Logistic and Supply Chain
OPERATIONS AND SUPPLY CHAIN MANAGEMENT Vol. 2, No. 3, September 2009, pp. 167-171 ISSN 1979-3561|EISSN 1979-3871
167
Managing Supply Chain Complexity in a Tea Manufacturing Company
I Nyoman Pujawan*
Department of Industrial Engineering, Sepuluh Nopember Institute of Technology, Kampus ITS Sukolilo, Surabaya 60111 Indonesia E-mail: pujawan@ie.its.ac.id
Mahendrawathi Er
Department of Information Systems, Faculty of Information Technology, Sepuluh Nopember Institute of Technology, Kampus ITS Sukolilo, Surabaya 60111 Indonesia E-mail: mahendra_w@its-sby.edu
Abstract
In this case we present issues facing supply chain management in a tea manufacturing company. The company manages two types of products, ready-to-drink jasmine tea and ready-to-drink fruity tea, each having different complexity issues in their supply chain management processes. The case explains characteristics of the products, the supply chain structures, and the nature of demand. The case is expected to facilitate discussions of various supply chain concepts such as the bullwhip effect, supply chain coordination, and vertical integration versus outsourcing.
Keywords: supply chain complexity, information distortion, case study, tea manufacturing
1. The First Meeting
It was Friday, June 27, 2008. The coordination meeting between the marketing, distribution, and production departments was taking place. “Some stores have been out of stock of some types of Fteh in the last few days,” the distribution manager of Tehindo, a producer and distributor of tea products in Indonesia, informed the attendees. Fteh is their brand name for ready-to-drink tea with a fruity flavor. “We have too many product variants of fruity tea. Such a significant shortage has never happened
to our main product, Goteh. Why don’t we focus on Goteh? Its sales volume is high and demand fluctuation is low,” the operations manager added. The marketing manager responded after a brief of silence, “It is indeed true what
167
Managing Supply Chain Complexity in a Tea Manufacturing Company
I Nyoman Pujawan*
Department of Industrial Engineering, Sepuluh Nopember Institute of Technology, Kampus ITS Sukolilo, Surabaya 60111 Indonesia E-mail: pujawan@ie.its.ac.id
Mahendrawathi Er
Department of Information Systems, Faculty of Information Technology, Sepuluh Nopember Institute of Technology, Kampus ITS Sukolilo, Surabaya 60111 Indonesia E-mail: mahendra_w@its-sby.edu
Abstract
In this case we present issues facing supply chain management in a tea manufacturing company. The company manages two types of products, ready-to-drink jasmine tea and ready-to-drink fruity tea, each having different complexity issues in their supply chain management processes. The case explains characteristics of the products, the supply chain structures, and the nature of demand. The case is expected to facilitate discussions of various supply chain concepts such as the bullwhip effect, supply chain coordination, and vertical integration versus outsourcing.
Keywords: supply chain complexity, information distortion, case study, tea manufacturing
1. The First Meeting
It was Friday, June 27, 2008. The coordination meeting between the marketing, distribution, and production departments was taking place. “Some stores have been out of stock of some types of Fteh in the last few days,” the distribution manager of Tehindo, a producer and distributor of tea products in Indonesia, informed the attendees. Fteh is their brand name for ready-to-drink tea with a fruity flavor. “We have too many product variants of fruity tea. Such a significant shortage has never happened
to our main product, Goteh. Why don’t we focus on Goteh? Its sales volume is high and demand fluctuation is low,” the operations manager added. The marketing manager responded after a brief of silence, “It is indeed true what