AN ANALYSIS OF THE SUPPLY CHAIN FOR BOTTLED WATER
A supply chain is the link or network formed among different firms, producing, processing or distributing a certain product. This chain specifically covers the steps it takes to get a good product or service from the suppliers to the consumers. The management of a supply chain is an important process for many industries. Supply chains involve a series of companies. The series involves manufacturers, suppliers, and retailers. The effective management of supply chains and logistics gives companies the potential to reduce costs and to increase market share (Christopher 1999).
The traditional supply chain also known as the open-loop supply chain is whereby goods do not return to the manufacturer. The products are either repossessed by third parties for recycling or disposed in landfills. In this chain suppliers provide raw materials to manufacturers. Once goods have been manufactured, they are distributed to the retailers. The retailers finally sell the goods to the end consumer. However, market information and feedback flows in the opposite direction. Traditional supply chains focus mainly on a single important outcome such as cost or speed (Ketchen & Hult 2000).
Bottled water is a consumable good, and thus often uses the traditional supply chain. The products go through the open-loop chain. The bottling company obtains the water from a source. In this case the supplier is often the company itself. The water gets purified by the company and packaged in bottles. The company can either distribute the water using its own transport infrastructure of third parties can assist in the distribution. Finally the product reaches various categories of retailers such as malls, departmental stores and personal shops. A good example is the Dasani mineral water by the Coca cola Company (Link: http://www.coca-colacompany.com/brands/dasani/)
There are a variety of problems encountered in traditional methods of managing inventory. Poor execution is one of the major problems. It is common in all levels of the distribution chain and mainly starts at the store level. A product might make it to the store but never reaches the shelf; or be loaded on a wrong truck then sent to the wrong store. Further still, a product might arrive late at a distribution center. Within and across supply chains, poor communication is bound to occur. Sales managers, analysts and supply chain personnel view problems differently and solve them differently. Endemic at all levels in the supply chain, is poor decision making. This is more often done because the decision makers do not know where to focus. Poor decisions are bound to be made through taking shortcuts that further exacerbate the problem. All these lead to a vicious cycle that reduce sales, profit and consumer loyalty.
Computerized record keeping helps in the proper analysis of sales and supplies. This enables companies make better market decisions. Customer feedback should also be seriously taken into account. It is through listening to the demands and complaints of customers that product improvement can be done. Efficient communication avenues ensure that supply chains are able to quickly respond to customer needs (Thomas & Griffin 1996). A supply chain based on the buying behavior of consumers and needs is also important for collaboration within the chain. It abates the effects of poor communication (Bratt 2004). Proper initial transportation decisions need to be implemented because they become long-term decisions focusing on overall supply chain transport decisions (Stank & Goldsby 2000).
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