Strategic Supply Chain Management of Bakehouse

1. Introduction

Supply chain management has an important process in the business, as part of all the operations from the raw materials for manufacturing a product, to delivery on ready product to the end customer. The main focus of this module is based on the supply chain practices of an organisation that has potential to growth in the field of bakery industry.

According to Wei & Wu, (2013), the implementation of effective supply chain management can reduce costs, the shared information can maintain the higher market sensitivity. Supply chain involves the overall supply chain system of the organisation, including planning, operations, logistic and all the management activities such as: suppliers, manufacturing, distribution, and retailing to the end customer or consumer.

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The aim on this module is to review the current model of the supply chain of the bakery shop “Backhaus” and implementation on the literature review on SCM to coordinate different choices as an alternative for improvement on the existing Supply Chain Management.

2. Background of the Organisation

The “Bakehaus” as a concept was established back in 1988 in Germany, as a family business. There are twelve different products of bred as an offer to their customers, as a best seller product. The selling offer also gives a wide range of products, such as: sandwiches, salads and soups, pastries, cakes and hot snacks. (Eat Out Magazine, 2016).

Bakehaus is a German bakery shop that is located in UK London- Hammersmith. The organisation is operation from 2011, and has been new to the competitive market. The shop is located on King Street, Hammersmith Tube Station. (Bakehaus”, 2016). The vision of “Bakehaus” is to produce quality bakes products for low prices. There are 15 employees currently working in the shop. Long-term mission of the organisation is to expand, or open more shops around London, as a growing business in the industry.

The products in terms of bread are based on grains and seeds from German suppliers, and there are no chemical additives or pre-mixed flower added, which gives the unique taste of the traditional German bread.

3. Organisational Supply Chain Model

The implementation of Supply Chain Management can have a positive impact on the business productivity, which will increase the improvements in returns on investments and assets. According to Lambert (2008) the main focus of the organisations is at their supply chain network, as their dependence on the SCM reflects on the competitiveness in the global market economy. (as cited from Naslund & Williamson, 2010).

Bakehaus sells a variety of different bakery products, but the main product is bread. When the product reaches the end consumer that represents one end of the supply chain network. The whole process of the supply chain begins from the suppliers of raw material, manufacturing, distribution and retailer or the “Bakehaus” shop which delivers the products to the end customer. According to the interview that has been undertaken from our team” Evolution” with the manager of the shop, there are eight suppliers that the organisation have a long-term relations.  The main suppliers of “Bakehaus” are: Watts Farms-UK for suppling vegetables, Klemme- for supplying bread. The relationship between the organisation and the suppliers is built on trust and loyalty, and it’s a non-contractual long term relationship, which is maintained for five years from the opening of the business.  The supply chain network for “Bakehaus” on their main product (bread) is direct from the manufacturer in Germany, which gives a competitive advantage on products in terms of quality and freshness. (see Figure 1).

Figure 1: Bakehaus Current Supply Chain Model

Adapted from: (Team – Evolution Group Presentation, 2016)

The costs for the transportation from Germany to UK is bared to minimum (as low as 0%), which gives the organisation additional savings that can be used in designing new products or services. The wastage on the shelf products is below 5%, and the main concept is based on freshness.

1. BakeHaus Supply Chain Management Practices

There are different levels of improvement that can be used in order to create an effective supply chain management. From the theoretical point of view Bakehause as part of their supply chain network is practicing techniques which have a positive impact on the strategic role of the organisation in terms of long term planning, consistent development and profitability and leading the organisation to competitive advantage in the market. (Cetinkaya, 2010).

The two main techniques that the organisation is practicing involves: inventory management system which is used to the point of stocking the warehouses and just in time manufacturing system that is used in shop for delivering fresh and quality products to the end customer. Managing inventory plays a vital role in the supply chain network in order for the products to reach the end destination following the necessary time frame. Backhaus by applying this technique can keep their stock inventory at the lower level, which leads to more flexible supply chain. (Elms & Low 2013). The inventory method that the organisation is applying within the supply chain network is called First in First Out (FIFO).

1.4 Literature Review on Supply Chain Practices

There are many different theories in the literature that has been published over the years, when we look at Supply Chain Management as a practice. SCM plays a vital role in the organisational performance, as the organisations are challenged to find the best supply chain practice in order to meet the customer demands as well as minimizing production costs. (Jain, Dangayach, Agarwal & Banerjee, 2010).

Supply Chain Management can be defined as a network that includes facilities for producing raw material, transforming the raw material to ready products that are shipped to the end customer by using different kind of distribution channels. The main objective of the Supply Chain Management is to add value to the overall production and sales, minimising the costs, and to create a list of benefits for customers, suppliers and the organisation. (Shukla, Garg & Agarwal 2011).

The SCM network in one organisation can be successful, but problems can also occur. There are different ways in order to improve the current SCM. The improvements that can be used in practice, can give the organisation better performance in their SCM, and that can lead to better quality, customer satisfaction and loyalty. Supply Chain Management Practices includes: Agile Model, Lean Management, Kaizen, and Total Quality Management.

1.4.1 AGILE Model    

Agility in organisational terms refers to flexibility. When considering agile improvement of the SCM, the main focus will be on the market. Agile model of Supply Chain practice can be applied in order for the organisation to be more flexible in terms of forecasting and dealing with the customer demands. (Christopher, 2000). In today business competitive industry, agility can play a vital role for the organisations in order to meet the needs of the customers. Agile Supply Chain which referees to flexibility, gives the organisations competitive edge in times of changes such as: environmental changes, technological changes or demands changes in the existing market. (Dhayalan, & Devadasan, 2011).

Just in time (JIT) is a system that has been developed in Japan in early 1970, as a management philosophy which combine the right product whit the right quality at the right place and the right time. Goddadrd (1986) believed that JIT as a philosophy has been applied to maximize customer demands at a minimum delays. (as cited from Kootanaee at al, 2013).