SM Jaleel, based in Trinidad, is a family run business that is the largest drink manufacturer in the Caribbean. Dominating the Caricom market, with seven leading brands of soft drinks and fruit drinks, its products are distributed throughout the region and internationally, with billions of cases of drinks through the supermarket chain. (Fig 1.)
SM Jaleel’s purchasing function (Fig 2.) consists mainly of managing the supply chain (Fig 3.)
from defining specifications based on the organization’s needs in its inbound logistics to the delivery and use of beverages.
Quality is critical to the organization, as a result, all activities including purchasing must adhere to the quality standards of the organization.
Overview of SM Jaleel’s purchasing function
Ideally the role of a manufacturing organization’s purchasing department includes the following;
Managing suppliers in improving the supply chain.
Evaluating and tracking supplier capabilities.
Selecting the lowest total cost supplier.
Reducing purchase costs.
Leveraging purchases by reducing suppliers and increasing volumes.
Managing supplier relationships.
The Purchasing view is to conserve funds and to refrain from buying a more costly product or service or larger quantity than is actually needed, to try to obtain both product and price competition.
At SMJaleel the purchasing department is more traditional in their approach due to the nature of the products in which they produce. For the soft drinks the company has a close relationship with their fixed suppliers who provide the basic ingredients like water supplier by WASA and sugar supplied by Guyana. Whilst for the fruit juices they vend from local farmers and suppliers. They remain in this comfort zone as they believe that there supplier relations are optimal.
Specification and Purchasing and its effect on Quality
Specification refers to a description of the characteristics of a commodity or service required. It is defined as the requirement which a purchase order is to be based. Specifications set forth the characteristics of the goods and services to be purchased so as to enable the vendor to determine and understand that which is to be supplied.
Today’s competitiveness demands high quality, and a specification can help in purchasing the best product for input. The time to develop a standardized purchasing specification can conclude high rewards and having various departments participate improves the specification and sets the stage for continuing the specification improvement process. Unlike other beverage manufactures like PepsiCo and Cannings, SM Jaleel do not revise its product and services specifications frequently.
Theoretically management believes that specifications are an important element of the purchasing process at SM Jaleel. However in interviewing actual buyers it is believed that the preparation of good specifications is probably the most difficult function in the process and the company plays little emphasis on these as it is viewed as time consuming. Inadequate or poorly written specifications sometimes the cause of many bidders’ challenges and can considerably delay the purchasing process, which is part of the reason why company tends to use fixed suppliers.
The importance of Standards in Quality Management
As distribution chains are increasingly stretched around the world, and urgency has arisen for the creation of safety standards to ensure that beverage industry quality control and processing standards provide a safe global supply.
The key to improving supplier quality is the use of certified quality standards by all. Michael DeCata manager of global supplier quality for GE Plastics believes that certification can help to reduce redundancy in supplier qualification, and that it can be a springboard for real quality improvement. Most purchasing executives recognize the merits of the certification process, agreeing that it does help in improving quality assurance systems.
SM Jaleel’s Management recognizes the merit and quality image that the company has achieved with its alignment with local and international standards.
TTBS-The Trinidad and Tobago Bureau of Standards acts primarily to develop, promote and enforce standards in order to improve the quality and performance of goods produced or used in the Republic of Trinidad and Tobago. Through the TTBS SM Jaleel also holds membership in the CARICOM Regional Organization for Standards and Quality (CROSQ) and is a full Member of the International Organization for Standardization (ISO) which is an international standard setting body composed of representatives from various national standards organizations. The organization publicizes worldwide registered standards.
Food and Drug Administration (FDA) registration is required for all companies that manufacture, process, pack, or store food or beverages that may be consumed in the United States. Thus SM Jaleel is also FDA approved as they export to large department chains like Walmart in the US.
Value analysis is a systematic effort to improve upon cost and or performance of products and services either purchased or produced. It examines the materials, processes, information systems, and the flow of materials involved.
Value Analysis allows for the improvement of product performance and reduction in production cost by understanding and addressing the intended function of the product. The method includes;
Dissecting products to discern key competitive advantages.
Detailed analysis of the disassembled products.
Identifying those functions of concern and soliciting ideas for improving.
Selecting the most value adding.
Cost-effective ideas and preparing a business case for the implementation of the proposals.
Value Analysis in the purchasing function includes the examination of each procurement item to ascertain its total cost of acquisition, maintenance, and usage over its useful life and, wherever feasible, to replace it with a more cost effective substitute. Implemented diligently, value analysis can result in
Reduced material use and cost.
Reduced distribution costs.
Improved profit margins.
Increased customer satisfaction.
Increased employee morale.
Based on observations and the outcome of the report, it seems that the company’s management believes that there purchasing operations are desirable as they are experiencing growth and continued success, however there are several areas that can improve the efficiency of these operations.
A standardized purchasing specification for manufacturing companies can act as a powerful tool, I would recommend that the company place more emphasis on this as it may add to the following:
1. Improve input quality therefore the final product quality.
2. Lower machine life-cycle costs.
3. Reduce purchase cycle time.
4. Educate suppliers to the company’s longterm requirements.
This information may be in the form of a description of the physical, functional, or performance characteristics and a brand name. Specifications are written so as to not restrict bidding but encourage open competition. The goal is to invite maximum reasonable competition. Even though the nature of the products produced do not require strict specification requirements it is recommended that the company comply with this habit as it may be more profitable when the company grows and expand.
I also recommend that the purchasing department identifies training needs and provides training for all employees. This ensures that they have the appropriate level of education, experience and training necessary to effectively perform the required activities. A training plan can be established to address food safety training for allergen management, low acid manufacturing, employee safety and food security.
All purchased ingredients should be procured against an approved specification from an approved vendor. Suppliers should pass an approval process. However in the case of the production of the fruit juices where it’s main ingredients example sorrel are locally sourced the company can set up progammes to ensure this products are planted and reaped to ensure the highest quality. Supplier performance should be routinely monitored, recorded and reassessed.
CARICOM Regional Organization for Standards and Quality- www.crosq.org
Registrar Corp Registration Information- www.registrarcorp.com
International Organization for Standardization-www.iso.org
Bridle, J. (2004) ‘Integrated transportation planning: Supply-chain success’, Focus,
Trinidad and Tobago Bureau of Standards -www.ttbs.org.tt/
SM Jaleel and Company Limited http- www.chubbysd.com
Techniques of value analysis and engineering. Lawrence D Miles
Lundgren, Bryan. 1990. Special Buys Need Standard Specs. Purchasing World, December 1, 44. http://www.proquest.com/ (accessed December 4, 2010).
Carbone, James. 1996. Chrysler wants QS 9000 standards for all suppliers. Purchasing, January 11, 68. http://www.proquest.com/ (accessed December 4, 2010).
Avery, Susan. 1994. ISO 9000 certification: Does it help or hinder? Purchasing, January 13, 101. http://www.proquest.com/ (accessed December 4, 2010).
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