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Supply chain and

Competitive strategies

  • In Reunion Island – Branch and 250 contracted local planters operating up to 50 acres of land.
  • Cultivation in South Africa and Mozambique – Cape Town
  • By establishing itself in Cape Town where it has an office for twenty years, Surat has been able to buy directly from farmers.
  • Maputo - invest an initial amount of Rs 300 million for cultivation of fruits and vegetables in Maputo

Local production and Green house investment – envisage to operate a hydroponic farm on a plot of 10,000m2

"There are products we import by air, but the freight cost is increasing year by year, and we realize that in the future there are some products that will be inaccessible because prices will inevitably rise. So in that sense it has taken the lead in producing Mauritius ", said Mr. Suren Surat.

"We also need to find alternatives to the import, although it has been and remains our core business" added Mr. Shyam Surat, Group CEO.

Surat faces competition from Chinatamby Co. Ltd, Agronat Ltée, B. M. Soobratty & Sons, Freshlink Ltd, Frigonoor Ltd, MRZ Koodruth Fruits Ltd, Proxifresh, Société Afzul Hosany Fils & Cie and Jardins de Medine (Medine Ltd).

In terms of competitive edge, Surat has the main following advantages:

- Secure the franchise FLM to reach final consumers

- Partnership with VivoEnergy to open up more FLM

- Investment in Production therefore less imports

- Direct sales from Freshland

Inbound logistics

Outbound logistics

Recommendations

Revisiting existing strategies

SKC has a stronghold mostly in Mauritius and Reunion island and should continue its expansion to other Indian Ocean markets (for example Seychelles, Mayotte and Madagascar (depending on its political satiability) by integrating a Total Logistics Concept to assist the decision making of the management.

Moreover, it would be wise for Surat to consider delocalising its ‘Freshland’ shop, for example at Port-Louis, since it has been observed that many fruits and vegetables sellers buy directly their products at existing outlets;

Improvement as per the service gap analysis since not same quality products are delivered at all the FLM retail outlets as perceived by the Management. The way to make sure these gaps are closed is through:

- thorough systems design, precise communication with customers, and a well-trained workforce and routine transactional surveys after delivering the customer experience.

Another strategic growth : the production and selling of dairy products known as ‘Surlait’ by SKC Dairy Fresh Company which won the 2010 Tecoma Award – Grand Prix du développement Durable. Nowadays, 2500 litres of milk are produced per day by its farm situated at Leval. It is worth noting that in Mauritius, 98% of milk consumption is imported.

Favourable demographic profile, changing lifestyles, rising income levels and changing consumption patterns is throwing immense potential market in front of SKC Dairy Fresh Company could seize such opportunity to increase milk production to cater for the demand on local market, by ensuring efficient inbound and outbound logistics.

Surat is planning to increase its units of production by offering its expertise freely to farmers in the vicinity villages of Leval to promote agricultural diversification

Recommendations

Conclusion

Adopt an integrated green supply chain management for economic benefits from increased efficiency, competitive advantage through innovation, improved product quality, consistent corporate environmental goals and improved public image. For example; the cost of packaging is actually substantially high - impacting on the total cost of the products (beneficial for customers);

Since Surat relies mainly on 250 local planters for the cultivation of local fruits and vegetables, it would be advisable for the company to revisit its strategy regarding the supply uncertainties and variances in quality and quantity of raw materials; of its raw materials taking into consideration environmental factors related to climate change to limit

Produce more fresh fruits and vegetables locally so as to decrease in importation and cost related to air and sea freights via the concept of greenhouse investment;

Enlarge its distribution centre to stock more products with its vision for local production/ growing business or build more warehouses;

The company should further its process of disintermediation to cut cost to boost up its supply chain;

After having undertaken a SWOT analysis of Surat with focus on its logistics network design and operations, we would recommend the management to initiate reengineering efforts, or to have plans to venture in a Business Process Re-Engineering and adopt a Total Logistics Concept.

New targets: Tap the huge potential that this particular market carries by optimizing transportation, distribution operations, and inventory investment to strike the ideal balance of cost and service.

Business logistics and supply chain management strategies have always been vital to organizations.

With globalisation, companies such as Surat, need to cope with numerous challenges to both gain competitive edge and consolidate its foothold in the local context and on the regional/international scenes. Nowadays, strategic planning coupled with innovation, ICT and an integrated total logistics concept is the cornerstone of any Multinational Corporation or Enterprise evolving in the dynamic business environment. And Surat has to go the extra mile in ensuring a proper IT/MIS system to remain competitive.

Over and above the above-mentioned factors, the main drivers for ensuring a logistic network design are mainly an effort to reduce cost and improve service. The right network design optimizes transportation, distribution operations, and inventory investment to strike the ideal balance of cost and service for customer satisfaction.

Revisiting existing strategies –SKC Surat & Co. Ltd going the extra mile

Since, Surat has reached its cruising speed, it is a prerequisite that the company appoint a proper logistics and supply chain executive/manager to better plan, organise, lead and control this particular portfolio – in line with the implementation of its expansion strategy;

Though, Surat’s enhanced distribution facilities has been one of the backbone of the success of the company, it would be now more cost effective for the company to outsource fully its warehousing and part of its distribution /process (such as for big clients) for cost and time savings, local capital commitment, for more flexibility and staying more focus – i.e concentrate on its core business. Therefore, moving to a Third Party Logistics service provider such as Logidis, Velogic or Mauritius Ports Development would be a strategic decision;

Surat is actually in talks with a local Enterprise Resource Planning (ERP) vendor namely Nextiraone to implement a Customer Relationship Management (CRM) package coupled with an ERP which will guarantee real time information for managers to take timely and proper decisions, ensure efficiency (cost saving factor) and thus giving Surat the additional competitive edge. They could also consider using a Radio Frequency Identification (RIFD) technology which will then interface and synchronise with the above system through satellite and GPS. However, implementing such an IT/ MIS system can be costly and the risk of failure of the system is high;

Surat SKC - Supply chain

Surat's Management Vs Customers

2. Gap between actual service and standardized service:

• Management perceive service offerings to be the same.

• As per the following statement, management perceives the service to be the same: « Nos produits sont commercialisés à travers Maurice. Nous sommes présents dans les marchés forains, chez des marchands de fruits et dans les grandes surfaces. Mais que ce soit au Food Lovers Market de Bagatelle ou dans des marchés de villages, c’est toujours la même qualité » affirme le directeur général.

Service Gap Analysis : FLM Bagatelle Vs rose Belle

• The gap analysis reveals that actual customer expectations and management perception of customer expectations domatch.

• Clients are satisfied with delivery and service quality.

• Strong reputation of the company is an asset.

• On an overall basis, customers’ expectations are catered by Surat.

However the one gap has been identified.

• The management perceptions of service quality is same for all customers. However, some customers complained that FLM being a privileged client to SKC Surat Ltd is delivered best quality products where as they are not having the same quality.

• Still they are satisfied with the quality there are provided.

• Market segment region-wise is not the same; less customers to visit Food Lovers Market Rose Belle therefore less variety and quantity.

• Buying behaviour of customers of the different regions may be different.

• Moreover, every Wednesdays and Sundays, fresh fruits and vegetables are sold in large quantity at the market. Thus, management may not think it worthwhile to sell a variety of fresh fruits and vegetables in large quantities.

Service quality

Parasuraman et al., 1988 provides 10 determinants of service quality. This dimension has been used to define the service quality of SKC Surat& Co. Ltd.

- Competence - Communication

- Courtesy - Knowing the customer

- Credibility - Tangibles

- Security - Reliability

- Access - Responsiveness

Physical Distribution and Transaction channel

Strategic Locations for Production

Transport

Strategic Locations for Production

To preserve the quality of the service Surat delivers the product with two types of delivery lorries, owned by the company. Each of the lorry is adapted to the kind of product transported but also the requirements of the clients - if they want a fresh product which will be delivered according to the cold chain.

,Surat is using a tracking system: each container can be traced and followed during the transport and movements of the goods. The tracing is effective thanks to a serial number of container which is noted down. Most of the tracking system for trucks is connected to a GPS.

Competitive Strategies

Reception of orders

Distribution

Surat has a sister company “Food Lover Market” which is specialized in selling fresh fruits and vegetables. Most of the fruits and vegetables sold in Food Lover Markets are from Surat.

Thanks to a partnership between SKC Surat and Vivo Energy Mauritius, FLM is implanted in Mauritius since 2011. It is a huge international franchise and now have about 10 FLM across the island .

FLM has strategic location through Mauritius and is well known for the fresh products sold and attractive prices.

In Surat, all of the orders are taken by the Marketing and Sales department. They are in charge of reception orders, then they are sent to Operation department and they prepare orders and distribution.

The Operation department is concerned with loading, unloading and stacking products in coldrooms. There are scheduled deliveries for hotels and supermarkets. It is done on a weekly basis.

Surat is in a physical distribution, the channel chosen by the company is direct deliveries. It means that there are no intermediaries in the distribution of good. In this case, the movement of products is from the warehouse to the retail store or clients.

Surat is in a physical distribution, the channel chosen by the company is direct deliveries. It means that there are no intermediaries in the distribution of good. In this case, the movement of products is from the warehouse to the retail store or clients.

Disintermediation

The company doesn’t outsource any of its activities.

.

This decision is strategically thought, because the outsourcing in a supply chain logistics implies unanticipated costs which are mostly hidden fees along the way if the process is in the hands of a third party.

Aside from cost, in disintermediation, there are fewer intermediaries’ means fewer price hikes between producer and consumer. We can notice too that there are speed advantages because here the order goes directly to Surat and every delay is handle immediately by the concerned, this bring a transparency to the process that speed things up.

Finally, disintermediation permits the direct contact between the company and the consumer, there is a quicker feedback from consumers.

Competitive edge

Managing inbound logistics

In the Value Chain, the inbound logistics is the first Step of the processes. A literal definition of Inbound Logistics would be the “process of receiving, storing & distributing raw materials for use in Production”. Considering the Three Main Aspects of Inbound Logistics at SKC Surat & Co Ltd

Receiving

- The Procurement Section processes the orders for the imported product received by Clients ( Supermarkets, Hotels & Sellers)

- The Order is converted into a Packing List using a SOFWARE known as PASTEL and which shall be used as reference during the reception .

-The imported materials arrives to Mauritius through Ship following a Schedule of Receiving mentioning date of arrival

- DAF Lorries are used for the transportation of the containers from Port Louis to Wooton

- Specific Boxes on the lorries will ensure proper transportation of goods as they will specify

all details about the temperature as well as the number of days the products have travelled

by sea.

There are two Types of Boxes Used :

(i) Electronic Boxes with sensors capturing Data about the product while on sea and information are taken through USB Cable

(ii) Manual Boxes which will give report manually

Storing

Upon Arrival the receiving is as follows:

- Containers are fixed to the 3 loading Units

- Photos of the Materials are taken before and after the opening of the Containers for claiming processes in case of damage of containers and goods

- Offloading procedures begin afterwards and the pallets are deposited on the floor next to the loading units

A reception form is filled containing the following information:

- Variety

- Count

- Weight

- Brand name

- Class of product

- Serial Number of container

- The warehouse has several levels to store the different kinds of goods

- The localization of the products in the warehouse is done via a system of palletisation

i.e means of storing and transporting good stacked on a pallet, and shipped as a unit load

- This will ensure a standardized ways of handling loads with common mechanical equipment

such as forklift trucks

- As per a requisition form, the forklifts driver will take out the goods & products.

The Cold rooms are named A,B,C … and there are 10 Racks.

- The below table shows the storage of the Different Types of Product

Storing

There are 6 main parallel cold rooms, which has sub warehouses where packed products are stored for next day deliveries.

A Temperature Indicator outside each cold room indicates the temperature inside the cold room. During the day when the cold rooms are opened to take out products, PVC Strip Curtains help maintain the temperature and prevent cold air to leak out of the cold rooms. The products are packed in Leno Bags before distribution.

Distribution

- Surat delivers to hotels, supermarkets and also to the general public though its market Fresh Land on its own premises

- Following a weekly schedule, the deliveries will be made to hotels & supermarkets

- There a 3 forklifts, 2 DAF Lorries & 36-40 Delivery Lorries used

- Among the lorries, the well-equipped refrigerated one are used for hotels and supermarkets and the normal non refrigerated ones are used for small shops

- The Total Logistics Concept is an important concept of Logistics as it puts forward the importance of each component the whole supply and their interrelationship

- The following Trade Off Analysis has been carried out at Surat

Distribution

1. Within Distribution Components

Goods coming to Surat arrived to Mauritius through shipping namely containers for a better conservation of the Fresh Fruits & Vegetables. Despite the fact that Air freight would be more rapid for such perishable products, Sea Freight allows a greater volume to be transported.

 

2. Between Distribution Component

At Surat, the importance of warehousing is put forward. The system of palletisation is used for conservation of fruits & vegetables before distribution.

 

3. Between Company Functions

Operations department functions are optimized as they deal with the orders, loading and stacking, over the marketing and sales department.

 

4. Between the Company & External Organizations

The sister company of Surat being FLM whom he treats as a Client as all the fruits & vegetables sold there are bought from Surat.

Company profile

Products of Surat

The products are categorised in two divisions:

Local products – These include banana, cassava, coconut, dragon fruit, guava, star fruit, tamarinds, avocadoes, grapefruits, pineapples, black plums, lemons, papayas, sweet potatoes, mangoes, lychees, cabbages, chillies, peppers, coriander, cucumbers, lady fingers, lettuces, leeks, bean sprouts, onions, ridge gourds, turnips, beetroots, spinach, tomatoes, turmeric, peppermints, watercress, ginger, garlic, potatoes and many more.

Imported products – These include apricots, apples, coconuts, dates, grapefruits, grapes, kiwis, lemons, mandarins, cherries, oranges, strawberries, melons, peaches, pomegranates, plums, pears, sharon fruits, broccoli, cauliflowers, peppers, tomatoes, asparagus, cabbages, artichokes, leeks, baby marrows, radish, butter squash, celery and others.

Vision & Mission of SKC Surat & Co. Ltd

Vision

Remain the undisputed market leader in the region.

Mission

  • Develop further a business culture of dignity and respect for the environment, for the employees and to maintain long term relationships with clients and suppliers.
  • Take every opportunity to address to the nation on the benefits of consuming fresh fruits and vegetables for a healthy Mauritius.

- Started in 1985 as a small business

2015, SKC Surat & Co Ltd is a multinational business of over 600 employees with an annual turnover of Rs 1.5 billion

- Core business: Importer and exporter of fresh fruits and vegetables – supplies about 25 000 tons (10000 – 20000 T for local market only)

- Main distribution Centre situated at Wooton

Surat’s business clusters include: Wholesale fresh products; Wholesale dry products; Retail; Dairy Crops and open cultivation; and Investment and property.

The field is centered on two concepts, storage and transportation. The storage portion of the field uses warehousing methods to keep the finished product safe and accessible. At any moment, the product may need to move out to a customer, so organization is key to success. While this part of the field is based on storage, having as little product stored as possible is generally desirable, as stored materials aren’t making any money.

According to Mr. Sundar Surat,

Operations Director of the group,

“the key to success lies in SKC Surat experience and teamwork".

To succeed, he said, any group must

"have a long-term vision, know the ropes and know minimize expenses"

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