Effective ways to improve supply chain in beverage manufacturing industry

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The Background of the Study

Nowadays, Malaysia is mushrooming with manufacturing industries. More company across many industries is start and strong looking at an entire supply chain.

Supply Chain is taking an important role in manufacturing industries, especially food and beverage industry. The food and beverage industry with a typical supply chain is involve many other good industries. In food and beverage industry, every individual and organization is a customer and help in spur on economy.

Most of manufacturing companies in Malaysia have their own systematic supply chain helps to success in marketing. Hence, they are needed to finding an effective ways to improve it. An effective supply chain management has become a powerful weapon in the marketing arsenal.

For finding an effective way to improve supply chain, company would review their previous supply chain and try to identify the problem of the supply chain. Company needs to identify from suppliers until customers. Buyers and suppliers are recognized as persons who have an important influence to company's supply chain. The problem will be cure to achieve the goal of company. Meanwhile, time and cost are important factors in influencing the quality of supply chain. If company can't manage the time and cost of supply chain in an effective way then company can't achieve a reasonable profitability.

1.1 Problem Statement

Many manufacturers are attempting to find a critical and effective ways to improve their company supply chain. In meanwhile, they are try to identify what is the problem affecting their supply chain.

The most familiar problem of supply chain was come from poor logistic flow. The interruption of time in logistic flow will affect the whole supply chain become inconsistency and unstable. The interruption of time occurs in inbound logistic flow to outbound logistic flow. In inbound logistic flow, company is highly dependence on the performance of subcontractor in procurement of raw material. In addition, the outbound logistic flow is dependence upon on the customer. Two of the logistic flows have an interrelated relationship. The obstacle in inbound logistic flow will highly affect the outbound logistic flow. (Svensson, 2001)

Besides that, supply chain also appears the problem of uncertainty for the environment. According to Stevenson and Spring (2007), an uncertainty can be regarding to reliance on supplier, quality of product, and action of supplier. The uncertainty will cause inefficiency in supply chain. The inefficiency in supply chain will reduce the profitability of the company. Based on the definition given by Van der Vorst and Beulens (2002), supply chain uncertainty can be defined as:

"Supply chain uncertainty refer to decision making situation in the supply chain which the decision maker does not know the definitely what to decide as he is indistinct about the objective, lack information about the supply chain or environment; lack information processing capacities; is unable to accurately predict the impact of possible control actions on supply chain behavior or, lacks effective control actions."

Furthermore, disturbance of component and material was one of the problems in supply chain. It may causes by the lack of material or an error occurs in components. According to Svensson (2001), disturbance in supply chain of component and material can be categorized as either quantitative or qualitative. Quantitative disturbance are events that create a lack of components and material for downstream activities. For example such like breakdown or delay. Qualitative disturbance are more lead to component or materials in supply chain, for example poor surface, measurement errors in component and non-functioning in component.

Regarding to three of the problems, it will affect the efficiency of the flow of supply chain. Company must tries to find out some effective ways to solve this two of the problem.

1.2 Objective

The main objective of the study is tried to assist the manufacturing company to identify the effective ways to improve the supply chain. The specific objectives for this study are:

To identify the flexibility of supply chain in Thong Guan Trading Sdn. Bhd.

To identify what are the effective ways used by Thong Guan Trading Sdn. Bhd in improve their stage of supply chain efficiently.

Identify company size and each stage of supply chain in Thong Guan Trading Sdn.Bhd.

1.3 Scope of the study

There are various meaning of supply chain defined by authors. The meaning of supply chain defined by Sheikh (2000) as "a sequence of business processes and information that provides a product or service from suppliers through manufacturing and distribution to the ultimate customer".

The scope of this study focuses on the effective ways to improve supply chain in beverage manufacturing industry. For this study, the company been chosen is Thong Guan Trading Sdn.Bhd which is located at Sungai Petani, Kedah. Thong Guan Trading Sdn. Bhd is a large producer and distributor of coffee, tea, plastic and others. The part of this study is scope in beverage manufacturing of Thong Guan Trading Sdn. Bhd and tries to find out the effective ways of Thong Guan Trading Sdn.Bhd in managing their supply chain effectively.

Thong Guan Trading Sdn.Bhd was established since 1942 by Mr. Ang Thong Guan. It was a family business which is merchant specializing on black tea and Chinese tea under the brand of "888". Furthermore, Thong Guan Trading Sdn.Bhd have branch and warehouse which are located at Ipoh, Kuala Lumpur, Kelantan, and Johor.

The products of Thong Guan Trading Sdn.Bhd are widely distributed in Peninsular Malaysia, Sabah and Sarawak and also exported to neighboring company such like Singapore, Thailand and Brunei.

1.4 Significant of the project

I believed that this study is useful for all the manufacturers in the industries. It will be a useful and critical tool for implementing a successful and effective supply chain in manufacturing.

Besides that, this study can provide a plenty of ideas on help manufacturers redesign and renovate their poor value's supply chain. It can be a guideline for those manufactures in their supply chain management. In meanwhile, it also can be the strategic for the company on increasing profitability.

In addition, this study help us to identify the problems which is occurs in supply chain. We can base on the problems and try to find out an effective way to manage it. The effective way will help in improving the supply chain in manufacturing industries.

Furthermore, this study also will help in depict a clear relationship between supplier and customer. The responsibility of among supplier and customer in supply chain will be clearly classified by the company.

Finally, the study of effective ways to improve supply chain in beverage manufacturing industry inspires all the manufacturers about the importance of effective supply chain in their manufacturing industry.

1.5 Company background

Thong Guan Trading Sdn.Bhd is a big producer and distributor of coffee, tea and plastic. From the early beginning, Thong Guan Sdn. Bhd is main concentrate in produce tea and coffee with the brand of "888" in Malaysia market. The name of the brand of "888" was origin from the concept of Chinese culture, means wealth. Besides that, it also easily recognized and remembered by customers.

Thong Guan Trading Sdn.Bhd was established since 1942 by the late Mr. Ang Thong Guan with a mere of RM50.00 capital. It carves out as a small family business at the early beginning with tea merchant specializing in black tea and chinese tea.

Before the outstanding reputation of Thong Guan Sdn. Bhd, the pioneer of Thong Guan Trading Sdn. Bhd Mr. Ang Thong Guan had worked as a salesman for tea merchant at Penang Road in the late 1930s.

At the beginning of the year, Thong Guan Trading Sdn. Bhd start expanded their company. Up to now, it is a quoted company in Main Board of Kuala Lumpur Stock Exchange, Malaysia. The first Thong Guan Trading Sdn.Bhd was located at Sungai Lalang main road centre between Sungai Petani and Bedong.

Thong Guan Trading Sdn. Bhd also starts their investment in various sectors, such like plastic sector, food sector and textile sector.