Structured Synopsis Maldives Industrial Fisheries Company Limited (MIFFS) is chosen as an area of study to identify the supply chain and logistics issues of canned tuna in Maldives. The company delivers a wide range of products to both domestic and international market. Ready to fry fish products, canned fish, frozen tuna products and dried fish products are the main products the company deals with. However, we looked into the supply chain and logistics issues associated with the canned tuna to the international market.
Problems with product flow are studied thoroughly to give a clear understanding of the issues associated in the supply chain. The main key areas like demand management, inventory management and collaborative planning and forecasting are considered in the supply chain of the company. Information mentioned in the report is based on the questionnaire and interview collected through the staff handling the logistic service in the company. Along with that, web-search and academic Journals are used to give valid information about the subject. Current state mapping is used to analyze the present status of the company.
From the audit conducted, it was found that the product demand is higher than the company can supply. Company uses pull system where production takes place based on the orders placed by the agents. The company cannot take many orders as they cannot produce as demanded by their customers due to lack of capacity. The company spends a huge amount on maintaining the quality standards of the product. Since they mainly deal with EX. market, the quality standards are very vital and ignorance at any level may lead customers to switch to their rival companies.
Company lacks the capacity to meet the sudden increase in demand. It takes three months for the company to get the raw materials. This means that customers have to wait for the product at least three months. So the long lead-time is also an issue which was found out from the audit conducted. Transportation from factory to male’ port is outsourced and products are sent right on time depending on the availability of vessel as they do not have any storage facility nearby port. This may also lead to a serious problem and may bring the whole supply chain to a halt.
An integrated supply chain is proposed to overcome the issues outlined in the audit findings. The solutions to overcome the demand management, inventory management, strategic landing and outsourcing are mentioned along with integrated supply chain to ensure that orders are delivered 3 Page Supply Chain and Logistics Issues of Canned Tuna in Maldives on time at the right quantity and at the right time without any breakdown in the supply chain network. An action plan is also given for the company to implement in the next two years to rectify the problems in the supply chain network.
This action plan will help the company to resolve the problems in the current state mapping and to gain the competitive advantages such as short lead-time and better customer service. This study will obviously help the company to think about the corporate values of the the vision and corporate goals. 2. Introduction The Maldives Industrial Fisheries Company (MIFFS) is a state-run corporate enterprise and leader of Maldives fishermen as a processor and exportation of fishery products. The company was established in 1993. Main products of the company include; canned fish, frozen tuna, dried tuna and fresh tuna products.
The company collects raw materials from Mammalian fishermen through their collecting vessels and factory Jetty. The major markets for the Miff’s products are United Kingdom, Ireland, Germany, Netherlands and Switzerland. The company main business is to export canned tuna products to the international market. The main challenges for the company are managing demand and continuous availability of raw materials. This report will examine the major supply chain issues and challenges for MIFFS and provide recommendations to improve demand management of canned tuna products. Page Current supply chain network Figure 1: Current supply chain network of MIFFS for overseas market 3. Customers’ expectation Customers’ expectation for canned tuna was changed globally in the recent years. Developed and developing countries are highly engaged in healthy food with high in quality. Consistent and complete labeling on canned tuna needs to be done to give detailed information on the fish that customers consumed (Greenback, 2010). Customers always look for premium quality products delivered right on time at an affordable price. . 1 Order Winners and Qualifier Eating pattern and demand for the canned tuna are rapidly changing in exporting countries. Customers are more preferred to eat healthy and fresh fish. High competition of canned tuna products in the European market allows customers to eave more alternative options. As MIFFS has high demand for canned tuna, it needs to focus on certain criteria to win the customer’s satisfaction. The highest priority is given to delivery lead time and reliability of delivery to be competitive in the market.
These two criterion’s are important to maintain a relationship with distributors in the international market and seek their confidence. Production flexibility is seen 51 Page criterion is price. Many consumers compare the quality and price of a similar product before they make buy decision. MIFFS provides highest quality canned tuna products at competitive price. Competitive Factor Product Canned-Tuna Order winners and Qualifiers Reliability of Delivery 25 Delivery Lead Time Quality Features (Product range) 10 Flexibility of Design Production Flexibility 20 Price / Cost Other Total 4.
Methodology This report is based on research to investigate the issues and challenges in the supply chain of canned tuna supplied by MIFFS to the international market and to minimize those issues and challenges. The Supply chain specifically focuses on the network from Suppliers to the Final Customers. In order to compile this report, we have gathered information about MIFFS and ajar international markets through questionnaire and interview (appendix 1 and 2) with Ms. Aftermath Affairs, the sales executive of MIFFS. We also gathered information by observing the major international markets historical data through web-search.
We analyzed several reports and 6 Journal articles to overcome the issues and challenges in supply chain of canned tuna. Besides, we used some graphical data to show the market trend of supply of canned tuna in the international market. 6 | Page 5. Current State Mapping Value stream mapping (VS.) is a tool which helps the company to identify the areas o improve the production process including both material and information flow. Current state map is the initial step of VS.. It gives the information about supply chain steps and the time taken in each step of supply chain (Sings, et al. 2011). Figure 3 shows the current state map based on the information provided by MIFFS, who is the manufacturer in the supply chain network. The information mentioned here is based on the VS. of canned tuna exported to overseas market. Supply chain commences by catching the tuna through a sustainable fishing techniques known as pole & line fishing. Fishing vessels store the tuna caught by them in the ice boxes within the vessel. Fishermen can either sell tuna to collecting vessels of MIFFS at different areas of the country or directly to the factory outlet.
Quality Assurance Inspector at each collecting point does the grading immediately on receipt of tuna. Grading is done based on three scales that is good, fair and bad. Tuna with bad texture, appearance and backbone temperature below 3 degree Celsius are considered under bad category which is rejected. It is kept in freezing facility within the manufacturing plant if the stock collected is more than what is required for reduction. The company doesn’t store it for more than 6 months as a way of maintaining quality. The facility has the capacity to store 700 metric tons of fishes.
The initial process of manufacturing is thawing tuna through the running water. After thawing, tuna are De-gutted and then cooked in steam. Once it is cooked, tuna are cleaned by removing everything except white meat. White meats are then stuffed into cans through a machine called ‘pack shaper’. The empty cans are produced in the in-house can manufacturing plant of the factory. Tin free steel which is required or making cans is brought from Taiwan which takes approximately 3 months. The cans as per the requirement of customers.
The raw materials such as salt and oil are brought from Thailand and Singapore respectively. Then the cans are sealed by a machine called ‘sesame’. The sealed cans are retorted which is cooking of cans in steam for 45 minutes at 117 degrees. Subsequently, those cans are kept in the cooling area for 24 hours. Upon cooling, cans are labeled and cased. These cases are then kept in a warehouse within the plant ready to be shipped. The whole manufacturing process takes 48 hours to complete. It is transported by sea through a third party logistics service to the central port of Maldives.
It is located at the capital city of Maldives, Male’. However, the company brings the containers to 71 Page the port right on time after booking is done in exporting vessel since they do not have any warehouse facility in the capital. It usually takes 10 hours to reach Male’ from the plant by sea. These containers are sent by sea transport which takes 2 days to reach Colombo and it takes approximately 15 days to reach its final destination. The number of days depends on ordering country. Tuna is mainly exported to European countries by the company (as shown in Figure 4).
The agents collect the containers from the destination port and then keep it in their distribution centers or distribute the shipment to the supermarkets and retailers. MIFFS operates as a manufacturer in the supply chain between suppliers and customers. In order to get the raw materials required for production and to meet the demands of customers, the company continuously communicates with both suppliers and agents. The company takes orders from the agents in different countries via electronic mail prior to three months of production.
The company lacks the capacity to take the urgent orders since they require time to get the raw materials required for production which is approximately three months. The company adheres to the principles of Hazard Analysis and Critical Control Point (HACK) and Good Manufacturing Principles (IGMP). Since, the company export mainly depends on the EX. market, they strictly follow the rules and regulations outlined by The European Commission’s Directorate General for Health and Consumers (ASANA) on import conditions for seafood and other fishery products to EX. countries. Page Figure 3: Current state mapping for production of 20 met Top Exporting Countries for Past 5 years AMOUNT IN KEG 3500000 2500000 2000000 1 500000 1000000 Top Exporting Countries for Past 5 years Ireland Netherlands Switzerland Germany 2423124. 18 163836 210958 1218247 3351993. 5 COUNTRIES Figure 4: Top five exporting countries of canned tuna from Maldives for the past 5 9 | Page 6. Audit Findings A study was conducted to identify the current issues related to the supply chain network of MIFFS. Audit was specifically in relation to tracing the gap in the current supply chain.
Issues and challenges which need immediate attention are only specified here. The first and utmost issue is that the demand is higher than the company can supply to the market. As a result, company loses important customers. Competitors who can supply products as per the requirement of the customers on time. Quality is another vital issue which needs to be addressed by the company to manage the supply chain network. Tuna is a perishable item which is very costly to keep in stock as it requires large freezing facility.
However, company needs to maintain the stock in order to produce continuously without halt. The company has o spend a vast sum of money to ensure that the products are of superior quality. Quality standards are maintained by the company to ensure that products are not of inferior quality. Maintenance of quality standards desired by customers is a great challenge for the company in the current circumstances. The other main issue which was found from audit is that the company is not able to meet the sudden increase in demand.
The company requires orders three months prior to the production. It takes three months to get the raw materials required for production. So the company has to reject all the orders which are of less than three months. Demand forecasting is considered very lightly for the production as a company produce based on the orders placed by the agents. The lead time between supplier and producer is too long which need a better solution. Likewise, the lead time between the producer and the agents are three months which are too long which needs immediate attention. 7.
Strategic Vision MIFFS vision is to increase market share of the international market by providing adequate services. To achieve this, MIFFS needs to increase capability and capacity to store, enhance the ability of delivery excellence and offer competitive price in the international market. The company needs to create a high-level research team which could further look into improving quality to produce high-value canned-tuna products for niche markets. The company is required 101 page to develop infrastructure such as cold stores, chilling and handling facilities, and reduce cost of production.
The company needs to share truthful information between supply chain partners to forecast demand more accurately. Collaborative demand forecasting allows supply chain partners to share demand information which helps to make decisions on production planning and product replenishment (Yang, et al. 2014). Figure 5: The Collaborative, Planning, Forecasting, and Replenishment (CPRM) Process Source: (Yang, et al. , 2014) 8. Action Plan We recommend the following action plan to minimize the issues associated with the current supply network of the company. Action plan proposed in Figure 6 is based on chain network. 1 | Page Figure 6: Proposed Action Plan 121 page 9. Operations and logistic policies Following are the recommended operation and logistic policies to rectify the issues in the supply chain of MIFFS. MIFFS is necessary to build rapport when dealing with other parties involved in the apply chain to understand their requirements. The company also needs to improve the network of customers and suppliers to ensure that the loss will be covered if any customer is dissatisfied or any supplier is unable to supply the required raw materials for production.
The company should strengthen record-keeping process; fishery data collection processes, analysis and reporting to measure the company performance. To ensure the constant quality standards required for the international market, MIFFS should strengthen the quality check system by regular inspecting of the raw materials collected from the suppliers. Basically, customers look for superior quality, quick delivery at a cheap cost. In a dynamic international market, supplying the product at the right time, place and cost is as vital as quality to gain the competitive advantage (Chin, et al. , 2004).
MIFFS needs to explore the possibility of expanding the capacity for tuna canning and packing to meet its demand and improve the balance between the availably of raw materials and processing capacity. According to Davis (1993) supply chain environment exits three sources of uncertainty; demand, production, and supply. Most important category is demand uncertainty. Demand uncertainty directly affects production planning supply scheduler over time (Davis, 1993). Therefore, Systematic change of production capacity and forecasting demand is another important stage for MIFFS to meet the peaks of unexpected customers demand. 0. Integrated supply chain network Carter et al. (2009) stated that supply chain integration is enhanced by building trust across all levels of the trading partners based on long term relationships and experience. Regular communication between partners is an important ingredient to build long term relationship in integrated Supply chain. To build a trusting relationship, MIFFS has to treat all the parties in the supply chain network equally. Implementing modern technology is an essential element of integrated supply chain which the company needs to take into consideration.
It helps the company to reduce 131 page the raw materials from multiple partners as mentioned in figure 1 . Moreover, technological advancement increases process efficiency by reviewing historical performance data and provide better service to the point of delivery 0 & J. D, 2002). As a result, the delivery lead time can be reduced with the successful implementation of n integrated supply chain network. Add & Nassau (2010) suggested that Supply Chain Management system enables intersperses cooperation and collaboration with suppliers, customers, and business partners.
This will enable MIFFS to share confidential information about market needs with all the partners among the supply chain. By adopting an integrated supply chain, the company can overcome the excess demand; reduce the delivery lead time, prompt response from suppliers and better coordination among supply chain partners. Figure 2: An Integrated Supply chain source: (snow, 2011). 11. Conclusion Being a manufacturer, managing a supply chain is a very complex task as MIFFS has to deal with suppliers, distributors, agents and customers simultaneously.
Supply chain of fishery products is particularly difficult given the quality requirements. Pull system is currently used by the company which is very risky as a small break down in the supply chain may lead to dissatisfaction from its customers Meanwhile, push system cannot be implemented as the company’s success highly depends on its ability to meet the requirements of the orders placed from the agents. Focusing on hangers on internal operations of the company only cannot solve the problems.
An integrated supply chain associated with operational activities along with 141 Page decisions and activities of their external business partners need to be considered to deal with the existing issues in supply chain network of MIFFS (Vida, et al. , 2007). Strategic planning will help the company to satisfy their customers by solving the existing issues linked with supply chain network. Improvements in lead-time, demand management and customer services are some competitive advantages that company can make use of over their rival companies. 151 page
