FINAL REQUIREMENT

PRODQTY (10:00-11:00)

Villegas, Jarish P.

Mrs. Ma. Floracel Amor Cabelin

ASSISTANT INSTRUCTOR
Intel

In today’s fast-paced business world, making rapid, data-driven decisions is crucial to maintaining a
competitive edge. These decisions are especially important for Intel’s supply chain, which spans order
taking, resource procurement, manufacturing, testing, and final delivery of products. Intel IT is
transforming our legacy supply chain into a modern “glass pipeline” that improves our decision making
capabilities and business agility. This glass pipeline is now possible with our new integrated data platform
(IDP). Our IDP integrates the SAP HANA* in-memory database with Cloudera Distribution of Hadoop*,
running on multiprocessor (four-socket) servers, which are currently based on the Intel® Xeon®
processor E7 family.

Reports that used to take hours to generate can now be created in real time as a result of faster access
to data. Supply chain planners and experts are more efficient and effective at optimizing business
processes, driving operational excellence, and providing higher levels of customer satisfaction. The
transformation of Intel’s supply chain data is not yet complete. Our estimated five-year return on
investment for our new supply chain platform is USD 208 million. The platform will deliver the following
capabilities:

• Simplified supply chain and data pipelines

• Self-service analysis, which enables planners to make faster and better decisions

• Improved data quality by eliminating the reconciliation of data across systems

• Real-time analytics that identify, diagnose, and respond to issues

We plan to continue to add more advanced predictive analytics to enhance our “sense-and-respond”
supply chain.

Factors choosing suppliers

The practices that Intel follows to manage incoming materials are well established and time-tested.
These practices include developing longterm relationships with top-tier vendors who have proven track
records for consistently delivering high quality ingredients. Intel periodically performs joint audits with
these vendors to identify potential quality and functional issues, and if found, jointly evaluates
corrective actions to address the audit findings. Developing leading-edge products frequently requires
incorporation of new technologies and materials. This, in turn, requires continuous efforts to on-board
new vendors to source these new technologies. Intel has a supplier selection process that considers
many factors such as quality, availability, and security to develop mitigation plans that compensate for
the absence of a long-term relationship and proven track record.
Nike
Nike Inc. must prioritize strategies that address competition, which is highlighted as the strongest force in
this Five Forces Analysis. Nonetheless, the bargaining power of customers and the threat of substitutes
are also significant. A recommendation is for Nike Inc. to prioritize investment in product development to
ensure competitive advantage. Based on this Five Forces Analysis, it is also recommended that Nike Inc.
must implement strategies to attract and retain more customers, so as to minimize the effects of
substitution in the sports footwear industry environment.

Factors

Suppliers affect Nike’s business through the availability of raw materials. This element of the
Five Forces Analysis tackles suppliers’ influence on firms and the industry environment. In
Nike’s case, the following external factors create the weak bargaining power of suppliers:

 High overall supply (weak force)

 Large population of suppliers (weak force)
 Moderate size of individual suppliers (moderate force)

Factors choosing supplier

The high supply minimizes the effects of individual suppliers’ actions on Nike’s business.
Similarly, the large population of suppliers reduces the impact of individual suppliers’ demands
on large companies like Nike Inc. The moderate size of individual suppliers supports a moderate
degree of suppliers’ influence. Nonetheless, this element of the Five Forces Analysis shows that
Nike experiences only a weak force representing the bargaining power of suppliers. As such,
suppliers are among the least significant concerns determining Nike’s strategies in the sports
shoes, equipment and apparel industry environment.

Starbucks

The original Starbucks was formed in 1971 by three academics– English teacher Jerry Baldwin,
history teacher Zev Siegel and writer Gordon Bowker who opened the first store in Seattle that
they called “Starbucks Coffee, Tea, and Spice”. These partners named the brand Starbucks
after the coffee-loving first mate in Melville’s Classic Novel “Moby Dick”. The name resonated
with the romance of the high seas and seafaring coffee traders. The logo of Starbucks Company
was based on an old 16th century Norse woodcut: a two tailed mermaid siren encircled by the
Store’s original name The Company grew slowly and by the early 1980s had a roasting plant
and 4 retail stores that sold whole-bean coffee in the Seattle area. Starbucks has been
profitable every year since it commenced trading.

In March 1987, Jerry Baldwin and Gordon Bowker decided to sell the whole Starbucks operation in
Seattle – the stores, the roasting plant and the Starbucks name. Schultz raised capital and immediately
bought the company. The new name of the combined companies was Starbucks Corporation. When
Howard Schultz was 34 years old, he became Starbucks’ president and CEO.

In 1989, Schultz brought in Howard Behar who was familiar with opening and running multiple units.
The following year, Orin Smith joined Starbucks as their Chief Financial and Operations Officer. Both
Smith and Behar were 10 years senior to Schultz and brought with them seasoned experience to help
build the Company’s infrastructure. By 1991, Starbucks had ventured into the mail-order catalogue
business, licensed airport stores, expanded into California and had just over 100 stores. The company
went public in 1992. (Case GS-54, 2007)

By 2005, Starbucks had more than 10,200 company operated and licensed stores in more than 35
countries. The stores offered coffee drinks, and food items, as well as beans, coffee accessories, teas,
and music. Starbucks Corporation operated more than 5,200 stores in 10 countries (80% in the U.S.
which were located primarily in shopping centres and airports), while licensed operators more than
2,800 units in 28 countries. . The company also owned and licensed the Seattle’s Best Coffee and
Torrefazione Italia chain in the United States with more than 100 shops. In addition Starbucks marketed
its coffee through grocery stores and licensed its brand for other food and beverage product. Most
recent figures from January 2, 2011 show the total store count for Starbucks Corporation as 17,009;
8,870 owned stores and 8,139 licensed stores. (Starbucks Company Profile, 2011)

Factors choosing suppliers

Suppliers can exert only low to moderate pressure on Starbucks. The brand has its own supplier diversity
policy that it uses to select the suppliers. Ethical sourcing is another major policy at Starbucks. The brand
sources Coffee ethically from several parts of the world. It is also growing with the coffee farmers directly
that has helped it gain higher control over its supply chain. It eliminated the mediators and started
sourcing from the farmers directly. Starbucks has developed great relationships with both tea and cocoa
farming communities to educate them, about better cocoa farming practices and to help them derive
maximum profits from it. All of this has worked to reduce the clout of the mediators and the suppliers.
Moreover, the number of suppliers is high and Starbucks has plenty of room to exercise choice. So, its
excellent supply chain management in the last decade has reduced the bargaining power of suppliers and
brought it low.
L’Oreal

L’Oreal company was invented in (1907) by “Eugene Schueller” the young French Chemist, who took a
first move by creating the first hair dyes and started his sales by selling them to the French hairdressers.
This move made him focus and concentrate on researching, starting for his investment to achieve the
beauty for consumers and to look forward with the name L’Oreal. L’Oreal is a listed company, as “Liliane
Bettencourt” and the Swiss food company “Nestle” are the founders as each of them are controlling 30%
(percent) of the shares.

In (1988-2000) the director and the chairman “Lindsay Owen-Jones” in (2006) started the company with
the cosmetic marketing. Therefore today L’Oreal is the 1st Cosmetic group worldwide it has 27
International brands which is running globally in almost 130 Countries with €20.3 Billion Euros with
more than 68,900 Employees. L’Oreal company has a setup of 5 key division and activities which is
related with L’Oreal LUXE, CONSUMER Products, PROFESSIONAL Products, ACTIVE Cosmetics and
The BODY SHOP. There are some products which contains the highest growth rates like Lancôme,
Giorgio Armani, Kiehl’s, Kerastase, Maybelline New York and La Roche-Posay contains a range of
exceptionally high quality products that are globally recognized all over the world.

Therefore, this success accomplished under his leadership Sir “Lindsay” who have recognized to help the
consumers individually by desiring them or getting them to be beautiful, his mission was to achieve to
create the effective growth strategy for their brands in order for companies success.

Factors choosing suppliers

Suppliers is the business that supply materials and other products into the industry .if suppliers have a
high range of bargaining power then the company gets less attraction. It has a high power when many
buyers and few dominators supply not differentiated. High valued products (Switching cost Substitute
products are unavailable in the market place.

For Example:

Raw Materials

Packaging

Point of Sales

Equipments

So that mean L’Oreal has many suppliers in producing their products. So therefore, their bargaining
power is low.
PepsiCo

In 2010, PepsiCo Beverage Company (PBC), an operating unit of PepsiCo Inc. (PepsiCo), the second
largest food and beverage company in the world, received the supply chain innovation award from the
Council of Supply Chain Management Professionals (CSCMP). PepsiCo was given this award for its
innovative distribution strategy, the “Direct to Store Delivery model”, that reduced system-wide inventory,
eliminated warehouse space constraints, enhanced the potential for unlimited SKU growth, and delivered
warehouse cost savings. After showing spectacular growth in the 1990s and early2000s, PBC found it
difficult to manage its distribution centers and warehouses

Factors choosing suppliers

There are even natural factors behind demand and supply. Climate change, sustainability, water scarcity
are all factors that despite not being related directly can impact demand and supply. However, sometimes
their impact can be direct when they shift the consumers’ focus towards other things. Natural disasters,
global warming, water shortage, decreased agricultural output etc are not small concerns. These factors
can impact the pricing and then create a downward pressure on demand. If the impact is on supply,
demand is going to be affected. If the supply of raw materials is low, like decreased availability of water,
sugarcane or corn, its effect will be felt on production. Low production means low supply and in turn it
means a pressure on brand to raise the prices to match the expected revenue

Nestle

Supply chain management has gaining its importance in serving business operations and being part of
strategic management of the business. Its role has been shifted from being a support department to being
the core department of business with strategic importance and role to play in overall operations of the
business. In modern business world no organization can sustain without having a well established,
effective and efficient supply chain management. The role of vendors along with vendor management
with the introduction of information technology is important consideration for organizations.
Now with increase of strategic importance of supply chain management the service provider is now
becoming a partner to the organization, rather being just the vendor. The factor influencing competitive
advantage of the organization is now having the better vendor management and vendor relations in the
list. Therefore in coming years the importance of supply chain management is expected to increase with
the increase in competition and globalization.
To understand the strategic supply chain management, key concepts and use of information technology
to maintain the vendor relationships, this report in presented on one of the leading FMCG company
Nestle. Their products range is wide and the concentration of this report is on organization's Pakistan
operations. Since Pakistan is the part of their global supply chain operations but for their milk products
they have to rely on the local milk suppliers who are not very much educated and well equipped.
Therefore managing them is a challenge for the organization and same challenge and its handling is
under study in this report. There are some recommendations also given at the end so that improvements
can be made in local supply chain.
Factors choosing suppliers

There are several factors that are to be considered when organizations go for reviewing and improving
their logistics and procurement. The first factor that is to be taken care of is the bargaining power of the
suppliers. The higher the bargaining power of supplier the higher will be the requirement for the
organization to maintain and build good relationships with their suppliers. In industries where such power
is with suppliers organizations have to design their procurement process which is supplier friendly and
encourages the organizations to have good friendly relationships with their vendor, focusing on making
them their partners in business and getting the competitive edge out of it (Chopra and Meindl, 2009).
The second factor which is to be taken into consideration is the cost factor, the procurement and logistics
can be costly to the organization if not designed creatively. The logistic are costly when their inbound and
outbound management is not done the way to maximize the productivity. Therefore when organization
design the procurement and logistics process they should keep in mind the cost of procuring the goods
and service along with the distribution cost of the good should be minimum. These costs include the time
and resources costs as well.
Another important consideration is related to the integration of procurement and logistics with rest of the
business operation. Organization when improving these processes should also make it sure that the
maximum integration is possible with other departments like production. They should be working on the
automation of the processes that should be managed by single hub. This way the costs of operations will
be minimum and automation and integration of all the operations will save time and increase efficiency in
the business processes. They should also make sure that integration also include the vendors (Chopra
and Meindl, 2009).