amount: 5% ii. Small/ Specialty Items i.e. Asian fruits iii. Maybe 1 a week54
  56. 56. SWOT AnalysisFood and Beverage at the Landings St. Lucia Strengths Weaknesses • RockResort caliber • Lack of visibility • Choice views & private beach • No logistics standardization • Culinary awards • No standard forecasting model • Little Storage • No formal purchasing process SWOT Analysis Opportunities Threats • Fresh meats • Protective economy • Economies of scale via importation • Legal and regulatory restrictions • Remoteness of the islandStrengths ‐ Both the Beach Club and the Palms are RockResort caliber restaurants that incorporate RockResorts’ environmental sustainability model by sourcing produce and fresh fish locally. ‐ The Beach Club is an open-air restaurant with the best views of Rodney Bay and the private Landings beach. ‐ The Landings has a strong culinary team. Recently, they were awarded Best Presentation at St. Lucia’s Rhythm and Spice Festival. Also the Landing’s Sous Chef Gilrey Samuel, as a part of St. Lucia’s national team, brought home the bronze medal at CHTA’s Taste of the Caribbean event.Weaknesses ‐ Lack of visibility with Vail Resorts headquarters. The Landings is potentially losing money by not taking advantage of their corporate partners, analysis capabilities, and capital investment for growth opportunities. ‐ There is little standardization of the food and beverage supply chain, which if utilized, would allow for easy scalability to newly developing food and beverage processes at other Caribbean RockResorts. 55