CASE STUDY: Jamba Juice's Supply Chain

Management
by ASC Staff (2015)
Retail and hospitality conglomerates Landmark Group celebrated the launch of Jamba
Juice at Yas Mall, Abu Dhabi, at the end of last year, marking the first step in an
ambitious 80-store roll out for Jamba Juice in the Middle East.
The famed US brand, founded in 1990 in California, attracted the sort of queues
normally reserved for Dubai’s latest night time venue when it opened its doors in
November, indicating the UAE’s thirst for Jamba Juice, which already has more
than 850 stores in the US, Mexico, Canada, the Philippines, Korea.
Jamba Juice business head for the GCC region, Shobhit Tandon, is delighted with this
strong start, telling Logistics Middle East: “The real test of the brand in this market
is when you’re able to break the ice with local people, so being in Abu Dhabi is
the right place to start, rather than in Dubai, and it’s been a successful launch.
“In the 25 days after we opened, we recorded more transactions than many cafes in
Yas Mall, whereas cafes normally do ten times as many transactions as juice bars.”
Foodmark, the food and beverage division of Landmark Group, founded in Bahrain in
1973, signed the master franchise development agreement for the brand in January
2014. The stores in the Middle East will only be using products from Jamba
Juice’s US suppliers and, as a brand that prides itself on not containing
preservatives and on using extremely high-quality ingredients, Logistics Middle
East was keen to learn about the company’s supply chain set-up.
“All our frozen fruits and dairy comes directly from the US; we don’t procure from
the local market,” Tandon confirms. “Our fruits are plucked at the best stage of
their ripening and then individually blast frozen with a technology called as IQF
(individually quick frozen).
“Using local produce was not even a consideration for us because Jamba
product superiority in its ingredients can’t be replicated easily. This technology
[IQF] allows us to maintain the taste and freshness of our fruits and vegetable up
to a year or more.
And that is how customers get the same product everywhere Jamba Juice operates;
you’re getting the same product whether you buy a Jamba Juice smoothie in Yas
Mall in Abu Dhabi or the Philippines. IQF exists only in specific places around the
world.”
Continuing, he adds: “Consistency is key. Stores just pick up the product when it
arrives and put it into the blender, so across the world Jamba Juice is
maintaining the highest quality standards.”
Nick Gallager, senior purchase manager, Foodmark, adds: “The host brand does all the
quality checks and approves suppliers, so as a franchisee you’re buying into that to
make sure you’re getting the right product.”
Supplies are shipped over from the US to Dubai’s Jebel Ali Port and freight time on the
water is 30 days.
Speaking a little more about the process, Gallager says: “The containers are run in a
freezer unit with trackers inside the cases, which are checked when unloaded to ensure
the temperature did not spike.
“The product is sourced to be the freshest because of shelf life restrictions, so then it
has to go through a process of being re-labelled and making sure it meets the criteria to
get into each country,” he explains.
“Then it’s shipped, cleared, goes into storage in the UAE and delivered on a daily basis.
At the moment we use a third party logistics provider but in the future we will buy direct
once our volumes are big enough, cutting out the US loop.
“Our US-based 3PL does the re-labeling and consolidation because we have different
suppliers for different products – that company pulls it all together, re-labels it and ships
it over. Then at this end, Foodmark either uses a 3PL to clear and store goods for us, or
if we bring it in ourselves, clear it and put it into third party storage. While we do operate
warehouses here, ours don’t have big freezer capability so we use somebody else’s
warehouse for Jamba Juice,” he adds.
Drawn on customs procedures and potential barriers in this market, Gallager shares:
“There’s plenty of challenges within the GCC region compared with Europe in terms of
bringing product in but Dubai is very good on the whole. Other markets are far more
challenging, and it’s the same for every company in the region.
“If you want to launch a new brand in a market such as Qatar, it’s hugely trying to get
the product in. For instance, you have to get the production expiry date ink jetted not
just on the box but on the inner packaging.
If you’re going to buy from a factory, he’s not going to stop his production run to do that
and if you haven’t got a big enough volume, it becomes cost prohibitive in a lot of
aspects. And the lower the shelf life, the higher the risk, and the higher the cost
ultimately.”
Thinking about Jamba Juice in particular, Gallager continues: “You can get product in
but for Jamba Juice it’s going to be more of a challenge because the products are
unique; if you were buying cheese, it would be easier as other people will be also
buying cheese within Qatar so somebody will buy in a container load and the
manufacturer would stop production.”
Indeed, the supply chain challenges Jamba Juice faces are less about the product and
more about how the market responds to the product, requiring adeptness in stock
management and conjecture.
Gallager explains: “We have to forecast over a month in advance what we think our
sales will be, balancing that against how much stock we’re going to hold of each flavour,
and until you’ve opened your first store, you won’t know the sales mix – you won’t know
how it’s going to differ from the US market and other markets in which Jamba Juice is
present.
“And, then in turn it will vary from store to store [within the region]. The Dubai population
can be considered more expat-based rather than having an Arab majority, so you have
to anticipate slightly different eating habits.”
So how exactly is that achieved?
“You have to go with your gut feeling, and then keep close track of sales to follow eating
patterns and preferences,” Gallager answers.
“We took the host brand model of sales, forecast that out against our volumes, which
gave us our initial two orders, and now we are monitoring it closely, leading us reducing
some orders and increasing others.”
Simple as this sounds to those who do this day in day out, the fact that the menus per
region differ slightly in order to cater to local taste buds and maximise sales adds an
extra layer of complexity.
Indeed, Tandon concedes that the process can be challenging with the menu in Abu
Dhabi differing a great deal from the US menu, not just in terms of flavours on offer but
with sizes of beverages customer can choose from as well.
“The US offers three sizes in Jamba Juice drinks of 16, 24 and 28 oz. because that
market flavours ‘supersize’ volumes,” he says.
“In our Abu Dhabi store we offer 12, 16 and 24 oz. instead. We also launched all of our
Classic Smoothies with and without dairy because of the high diabetic population [in the
region]. While we use a zero-fat frozen yoghurt shipped from the US in the dairy
versions, we decided that all of our smoothies should also be available as a purely fruits
and vegetables options as well.
Owing to market research, new flavours also found their way onto the region’s menu,
requiring the company to formulate some products locally, such as Jamba Juice’s Date
with Dates smoothies, which are not part of the US menu, as well as its cucumber,
pomegranate and watermelon blends.
A supplier in Dubai provides these ingredients and will supply all the stores in the
UAE.Packaging is also locally produced.
Tandon reports. “Like the US, we only use recycled paper and use only Pet, not PP, but
the artwork is different because our brand positioning is different.
Continuing, he adds: “We found that extremely popular flavours in this market are
pomegranate, watermelon and cucumber. These are not present on the US or
Philippines menu, for example, so our menu has ended up being quite different,
contributing to the complexity in projecting a correct sales mix, two months in advance
of opening.”
And how ‘on the money’ has the company’s purchasing been so far?
“We are on track and I’d say we got the mix about 95 percent right when we made our
projections in July 2014 for our Abu Dhabi store opening in mid-November,” Tandon
reveals.
The initial orders have been sizeable with Gallager stating that filling the container to
keep costs down is the motivation between bringing in so much stock for one store so
far.
“As we get more stores, we’ll increase the number of shipments and spread the
shipments out; whereas it’s once every eight weeks now, we would aim to bring that
down to once every two weeks, so the shelf life is always freshest,” he reasons.
“The customer wants the best there is and we have to support that from a supply chain
point of view. We have to deliver consistency.”
Delving further into the intricacies of the Jamba Juice supply chain, Gallager adds: “It’s
quite tricky with Jamba Juice because the fruit is like the meat on the plate and you
can’t change where it comes from, but when the volume gets big enough, you would
buy it direct from the source.
“If you’re looking at the more general food supply chain then buying locally produced
stuff of high quality is the preference to reduce costs but with Jamba Juice the fruit is
the key element.”
At present, product makes it way from ship to store by road, courtesy of a clearance
agent and forwarder, then a third-party warehouse. The story could be different in a few
years, after the GCC-wide railway gets up and running in 2018, providing the company
has the volume.
“It’s all a volume game; if you can fill [the container] and stations are near where we are
going to have our stores then it works because it lowers the cost,” Gallager shares.
“If stations are miles from where we decide to have our warehouses, it might be
cheaper just to use truck transportation.”
So, what’s next for the brand, hot on the heels of its first foray into the GCC region?
Tandon reveals that although the time frame for rolling out the 80-stores here is ten
years; he is confident this can be achieve “much earlier”.
He then leaves me with a tantalizing taste of what’s in store for the UAE in the first half
of 2014: “We have four stores lined up that are confirmed. Our next launch is in Al Wasl
Main Road, towards the end of January, followed by the Oasis Center on SZR in
February, then Souk Madinat and Al Ghurair in March.”
Yung ginagamit na ingredients sa Jamba Juice is kinukuha pa nila sa US o
nanggagaling sa US para daw yung lasa nung sa US eh katulad lang din ng
lasa sa store sa Abu Dhabi, shiniship ang mga ingredients patungo sa Abu
Dhabi o kahit saan parte ng mundo na meron IQF individually quick
frozen.
yung mga ginagamit nila ingredients is galing pang US yung mga fruits bale
30 days yun sa dagat na naka-frozen
tas meron silang sariling product yung cucumber etc. na sa kanila lang
matatagpuan wala sa philippines o korea