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Demand fluctuation of coffer products

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Demand fluctuation of coffee products

Like any other commodity in the global market, coffee products vary in demand. Sales

change from season to season due to unlimited business factors where some are beyond control

(Yao et al., 2021). The factors impacting the rise in demand levels of the coffee products in the

market may include customer’s change of preference (from tea to coffee), increased population

income hence improved purchasing power, escalated price of supplement products' ( such as tea)

leading to people buying more coffee than tea and other supplements (Hung Ann & Bokelmann,

2019). For instance, according to Global Trade Statistics, the global coffee consumption in

2020/2021 was projected to be 167.22 million bags, having escalated by 1.8% on its level of 164

million coffee bags in 2019/2020 (Torga & Spers, 2020). The increase in the buying rate

indicates an expanded production process for the coffee suppliers. The best thing a

manufacturing business can do to counter the variation in the demand levels is to have a very

flexible production department. One of the key activities to support this is outsourcing (Giri &

Sarker, 2017). This is the process through which an organization or the suppliers sources a third-

party manufacturer to produce products on behalf of the said firm (Giri & Sarker, 2017).

Outsourcing the production of coffee products for a particular organization is a very

helpful move for many reasons. The highly considered benefit of the operation is the lower labor

cost that will come with the process hence an overall fair pricing strategy for the products (Giri

& Sarker, 2017). The entity will attain the real coffee savings from the increased sales and focus

more on its fundamental business operation. Secondly, increased innovation answers the

question of why we need outsourcing. The company may lack the necessary tools or

manufacturing schedule to create new coffee products. Having access to an outsourcing resource

allows you to schedule prototyping and other production-related tasks swiftly without
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reallocating internal resources. Thirdly, the process aids in mitigating the bottleneck in

production caused by the increased demand. Finally, outsourcing addresses inefficiencies that

may result from in-house coffee production and, in turn, encourage production efficiency in the

whole process (Somjai, 2017).

For the coffee to be fully manufactured and its products sold, it goes through a whole

processing stage in observance of supply chain management requirements. Some of the

production line activities considered for outsourcing include pulping, milling, grading, and

packing (Haile & Kang, 2019). When the demand hikes, these production activities increase in

intensity, and they can only be performed better and effectively by outsourcing. However, to

successfully achieve this plan, the time and process plan of the activities is paramount. This

refers to the whole arrangement action of the activities in regard to the effective time

management process. The coordinated arrangement will enhance the swiftness of facing the

bottleneck once it manifests in the coffee production procedure within the organization (Haile &

Kang, 2019). The best structure to implement this is by encouraging and promoting easy,

accessible, and flexible communication methods between the involved firms. The

communication is based on digital platforms where the organization facing the bottleneck is able

to connect with the supplier it is outsourcing from. A specific statement of the expected quantity

of production and the agreed cost is set out clearly at the initial stages to avoid delayed coffee

processing due to disagreements between the productions. Such a structured and mutually agreed

outsourcing system creates trust between the firms, and the bottleneck situation can only be acted

upon swiftly in such a scenario.

Despite the advantages of outsourcing coffee production, some setbacks lie in the whole

operation. Some of them include a possibility of poor management due to increased parties that
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needs to be coordinated (Somjai, 2017). The business is also unpredictable, and so are increased

levels of future uncertainties when outsourcing is practiced due to outside partners' integration.

Further, what is most tricky in the whole process is the possibility of experiencing hidden costs.

When outsourcing is done to lower costs, there is usually a promise of immediate cash flow

benefits as well as long-term cost reductions. Undoubtedly, a corporation can analyze vendor

costs to present expenditures and factor in future cost schedules for innovation and learning

curves. On the other hand, it may be unaware of future cost savings opportunities or

technological disruptions. These are most likely judgmental concerns (Somjai, 2017).

In conclusion, automation is key to the best way to achieve a coordinated outsourcing

plan that ensures effective order delivery to the final consumer. This is where the orders from the

customers and how to deliver them are featured in a single digital platform. This will enhance

quick determination of how many partners are required to be outsourced (Arif & Jawab, 2018).

The outsourcing company must ensure perfect lead and delivery time calculation. The company

should employ the following method as indicated by Arif & Jawab (2018).

Planned Shipment Date + Shipping Time = Planned Delivery Date

The above process will create a flowing ordering rhythm in the coffee production outsourcing

plan.
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References

Giri, B. C., & Sarker, B. R. (2017). Improving performance by coordinating a supply chain with

third-party logistics outsourcing under production disruption. Computers & Industrial

Engineering, 103, 168-177.

Haile, M., & Kang, W. H. (2019). The harvest and post-harvest management practices’ impact

on coffee quality. Coffee-Production and Research, 1-18.

Hung Anh, N., & Bokelmann, W. (2019). Determinants of smallholders’ market preferences:

The case of sustainable certified coffee farmers in Vietnam. Sustainability, 11(10), 2897.

Somjai, S. (2017). Advantages and disadvantages of outsourcing. The Business and Management

Review, 9(1), 157-160.

Torga, G. N., & Spers, E. E. (2020). Perspectives of global coffee demand. In Coffee

Consumption and Industry Strategies in Brazil (pp. 21-49). Woodhead Publishing.

Yao, J., Liu, M., Chen, N., Wang, X., He, X., Hu, Y., & Chen, W. (2021). Quantitative

assessment of demand and supply of urban ecosystem services in different seasons: a

case study on air purification in a temperate city. Landscape Ecology, 36(7), 1971-1986.