SUPPLY CHAIN

Retail and Brewing Industry

 

            The essay is all about the critical issues on the supply chains of the retail and brewing industry. As an introduction, retail and brewing industry are defined together with its unique characteristics that differentiate them from each other. The issues, together with significant facts, followed the introduction. A conclusion finalizes the said topic at the end of the essay.

The Retail Industry 

The retail industry involves the sale of new or used goods to final consumers for personal or household consumption. It also includes the repair of household equipment or motor vehicles.

Most retailers employ fewer than twenty staff and are largely in the furniture/house wares/appliances stores sector, the recreational goods stores sector and specialized food (including take-away foods) sector. Larger retailers, employing two hundred people or more, operate in the clothing and soft goods sector, supermarket/grocery stores sector and department stores sector. About forty four thousand of the people employed in the industry are working proprietors and partners.

A Look at the Brewing Industry

A brewery, on the other hand, means any establishment made for the manufacture of malt liquors, such as beer and ale. Typically a brewery is divided into distinct sections, with each section reserved for one part of the brewing process. Breweries can take up multiple city blocks, or be a collection of equipment in a home brewer’s kitchen. The diversity of size in breweries is matched by the diversity of processes, degrees of automation, and kinds of beer produced in breweries. Brewing industry, therefore, is any industry involved in the brewing activity. Brewing is the production of alcoholic beverages and alcohol fuel through fermentation. This is the method used in beer production, although the term can be used for other drinks such as sake, mead and wine. The term is also sometimes used to refer to any chemical mixing process.

Key Retail Industry Issues

Retailers focused on supply chain efficiency in order to stay competitive, according to research by the NRF Foundation and Bearing Point, Inc. unveiled at the NRF Annual Convention and EXPO in New York. The study, ” 2004,  for 2005,” revealed that the majority of retailers cite supply chain optimization as a priority initiative for getting closer to the customer.

In today’s competitive environment, retailers understand the importance of leveraging their customer information. Shopping data collected from the store level can be leveraged as valuable real time data and shared throughout a retailer’s supply chain network of suppliers, factories and distribution centers to meet anticipated product demand.

Other key findings of the study include the fact that almost twenty five percent of retailers plan for half of their merchandise assortments to be private label. In the next twelve months, more than half of retailers (57%) plan to replace or upgrade their point-of-sale systems. While thirty eight percent of retailers will focus on domestic expansion, seventeen percent will focus on international expansion. This year, thirty three percent of retailers will focus on redesign and relocation of stores. More than one in five retailers (21%) list outsourcing as a priority for 2005.

Retailers realize that in order to improve their businesses, it is important for them to reinvest in new technologies and programs. This was according to the NRF President and CEO . Consumers are rewarding retailers who utilize resources to feature new merchandise, new technology, and new ideas.

The study also includes suggestions of several approaches for retailers’ use to provide competitive advantage and generate robust prospects for profitability. First is to create true supply chain visibility with a synchronized demand network that eases inventory pain by providing trading partners with optimal flow through of product and near-real time sharing of forecasts and demand signal. Second, link disparate systems for common connectivity to aid in retailers’ streamlining of operations. Targeting and segregating of high-value customers from low-and no-value customers and providing the right combination of product and services to earn loyalty is also of great help.

Brewing Industry Issues

            Brewing is almost certainly the most ancient manufacturing art known to men, and is probably as old as agriculture. Today the global beer market is worth USD 266.1 billion and is said to reach a value of USD 290 billion in 2008, which indicates that this age-old product is far from being out of fashion today and still registers growth. The value chain of the brewing industry today however is under a lot of pressure. Regulatory compliance, global competition, emerging new markets in Eastern Europe and Asia versus traditional and mature markets in Europe and the US, and finally shifting consumer patterns are heavily influencing this traditional industry.

Needless to say that these factors play an important role in the brewing business and that they are forcing manufacturers to consider various investments that enables them to face these challenges. Choices on brand strategies, mergers and acquisitions, costs reductions and investments/divestments are reshaping the traditional value chain were the focus always was on the brewing process and the primary quality of the beer. As such we see the value chain slowly shifting towards a focus on supply chain and filling & packaging, implicating that flexibility, time to market and managing costs are the keys.

The key issues in the brewing industry are on market dynamics, global or distributed manufacturing, regulatory requirements, and on marketing & RFID Technology.

With regards to market dynamics, it says that growth, through consolidation, gives brewers greater efficiencies and economies of scale. It also increases utilization of industry capacity. Globalization gives brewers the opportunity to expand into markets with more growth potential than their own backyards. Shifts are seen from mature markets towards China, India or Latin America where the increasing standard of living and increasing population will lead to greater alcoholic beverage consumption. In the mature local markets, changing consumption patterns require brand management and manufacturing optimization as prices are under pressure. Introductions of low-carb beers, mix beers and innovative packaging addressed consumers “value of life” and increases sales of premium brands. As a result, beer manufacturers are challenged to adapt to new markets and consumer behaviors while dealing with pressure on prices and risk of declining brand awareness.

On the global or distributed manufacturing issue, the current market situation demands a good manufacturing strategy. Producing in several locations using economies of scale, low cost operations are keys to secure market share. Furthermore, supply chain and marketing are putting demands on manufacturing facilities that require more flexibility and transparency into the plant. After many mergers & acquisitions and as a result of the autonomy of the local plants, many enterprises that now are focusing on consolidation, visibility and efficiency of their production capacity are confronted however with many applications and systems in the different manufacturing locations. As a result, beer manufacturers are challenged to standardize systems and procedures in order to obtain plant visibility, which enables focusing on low costs operations and economies of scale.

Today’s brewers operate in a complex public policy environment. Legislative, regulatory, and social challenges can directly affect brewers’ day-to-day business activities and their outlook for the future. Kyoto treaty and local energy reduction programs require breweries to optimize processes and procedures. European Union’s Packaging and waste directive specifies high amounts of recycling to be achieved. Traceability in perspective of the EU Food Law and US Bio-Terrorism Act require big investments in automation and IT projects.

Corporate marketing strategies are driven by global branding and increasing product diversification. Smart RFID labels become cheaper and have big potential in addressing customer service, cost reductions, counterfeiting, asset management, etc.

Conclusion

            Retail trade sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise. Retailers are therefore organized to sell merchandise in small quantities to the general public. It is opposite to the case of the brewing industry. In here, it is the initial step in the process of making a product, example is the beer. That is why a deeper understanding of their unique characteristics and differentiation from each other makes it easier to determine solutions to the issues involving the two industries.

 

 

 

References

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