Water is one of earth’s most abundant compounds. In fact, it is estimated that the earth’s surface is covered by more than 70% of water . And since water is one of the most essential compounds for human life, it is no surprise how water, specifically bottled water, have become one of the world’s most profitable industries (Miller, 2006, p.4). Unfortunately, most of the earth’s water resources are not readily accessible as more than 90% of which can be found in the seas and oceans while the remaining less than 10% would have to be tapped from rivers, lakes and the underground . Furthermore, the water derived from these resources still needs to be processed in order to make it fit for human consumption. So despite the abundance of the earth’s water, the processes involved in its extraction and delivery incurs costs. Obviously, every bottled water did not just sprung up out of nowhere; in fact, it undergoes several processes that accumulate costs until it reaches the end consumer. In order to understand how bottled water end up in retail outlets; readily available for public consumption, it is also necessary to study the supply chain involved. Understanding the supply chain of bottled water can also help manufacturers improve their logistics and delivery processes, which in turn improves their production costs and at the same time, reduce the cost of bottled water as it reaches the consumer.
Like many consumer products, bottled water goes through different processes and distribution channels before it is finally purchased by the consumer. At a minimum, bottled water may undergo four major stages: the design or product development stage; the production stage; the marketing stage; and the consumption and recycling stage (Kaplinsky, & Morris, n.d., p.4). It should be noted that these stages are interconnected or linked with each other; forming the basic supply chain of bottled water. The typical bottled water supply chain, however, is not as simple as described earlier. It is important to note that the major stages or links in a bottled water supply chain may consist of different activities; and for strategic purposes, most organizations subdivide broad functions such as production and marketing into discrete activities for deeper analysis of their supply chain activities (Porter, n.d., p.6). The design and development stage, for instance, may involve activities such as participation of consultants while the production stage may involve the procurement of raw materials and the processes involved in the purification and bottling of water. The marketing and sales link can also involve different activities such as the shipping and delivery of finished products among distributors, retailers and even directly to consumers. Aside from the primary activities, there are also secondary activities or support activities that are involved in the supply chain. According to business professor, Michael Porter, in his seminal work ‘Competitive Advantage: Creating and Sustaining Superior Performance,’ the organization’s infrastructure, human resource management, technology development and procurement process, can help improve the effectiveness and efficiency of its supply chain.
Several problems and challenges may arise within the supply chain that could increase costs or delay the delivery process. The distance of the suppliers of raw materials from the factory; the technology involved in the production of bottled water; the delivery of the finished product to consumers; and many other activities within the supply chain, can potentially create problems. The further away the production site is from where the raw materials come from as well as the distance it needs to traverse for the product to reach its market, can certainly increase production and delivery costs. These activities, in turn, affects the final price that is being paid by the end consumers. One way of improving the efficiency of the supply chain of bottled water, therefore, is to shorten the distance from supplier to production and from production to the end consumer. A shorter distance minimizes delay as well as lower’s transportation costs. Another way of improving the supply chain is to eliminate or at least limit the number of distribution channels or middlemen that the product has to go through. Distributors, for instance, is an important link between manufacturers and consumers, but they can also increase the retail cost of the product because they also need to add up their services as well as their profits to the price of the product . Recycling is also one of the major challenges for bottled water manufacturers. PET bottles, for instance, is one of the major solid waste problems in most cities. And since PET bottles are made of plastics, they do not degrade easily, but rather accumulate and become a major cause of flooding and other environmental problems. In order to address this problem, bottled water manufacturers can increase their involvement in the last leg of their supply chain by buying back and recycling PET bottles as part of their social responsibility.
In conclusion, the efficiency and effectiveness of the processes and activities within an organization’s supply chain can determine its profitability and sustainability. In a world wherein there is an increasing competition because of globalization, the organization’s supply chain can be a crucial indicator of whether an organization succeeds or not. In a huge industry such as the bottled water industry, the supply chain activities can be very complex wherein problems and challenges can easily arise. However, finding ways on how to constantly improve the supply chain can provide beneficial results. Also, improving the supply chain should not only focus on the primary activities. Equally important in the improvement of the supply chain is the improvement of its secondary or support activities, which has a huge impact on the effectiveness and efficiency of the supply chain in general.
Kaplinsky, R., & Morris, M. (n.d.). A Handbook for Value Chain Research. Retrieved February 2016, from www.ids.ac.uk: https://www.ids.ac.uk/ids/global/pdfs/VchNov01.pdf
Miller, M. (2006). Bottled Water: Why Is It so Big? . Retrieved February 2016, from digital.library.txstate.edu: https://digital.library.txstate.edu/bitstream/handle/10877/3296/fulltext.pdf
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Porter, M. (n.d.). The Value Chain. Retrieved February 2016, from http://people.tamu.edu/: http://people.tamu.edu/~v-buenger/466/Value_Chain
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