Supply Chain Management Protocols And Inventories Business Essay

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Today, we expect to be able to buy food from all over the world. Food products are distributed more quickly and over greater distances than before. This means advantages in terms of availability but also disadvantages in terms of more complex supply chains.

1.1 Importance:

The importation and exportation of frozen food have increased in the last decade due to the development of the alimentary regime.

This increase in activities affected most developed countries including Lebanon.

According to the FAO figures the value of food imported to Lebanon significantly increased in the last 40 years.

In 1970 the total value of food imported was exceeding 8 million USD however in 2009 the total value was around 50 million USD with an increase of 510%

Since a defect-free product, or safe foodstuff, delivered on time is no longer considered a competitive advantage for a company but a basic requirement, collaboration and co-ordination of the supply chain are needed.

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Accordingly the answer to this problematic is by using an effective supply chain management starting from suppliers passing by the freezing treatment centers, transport, finally arriving in the basket of final consumer.

Compared to fresh food the importation of frozen products is considered more expensive; accordingly the traceability is more difficult and takes more time.

We will undertake a study on the international frozen chain and local frozen chain.

It is necessary for a company to communicate with the customers in order to be well known on the Lebanese territory.

Referring to many importers we will apply the traceability management in the frozen food industries.

1.2 Objectives:

If we implement an effective traceability management we can reduce the cost and improve the food safety:

What is the market share of frozen food in the Lebanese market and how does it constitute a profit for the importing companies? What are the methods used by importing companies to transport the goods and control the frozen food chain? Are the Lebanese industries implementing the supply chain management in their operations? Is the traceability management implemented in the frozen food industries?

Our subject focuses on the three main parts. In the first part, we will explain the theoretical tools of analysis that will clarify the basic concepts related to our study.

1.3 Outlines:

Starting by defining the concept of refrigerated foods, then the supply chain management and finally we will explain the traceability in the supply chain.

In the second part we will examine if food industries are applying these concepts then, how they are managing and monitoring the frozen food and what is the recall strategy used in case of crisis. For achieving this objective we will use in our study the

Questionnaire that will be submitted to 3 companies: Slutan FOOD.TSC.Spinneys.

Finally, in the third part, we will analyze the response achieved from the questionnaire in order to conclude and identify the impact of the traceability management on the efficiency of the industry.

Chapter 1: Supply Chain Management protocols and inventories for frozen food.

Part 2.1: Refrigerated foods:

Refrigerated foods are one of the fastest growing sectors of the grocery and foodservice industries in the world and it is divided into two categories: chilled and frozen food.

2.1.1: Chilled Food:

Perishable foods which are maintained at temperatures in the range -1oC to +8oC, in order to retain their quality shelf life and microbiological safety at the point of consumption.

2.1.1.2 History of chilled food.

The first chilled foods in the 1960s were sliced meats and pies. By the next decade, household refrigerators were stocked with salad dressings and dairy desserts. In the 1980s, TV dinners, sandwiches, pizzas, ethnic snacks, pastas, and soups were kept chilled. Nondairy desserts, sandwich fillings, dips, sauces, stocks, prepared fruit and vegetables, and leafy salads were commonly chilled in the 1990s, and specialty breads, condiments, sushi, and meal kits were typical by the 2000s (decade).

2.1.1.3 Safety Requirements:

Minimal contamination during manufacture, rapid chilling and low temperatures during storage, handling, distribution, retail display and consumer storage.

2.1.2: Frozen Food:

Freezing food preserves it from the time it is prepared to the time it is eaten.

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Freezing food slows down decomposition by turning residual moisture into ice, inhibiting the growth of most bacterial species. In the food commodity industry, the process is called IQF or "Individually Quick Frozen".

Frozen products do not require any added preservatives because microorganisms do not grow when the temperature of the food is below -9.5°C, which is sufficient on its own in preventing food spoilage. Long-term preservation of food may call for food storage at even lower temperatures.

If it's frozen then it's fresh: food that has been frozen properly can be as fresh as when it was first harvested. Freezing simply slows down the deterioration process of food and the advantage is that it can be done immediately after harvesting so the nutrients are locked in.

By comparison, fresh products may be sitting around for days or weeks before they're cooked and eaten. By the time some people receive fresh meat and vegetables they've lost nutrients, vitamins and some products are sensitive to light too. The key to effective freezing is starting with a good product and then freezing it as quickly as possible.

2.1.2.3 History of frozen food:

Beginning in 1929, Clarence Birdseye offered his quick-frozen foods to the public. Birdseye got the idea during fur-trapping expeditions to Labrador in 1912 and 1916, where he saw the natives use freezing to preserve foods.[4] Modern attempts at refrigeration began in the early 20th century in the meat packing industry. More advanced attempts include food frozen for Eleanor Roosevelt on her trip to Russia. Other experiments, involving orange juice, ice cream and vegetables were conducted by the military near the end of World War II.

Part 2: supply chain management, traceability:

The frequency of product recalls has been increasing over the past decade. Many examples for the recent 'global' product recalls include the Toyota automotive recall (2010), the pork dioxin recall in Ireland (2008), the melamine tainted milk recall in China(2008). Towards improving the product quality and ensuring the food safety and sustaining a competitive advantage; many food producers are switching to 'supply chain traceability'. The ability the trace the origin, movement, and destination of products along the supply chain has been associated with improvements in operational performance, inventory optimization, product quality, and food safety.

Furthermore, comparatively little attention has been given to which Supply Chain Management (SCM) strategies and management practices can help managers to successfully trace the origin within the agri-food industry.

2.2 SUPPLY CHAIN MANAGEMENT:

2.2.1 Definition.

A supply chain is the sequence of organizations- their facilities, functions, and activities- that are involved in producing and developing a product or service. The sequence begins with basic suppliers of raw materials and extends all the way to the final customer. Facilities include warehouses, factories, processing centers, distribution centers, retail outlets, and offices. Functions and activities include forecasting, purchasing, inventory management, quality assurance, scheduling, production, distribution, delivery, and customer service.

There are two kinds of movement in these systems:

The physical movement of material, generally in the direction of the end of the chain (although not all material starts at the beginning of the chain).

The exchange of information, which moves in both directions along the chain.

Every business organization is part of at least one supply chain, and many are part of multiple supply chains. The number and the type of organizations in a supple chain are determined by whether the supply chain is manufacturing or service oriented.

2.2.2 Value chains, supply chains, and demand component.

Supply chains are sometimes referred to as value chains, a term that reflects the concept that value is added as good and services progress through the chain. Supply or value chains are typically comprised of separate business organizations, rather than just a single organization. Moreover, the supply or value chain has two components for each organization: a supply component and a demand component.

The supply component starts at the beginning of the chain and ends with the internal operations of the organization. The demand component of the chain starts at the point where the organization's output is delivered to its immediate customer and ends with the finals customer in the chain.

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The demand chain is the sales and distribution portion of the value chain. The length of each component depends on where a particular organization is in the chain; the closer the organization is to the finals customer, the shorter its demand component and the longer its supply component.

All organizations, regardless of where they are in the chain, must deal with supply and demand issues. The goal of supply chain management is to link all components of the supply chain so that market demand is met as efficiently as possible across the entire chain. This requires matching supply and demand at each stage of the chain. Note that except for the beginning suppliers and the final customers, the organizations in a supply chain are both customers and suppliers.

2.2.3 The need for supply chain management

In the past, most organizations did little to manage their supply chains. Instead, they tended to concentrate on their own operations and on their immediate suppliers. However, a number of factors make it desirable for business organizations to actively manage their supply chains. The major factors are:

The need to improve operations. During the last decade, many organizations adapted practices such as lean production and TQM. As a result, they were able to achieve improved quality while wringing much of the excess costs out of their systems. Although there is still room for improvement, for many organizations, the major gains have been realized. Opportunity now lies largely with procurement, distribution, and logistics- the supply chain.

Increasing levels of outsourcing. Organizations are increasing their levels of outsourcing, buying goods or services instead of producing or providing them themselves. As outsourcing increases, organizations are spending increasing amounts on supply-related activities (wrapping, packaging, moving, loading and unloading, and sorting). A significant amount of the cost and time spent on these and other related activities may be unnecessary.

Increasing transportation costs. Transportations costs are increasing and they need to be more carefully managed.

Competitive pressures. Competitive pressures have lead to an increasing number of new products, shorter product development cycles, and increased demand for customization. And in some industries, most notably consumer electronics, product life cycles are relatively short. Added to this are adoption of quick response strategies and efforts to reduce lead times.

Increasing globalization. Increasing globalization had expanded the physical length of supply chains.

Increasing importance of e-commerce. The increasing importance of e-commerce has added new dimensions to business buying and selling and has presented new challenges.

The complexity of supply chains. Supply chains are complex; they are dynamic and they have many inherent uncertainties that can adversely affect the supply chains, such as inaccurate forecasts, late deliveries, substandard quality, equipments breakdowns, and cancelled or changed orders.

The need to manage inventories. Inventories play a major role in the success of failure of a supply chain, so it is important to coordinate inventory levels throughout a supply chain. Shortages can severely disrupt the timely flow of work and have far reaching impacts, while excess inventories add unnecessary costs. It would not be unusual to find inventory shortages in some parts of a supply chain and excess inventories in other parts of the same supply chain.

2.2.4 Benefits of effective supply chain management.

Effective supply chain management offers numerous benefits. For example, Campbell soup doubled its inventory turnover rate, Hewlett-Packard cut deskjet printer supply cost by 75 percent, Sport Obermeyer doubled profits and increased sales by 60 percent in two years, and National Bicycle increased its market share from 5 percent to 29 percent. And effective supply chain management helped Wal-Mart become the largest and most profitable retailer in the world!

Generally, benefits of effective supply chain management include lower inventories, lower costs, higher productivity, and improved ability to respond to fluctuations in demand, shorter lead times, higher profits, and greater customer loyalty.

2.2.5 Managing the Food Supply Chain.

Supply chain management involves coordinating activities across the supply chain. Central to this taking customer demand and translating it into corresponding activities at each level of the supply chain. The key elements in this process are outlined in the next section.

A cold chain is a Supply Chain for perishable items requiring low temperatures in order to protect the chilled and frozen food.

Furthermore, a cold chain can be used in many other areas, such as food, pharmaceutical and chemical products. The common thing of those products is the high requirement on the temperature, humidity, light or other particular conditions.

Therefore, the two main differences between supply chain and the cold chain are:

1- The cold chain demands a lot on the operating conditions.

2- The cold chain has the possibility to be spoiled.

2.2.5.1. Elements in the food supply chain management.

The supply chain in the food industry starts with ingredients or raw materials. Selection of the appropriate raw materials is needed to achieve the desired end product. Suppliers are contracted to supply materials that meet the requirements outlined on the raw material specification sheet. There may be a number of concurrent suppliers of the same ingredient to ensure availability is always guaranteed, especially for high volume businesses, such as in fast food restaurants.

A traceability system allows manufacturers to trace the source and path of each ingredient or raw material throughout the production process. This is very important if any incidences of contamination come to light after a product has been placed on the market. Having such safeguards in place can prevent or minimize any widespread risks to consumers.

The success of the supply chain depends on efficiency and timeliness which is related to the logistics that will be discussed in more detail in the upcoming section.

Legislation and good manufacturing practices (GMP) within the cold chain are designed to ensure effective control of safety and quality.

General legislative directives relevant to cold chain operations include:

GMP intends to give the best guidance available on practical means of achieving and maintaining high quality chilled and frozen foods. There are key guidance points given for each stage of the operation:

Step 1: Getting the basic requirements

Raw materials and packaging Set product specifications, e.g. microbiological, temperature, quality, hygiene Adopt 'approved suppliers' and incoming product inspection regimes Comply with packaging directives, e.g. contact materials, environmental Ensure packaging meets technical requirements, e.g. barrier, insulation

Step 2: Control the manufacturing operation

Use appropriate freezing equipment to maximise quality Pass through 'zone of crystallisation' as quickly as possible.

Regard freezing as complete only when product reaches -18oC throughout If manufacture requires heating, cool as soon and quickly as possible Ensure storage and transportation of chilled foods is below 4oC High risk categories require special (segregated) manufacturing conditions.

Step 3: Maintain the appropriate storage conditions

Maintain primary and secondary freezer stores at between -20oC to -28oC Maintain frozen product temperatures at less than -18oC Maintain chill stores at between 0oC and 8oC Maintain chilled products that spoil rapidly at between -1oC and +2oC Maintain microbiologically susceptible products at between 0oC and +5oC Minimise air temperature variations in cold stores Ensure optimum stacking patterns in storage regimes Monitor and record air temperatures in warmest part of the storage facility

Provide alarms to indicate temperature abuse

Step 4: Distribution of chilled and frozen foods

Unless you grow your own food, all the food we consume has undergone some - and probably many - forms of transport.

In the simplest case, fresh vegetables may be taken to a local market. Consumers then buy produce and drive, walk or cycle it home.

This first step may be eliminated if the produce is bought at the farm-gate, such as in the case of strawberries in the summer time, but then it is still transported home by the customer.

A product may be a key ingredient for another product and thus is transported to a manufacturing site elsewhere by road, rail, sea or air. This procedure can be repeated before it is finally sold as a finished product, which again requires transport to get it to the point of sale. Transportation of foods results in what it termed "food miles" and its economic and environmental impacts are debated today.

Commodity products, such as grains, can be bulk or container shipped around the world in huge transporter ships. In bulk shipping the grain goes straight into the hold of the ship instead of being transported in containers on board the ship. Some countries are major commodity exporters to other parts of the world, such as Australia and Canada for wheat export and pulses. Further on, we will see some examples of innovations and research in shipping transport.

The storage, packaging and transport steps of the supply chain can involve many technologies, needed to maintain product quality. Chilled or frozen distribution ("cold-chain") and modified atmosphere environments are used for many products.

Foods can be stored and packed in modified or controlled atmospheres. Controlled atmospheres are useful for crops that ripen after harvest or deteriorate quickly even when stored optimally.

For primary frozen distribution, temperatures between -12oC and -18oC For local frozen distribution, -12oC to -15oC For chilled foods temperatures control, ensure

Category 1 (-1oC to +2oC): fresh meat, poultry, offals, comminuted meats, fish and shellfish, smoked fish.

Category 2 (0oC to 5oC): pre-cooked foods, cured meats, sandwiches, pasteurised milk/cream

Category 3 (0oC to 8oC): fruit and vegetables, fermented meats, hard cheese, bakery products, butter/margarine, spreads

Step 5: Ensure appropriate conditions for retailing/foodservice

Inspect and measure incoming food for temperature control Monitor in-house cold store facilities Operate retail display cabinets according to manufacturer's guidance

For cook-chill and cook-freeze products, ensure a minimum reheating operation of 70oC for 2 minutes is achieved Maintain food temperatures above 63oC for foodservice

Doubts on the integrity and control of food temperatures at any stage of the cold chain can be allayed or confirmed by the following simple sequence of checks:

Inspect air temperature recorders and thermometers to determine temperature history of product.

2.2.6. Logistics of the cold chain.

The cold chain consists of two logistic systems:

Surface storage: Refrigerated warehouses for storage of temperature sensitive products.

Refrigerated Transportation: Reefer trucks, containers, ships and trains for transport of temperature sensitive products.

To preserve safety in chilled foods, there are prescribed maximum temperatures. Currently, the Agreement on the International Carriage of Perishable Foodstuffs (ATP Agreement) specifies the following maxima for transportation: 7oC for meats; 6oC for meat products, butter; 4oC for poultry, milk and dairy products; 3oC for offal; 2oC for fish. These temperatures are also a good guideline to be followed throughout all stages of production, including distribution, storage and retail display.

To preserve quality and safety in frozen foods, temperature requirements exist for each major stage of the cold chain. It is recommended that stabilised food temperatures are maintained at -18oC or colder, although exceptions for brief periods are allowed during transportation or local distribution when -15oC is permitted. Also, retail display cabinets should be at -18oC, to an extent consistent with good storage practice, but not warmer than -12oC. Consideration should also be made for the likely temperatures experienced by the foods within domestic freezers - this is dependent upon the 'star rating' of the freezer; a three-star freezer is capable of temperatures below -18oC, a two-star freezer of temperatures below -12oC, and a one-star freezer of temperatures below -6oC. In the latter, the practical storage time for frozen products is limited to just a few days.

Throughout chilled and frozen food manufacturing, assurance of food safety is paramount. Combining the principles of food microbiology, quality control and risk assessment, a Hazard Analysis Critical Control Point (HACCP) approach is recommended by many regulatory bodies to assure food safety and demonstrate 'due diligence' in accordance with food safety legislation.

2.2.6.1. Hazard Analysis Critical Control Point (HACCP)

HACCP is an important element in the control of safety and quality in food production. When properly applied, it provides a management tool aimed at complete commitment to product quality and safety. HACCP is useful in identifying problems in food production and works well for simple products and processes. The inevitable drawback for the SME food producer is that considerable resources and expertise may be required to carry out hazard analysis on novel or complex products. However, there are many guideline documents and PC-based software now available to guide the user through the essential steps.

The 7 principles of HACCP:

Identify the potential hazards

- Together with the HACCP team (including microbiologists and process engineers) construct a flow diagram for all product/process operations - list all hazards associated with each process step - list measures which will eliminate or reduce hazards.

Determine the critical control points (CCPs) for identified hazards

- determine the CCP (a step at which control can be applied and is essential to eliminate the hazard).

Establish the target levels/tolerances for controlling the CCPs

- establish a predetermined value for control which has been shown to eliminate hazards at a CCP.

Establish/implement monitoring systems for controlling CCPs

- e.g. set out a planned sequence of observations or measurements to assess the degree of control on identified CCPs.

Identify corrective actions when a deviation occurs at a CCP

- identify a predetermined action for when the CCP indicates a loss of control.

Verify that the HACCP system is working

- establish and apply methods to ensure that the HACCP system is working, including documentary evidence, e.g. auditing, end product testing, process validation.

Establish a documentation system for procedures and records

- develop and maintain procedures and practices for record keeping.