CARIBBEAN MARITIME UNIVERSITY

Kingston Jamaica

Logistics & Supply Chain Management II

“SUPPLY CHAIN AUDIT ON JAMAICA FLOUR MILLS”

Research submitted in partial fulfillment of the requirement for the degree of Bachelor of

Science

In Logistics and Supply Chain Management

To

Mr. S. Powell

From

Donya-Maria Cooke - 20180497

Yanique Fagan - 20180282

Jonelle Guthrie - 20180227

Jade Nelson - 20181036

RUNNING HEAD: SUPPLY CHAIN AUDIT ON JAMAICA FLOUR MILLS

Table of contents

Introduction ……………………………………………………………………………… Pg. 3

Key problems affecting Jamaica Flour Mills …………………………………………… Pg. 4-5

Origin of the problem and its impact on Jamaica Flour Mills………………………..…. Pg. 6-9

Recommendations………………………………………………………………………..Pg. 10-11

Sustainable Operations………………...….……………………………………………...Pg. 12-13

Conclusion………………………………………………………………………………..Pg. 14

References………………………………………………………………………………..Pg. 15-16

Presentation link………………………………………………………………………….Pg. 17

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Introduction

The company of focus chosen for this assessment is Jamaica Flour Mills. Jamaica Flour

Mills Limited was established in 1964, they produce and mill flour as well as other grain

products. They manufacture the finest wheat and baking items in the region. Their goods are

manufactured from high-quality ingredients and are liked by customers all across the island.

Flour, cake mix, festival mix, baking powder, and creamy wheat cereal are among the luxury

items offered by JF Mills. Manufacturers utilize these goods to give healthier foods and a better

living for millions of people throughout the world. The Archer Daniels Midland Firm owns the

company, which is the sole flour producer on the island (ADM). ADM has approximately 270

factories globally, producing a diverse variety of goods such as food components, animal feeds,

and biofuels. This assessment will analyze the key problems affecting Jamaica Flour Mills in

the context of today’s environment, it will determine the origin of the problem as well as the

level of impact the outlined problem has on the company, applicable recommendations will be

provided in order to address the identified issues and last but not least, an explanation of how the

operations of Jamaica Flour Mills can become sustainable based on economic, social and

environmental dimensions will be provided.

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Key problems affecting JFM

Since the year 2021 Jamaica Flour Mills has been impacted by repeated price increases

for wheat and grain , increases in freight charges (transportation costs), shipment delays and

most importantly shortage of grains which has been affecting other manufacturers such as

Jamaica Broilers, Caribbean Broilers, and Seprod.

To be optimum and efficient, JFM must concentrate on Key Performance Indicators

(KPI) in order to keep track of, maintain, and/or enhance performance in many elements of the

company. A Important Performance Indicator (KPI) is a quantifiable statistic that shows how

well a firm is reaching key business goals. Organizations use KPIs at many levels to assess their

progress toward their goals. Low-level KPIs may focus on procedures in departments such as

sales, marketing, HR, support, and others, whereas high-level KPIs may focus on overall

business success.

According to (Nembhard, 2021) managing director of Jamaica Flour Mills (JFM), Grain

prices have been rising over the world in general. Wheat is not special; cereals in general are.

The animal feed industry, everyone who imports grains, whether it's maize or wheat, grain prices

have gone up, fuel costs have gone up, therefore ocean freight has gone up, and there have been

a number of concerns. A storm slammed the Gulf, affecting a number of loading stations and, as

a result, disrupting grain shipment for some time.

A number of Caribbean facilities ran out of grains last year, and importers were forced to

share grain among themselves to guarantee that everyone had supplies until their delayed ship

arrived. Almost 90% of the grains consumed in the region are imported from the United States

and Canada. When those markets have problems, the regional impact is instantaneous.

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Barbados, Grenada, and St Lucia were all included. In Jamaica, there have been

occasions when corporations were short on grains or their vessels were late, and Jamaica Flour

Mills was able to provide them with grains. The feed firms were assisting each other since one of

the grain vessels was late, and one company would assist the other. ”There has been a lot of stuff

since January 2021, according to (Nembhard, 2021) managing director of Jamaica Flour Mills

(JFM), and it isn't going away since we're still having supply chain challenges and lengthier lines

at the loading stations,"

Since the Russian invasion, exports from the two countries involved have been halted. As

a result, supply has decreased while demand has remained constant. Many people's economic

fears are being realized as a result of Russia's invasion of Ukraine, as Jamaicans are now feeling

the heat from the eastern conflict, as seen by an anticipated increase in the price of flour, a staple

in every Jamaican family. Local customers have had to pay extra for numerous essential items in

recent months, as prices have risen due to global supply-chain issues that have intensified since

the month-long war situation in Ukraine.

This anticipated rise is the result of Russia banning grain and sugar exports in an effort to

avert a food emergency in the nation. As experts have already warned, any suspension of grain

exports will have a significant impact on the product's local price.

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Origin of the problem and its impact on JFM

Jamaica flour mills have experienced a drastic change and have been trying to balance

their final product while trying to satisfy their customers needs. The increase in price for wheat

and grain, increases in freight charges or transportation cost , shipment delays as well as shortage

of grains has had a major impact on the Jamaica Flour Mills company. The company has had

supply chain concerns which have affected global trade which also fueled inflation in the

company through increased shipping cost. Due to the devastating increase in prices on grains and

fuel, the price for shipping fees has also gone up.

Hurricanes have a major impact on the movement of freight. It impacts truckload rates

which is caused by moving freights before the storm approaches to safety. When the storm is

over emergency supplies are brought in which pushes inbound rates to the max for a period of

time. Hurricane damaged loading stations at ports on the US Gulf Coast over the summer,

severely complicating grain movement and driving various islands and enterprises to share

supply. This impact has further led to the transportation of grains to be impacted for a vast

amount of time. If there are no loading stations, it makes it impossible for grains to be loaded. It

occurred during a time when demand was high for grain and companies depended on it to be

shipped. The Caribbean’s supply of grains mostly comes from the United States and Canada and

when there are any form of issues arising from those two continents, the Caribbean is

immediately impacted. The shortage of grain supply was so bad that at one point the Jamaica

flour mills had to help out companies by sharing supplies with them. Supply chain issues are

further seen where there has been longer line-ups at loading stations due to the shortage in

supply.

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RUNNING HEAD: SUPPLY CHAIN AUDIT ON JAMAICA FLOUR MILLS

Flour is an important ingredient used by Jamaicans which is made from wheat. The

coronavirus pandemic has also caused a major impact on the production and supply of wheat due

to social distancing and persons having to quarantine, hence they had less workers in the

production and distribution field. Shipping industries have been hit with labor shortages

contributing to congestion at shipping ports. Companies haven't been able to keep up with

demand considering roughly 90% of supplies come through shipping. The company thought that

operations would have slowly improved after the fall from the start of the pandemic but there has

been uncertainty since the new variant and the reaction of consumers. The company feels worn

down and not able to catch a break while trying to provide their customers with supplies.

Numerous companies ran out of grain throughout the Caribbean which caused the importers of

this commodity to share with the companies that are in demand. Companies were short because

their suppliers had a delay in the transporting of their produce. Suppliers are currently awaiting

containers in order to ship their supplies to customers like Jamaica Flour Mills.

According to Zee news (2022), Jamaica commerce minister Aubyn Hill said that the

country is looking forward to enriching investment ties with India and added that the talks for

imports of wheat, fertilizers, and farm equipment from India are ongoing. Supplies from India

have been disrupted and there has been a partial ban on exports. Jamaica Flour Mills does not

currently import wheat from India as they get their supply from North America but they could

have been a source of supply when Jamaica Flour Mills goes through supply issues. The Indians

are looking out for themselves and their markets to ensure that they can supply their local

demand with the product they need before they go about supplying for other countries.

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The war between Ukraine and Russia has also led the Jamaica Flour Mills to open discussion

with India. The war has caused countries to cut off their supplies or has affected some supply

hubs forcing India to open up their supply chain.

The price of grain, which has increased since the start of the year, has further increased

due to the war between the European states and also has a major impact on the supply chain. The

increase in wheat prices will affect the prices of pastry products like bread, cakes, buns to name a

few, which will cause the company to lose some of its customers, putting pressure on their

pockets as they are already troubled with the impacts of high inflation. Jamaica Flour Mills have

to find ways to not let the increase in prices they are experiencing reflect on the customers,

which at the end of the day will put them at a greater loss.

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Fig. 1 illustrates the prices of wheat from the year 1990- 2022 and how it has increased

and decreased between those years. There was a drastic increase in the year 1996 and one in

2008 that was due to an increase in oil prices. It went to its second highest in the year 2022 due

to the war between Ukraine and Russia and may continue to peak in the near future. This poses

financial issues and strains on both the company and the customers.

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Recommendations

There are several recommendations that can be suggested in order to reduce or eliminate

the above mentioned problems , however a few of those solutions are: Look for opportunities to

innovate.

In the midst of any crisis is always opportunity. Once the immediate response to the crisis

is secured, organizations should consider opportunities for short or medium-term innovation.

These may be for the development of products and services that can be quickly brought to

market in response to changing customer needs. Or this may be an opportunity for thinking

innovatively about working with partner organizations or refocusing activity and tapping into

heightened energy from employees, as energy often increases in response to a crisis. Or you

might take a complete relook at how the organization is deploying digital and other technological

innovation. Consider partnering with different suppliers,(Covid 19 response, n/d).

Accept the short-term focus, and demonstrate true leadership. A key implication for any

business responding to a major crisis is an immediate plan for response and recovery. Timelines

and targets will need to be refocused on very near and near-to-mid-term horizons. In this

situation, it is vital that senior leaders in the organization accept the change of their focus from

strategic to tactical, particularly with a crisis such as COVID-19 where the situation is both new

and continues to evolve,( Covid 19 response,n/d) .

It is strongly advised going with a market research-based predictive method. This will

assist JFM in determining which resources will be required at what times. This information,

along with inventory information, must be updated on a regular basis in order to prepare the

company for shortages or exceptionally high sales volumes. When implementing a predictive

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approach across the company, keep in mind that internal cooperation across departments is

critical.

Another strategy to deal with raw material shortages is to prevent delays as much as

feasible. Final consumers are already waiting much longer for their orders (wait times in the food

industry have doubled, for example), thus optimizing transportation, semi-finished goods, and

end products through the manufacturing process might be helpful. This will save company time

and ensure client satisfaction.

The human element must also be considered. JFM will obtain a better grasp of how the

market operates and may even receive insight into company stock levels if they create and

maintain trustworthy connections with consumers, distributors, and suppliers. These kinds of

partnerships provide a strong foundation for high-quality company cooperation and can thus be

an appealing option in times of global shortages.

Another recommendation would be to advise Jamaica flour mills to try outsourcing ,

which basically is the act of obtaining goods or service from an outside supplier, for example

since Jamaica does not currently receive flour from India, Germany or Italy then those countries

would be a good example to satisfy their demand especially in times of crisis.

Offering discounts to customers who have experienced delay in their orders due to issues

with the delay in cargos would be another recommendation, as this will give customers some

form of reassurance, and also help them to feel appreciated.

And last but not least , avoid last minute shopping , avoiding last minute shopping will

improve/decrease the amount you spend on transporting cargoes and also the cargoes on a hold,

not only that but avoiding last minute will help you to take advantage of special discounts that

may be available.

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Sustainable Operations

Jamaica Flour Mill Limited goal is not solely to transport and transform crops; their goals

are geared towards touching millions of lives daily by connecting farmers to consumers and

making a difference as they operate in a manner that will result in sustainability socially,

economically, and environmentally. As one of the world’s largest nutrition companies it is

imperative that they make sustainable choices in their day to day operations. It is evident that

Jamaica Flour Mill Limited has been taking the right steps into sustainable operations in more

ways than one.

Though around the world enough food is being produced to meet the nutritional needs of

the global population, millions of people are still struggling to find food for themselves and their

household. ADM has proven that they understand the magnitude of impact they can have on the

global hunger crisis as a producer and transporter of nutritional products. In the year 2020 a total

of 3.1 million was donated to countries such as Myanmar Egypt, Philippines, Ethiopia and

Kenya through the ADM care initiative by contributing to school feeding programs and

supporting people who were impacted by the Covid-19 Pandemic (Our Commitments, n.d.).The

Jamaica Flour Mill foundation has been successful in granting scholarships to secondary and

tertiary level students in Jamaica surrounding the company’s plant (Grant, 2020). The company

continues to contribute to the social dimensions by increasing the variety of grants being offered

including, community, general and baking technology scholarship and grants. According to

(Campbell, 2016), scholarships not only benefits students, they contribute to the overall growth

and development of a country. When students complete their studies it edifies them, causing

them to become innovative and bold. This then leads to new businesses and technologies that can

help to transform the state of the country.

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Jamaica Flour Mill Limited partakes in innovative activities that will ultimately provide

economic benefits to the country. ADM invests in cutting edge start-ups with disruptive

technologies across five key areas: human nutrition, health & wellness/ microbiome, animal

nutrition, sustainability and biomaterials and agriculture technologies. The incubated new

products group oversees the operation of innovative new products and businesses within ADM.

The goal of the group is to bring new products or businesses to commercial-ready, before

transferring to one of ADM’s larger business units. Innovation describes the development and

application of ideas and technologies that improve goods and services or make their production

more efficient. Innovation leads to greater productivity which increases the amount of goods and

services being produced ultimately increasing economic growth (Snyder, 2019).

One of the most pressing issues associated with sustainability is climate change and as

such Jamaica Flour Mills has a goal geared to protecting the environment and enhancing

environmental sustainability. JFL has a large industrial footprint which means they have a role to

play in reducing the emission of Greenhouse gasses being released into the atmosphere. JFM

strategize a plan to reduce absolute GHG emissions by 25%, reduce energy intensity by 15%,

reduce water intensity by 10% and achieve a 90% landfill diversion rate by 2025. They have also

committed to developing a global strategy focused on improving community well-being in

priority watersheds, including water-stressed areas, by 2025. Their policy to protect forests,

biodiversity and communities aims carry out these plans throughout the supply chain to achieve

activities such as working collaboratively with peer companies, government, and civil society to

help establish sector-wide deforestation cut-off dates for commodities, promote solutions to

reduce climate change and GHG emissions and no deforestation or no burning of forests (Policy

to Protect Forrest, n.d.)

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Conclusion

Jamaica Flour Mills (JFM) aspires to be the greatest flour manufacturer in the Caribbean,

and they work hard to improve in each area where they can. According to our audit, JFM's key

problem is a lack of raw materials (wheat) to produce certain items that are popular among

customers both locally and globally. By adopting the short-term emphasis and demonstrating

actual leadership, we have created several recommendations that can help JFM supply chain

difficulties. An initial strategy for response and recovery is critical for any company dealing with

a significant catastrophe. Timelines and objectives will need to be refocused on the very

immediate and near-to-mid-term horizons, as well as the possibility of substituting new

components and suppliers. We understand that global tensions and the ongoing uncertainty in our

economy and society have made doing business incredibly difficult. We urge that JFM examine

these techniques and try to outsource the materials at a reduced cost (if feasible). For example,

because Jamaica does not currently get flour from India, Germany, or Italy, those nations would

be a suitable example to meet their need, especially during times of crisis or develop something

that can be substituted. The purpose of this audit is to determine the major problem impacting

JFM. The organization has made it their mission to enhance these areas and meet client

expectations. JFM will continue to remain ahead of the curve, establishing themselves as the

finest choice for flour and flour-based goods for both families and companies looking to create

lifetime memories with their products.

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References

Zee News, (2022, May 18). Jamaica initiates talks with India for wheat, fertilizers import.

Retrieved from https://zeenews.india.com/world/jamaica-initiates-talks-on-wheat-

imports-with-india-amid-export-ban-2464697.html

Jamaica Observer, (2022, May 18). Good with supplies but watching prices. Retrieved from

https://www.jamaicaobserver.com/business/good-with-supplies-but-watching-prices/

Campbell, A. (2016, January 29). The impact of home-country context on scholarship outcomes.

ACU. https://www.acu.ac.uk/news/the-impact-of-home-country-context-on-scholarship-

outcomes/

Grant, C. A. (2020, May 18). J$3.5M Jamaica Flour Mills Scholarship (JFM) Programme for

Tertiary Students. ScholarshipJamaica. https://scholarshipjamaica.com/jamaica-flour-

mills-scholarships/

Our Commitments and. (n.d.). ADM. https://www.adm.com/en-us/sustainability/goals-and-

programs/adm-cares/

Synder, B. (2022, June 24). How Innovation Drives Economic Growth. Stanford Graduate

School of Business. https://www.gsb.stanford.edu/insights/how-innovation-drives-

economic-growth

Covid 19 response, (n/d) accessed on May 20,2022. Retrieved from

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https://www.accaglobal.com/content/dam/ACCA_Global/Assets/campaigns/PI-COVID-19-
Global-Survey-Recommendations-16.pdf

Presentation link

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https://drive.google.com/file/d/1oy64qMdX2UwWBomTP9bxVzJkbl3dItYi/view?usp=sharing

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