3. China now consumes 25 million tons of milk
yearly. Putting it ahead of both France and
Germany globally.
Synopsis
4. Demand has outpaced supply which has
caused profit seekers to enter the market.
Synopsis
5. In 2008, melamine, an additive
used to make plastic, was
discovered in the milk supply
of China’s 3rd largest dairy
producer, Sanlu.
Synopsis
6. Melamine was added to the
milk to make it test higher for
protein content, thus getting
higher prices in the market.
Synopsis
7. 4 infants died from melamine
ingestion and over 53,000 infants
fell ill because of the
contamination..
Synopsis
8. China’s 4 largest dairy
organizations, accounting for
almost 50% of the country’s
dairy production, pulled their
products from shelves.
Synopsis
9. China’s 4 largest dairy
organizations, accounting for
almost 50% of the country’s
dairy production pulled their
products from shelves.
Synopsis
Over 20 countries banned not only Chinese dairy
products but also candies, cookies, and chocolates.
10. The scandal has caused a loss
of confidence in China’s dairy
industry that could take years
to repair.
Synopsis
11. Synopsis
Dairy Supply Chain in China
Small Dairy Farmer Milking Station Middlemen Transport
Large Dairy Production
& Distribution Facility
GroceryConsumer
12. Synopsis
Dairy Supply Chain in China
As the market heated up, new privately owned
milking stations popped up, often right beside the
established stations, offering higher prices for the
milk.
13. Synopsis
Dairy Supply Chain in China
Corners were cut at the milking
stations and with the
middlemen because testing was
not typically done until it was
delivered to the large dairy
producers.
14. Synopsis
It was revealed that officials
knew about the contamination
problem for months before
informing the public.
Numerous dairy officials were
sent to prison and 2 primary
middlemen were sentenced to
death.
15. Synopsis
Starbucks has now launched a
new line of coffees that are
grown by farmers in China and
it hopes to bring the product to
consumers worldwide.
Worldwide launch is dependent
on how fast farmers can ramp-
up production to meet demand.
16. Synopsis
Could this be the start of
another issue of Chinese
businesses cutting corners to
meet demand?
18. Question 1: Explain why the supply
chain can dramatically impact a
company?
A supply chain is a system of organizations,
people, technology, activities, information and
resources involved in moving a product or
service from supplier to customer.
19. Question 1: Explain why the supply
chain can dramatically impact a
company?
In recent years, supply chain
management has grown in
importance as business looks
to gain better efficiencies in
their supplier network and
outsource more of their
production to other
companies both locally and
globally.
20. Question 1: Explain why the supply
chain can dramatically impact a
company?
Companies such as Dell have developed a
competitive advantage through their supply
chain management by working with their
suppliers to enable the company to carry very
little inventory and source parts as the product
is ordered by the customer.
21. Question 1: Explain why the supply
chain can dramatically impact a
company?
Dell often requires their
suppliers to locate close to
the company’s factories and
deliver products as they are
ordered.
22. Question 1: Explain why the supply
chain can dramatically impact a
company?
Retail giant Walmart
has been able to gain
better pricing from
companies such as
Proctor & Gamble by
integrating their supply
chain so that sales
information is passed
directly to Proctor &
Gamble.
23. Question 1: Explain why the supply
chain can dramatically impact a
company?
Walmart has gained a sustainable
competitive advantage over its competitors
because of the price advantages gained in a
fully integrated supply chain.
24. Question 1: Explain why the supply
chain can dramatically impact a
company?
Supply chains can not only have a positive
effect on a company’s bottom line but can
also affect the company in negative ways.
Consumers hold the brand, not its
suppliers, responsible for the quality of a
product.
25. Question 1: Explain why the supply
chain can dramatically impact a
company?
As companies source globally,
supply chain disruptions can
occur which can affect the
profits of a company if they
source materials from one
supplier or one region.
26. Question 1: Explain why the supply
chain can dramatically impact a
company?
Companies must ensure product quality
within the entire supply chain. From
restaurants to car manufacturers to shoe
companies, the consumer holds the brand
responsible for the entire production of the
product from raw material to store shelf.
27. Question 2: List all of the products that
could possibly be affected by a problem in
the U.S. Milk supply chain.
28. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Milk
29. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Cheese
30. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Butter
31. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Yogurt
32. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Cottage Cheese
33. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Boxed Cereals
34. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Cereal Bars
35. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Sandwich Breads
36. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Crackers
37. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Lunch Meats
38. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
Vegetarian “Meat”
Products
39. Question 2: List all of the products that
could possibly be affected by a problem
in the U.S. Milk supply chain.
If there were disruptions in the U.S. milk
supply, the price of meat could also fall if dairy
farmers were forced to slaughter the cattle for
meat instead of milking them.
40. Question 3: How can a CRM system help
communicate issues in the supply chain?
41. Question 3: How can a CRM system help
communicate issues in the supply chain?
Customer relationship
management involves
managing all aspects of a
customer relationship
within an organization to
increase customer loyalty,
retention, and an
organization’s profitability.
42. Question 3: How can a CRM system help
communicate issues in the supply chain?
Customer contact is often
one of the first signs of
issues with a product
quality once the product
has reached market.
43. Question 3: How can a CRM system help
communicate issues in the supply chain?
Because a CRM system can track customer complaints, a
company can use the CRM system to help pinepoint a quality
issue within the supply chain.
Understanding where complaints are originating, with what
products, and what the issues are, can quickly uncover
product problems for a company and those issues can be
isolated to a specific supplier within the supply chain.
44. Question 3: How can a CRM system help
communicate issues in the supply chain?
In order for a company to
quickly understand issues
within the supply chain,
the company must closely
monitor its CRM system
and identify product
quality issues quickly.
45. Question 4: How could BPR help uncover
issues in a company’s supply chain?
46. Question 4: How could BPR help uncover
issues in a company’s supply chain?
Business process reengineering (BPR) is the
analysis and redesign of workflow within and
between enterprises.
The purpose of BPR is to make all business
processes the best-in-class.
47. Question 4: How could BPR help uncover
issues in a company’s supply chain?
Michael Hammer and James
Champy published their best-
selling book, Reengineering the
Corporation, where the authors
promoted the idea of radically
redesigning the enterprise by
wiping the slate clean.
48. Question 4: How could BPR help uncover
issues in a company’s supply chain?
New information technology,
including the ability for people
throughout the supply chain to
communicate in real time and
the ability for controls and
monitoring to be instituted
throughout the supply chain,
is often a driver of process
reengineering within the
organization.
49. Question 4: How could BPR help uncover
issues in a company’s supply chain?
By reengineering workflows with better quality controls
within the production process, companies can more easily
uncover issues within the supply chain at their source.
Through breaking down the processes of the business and
organizing around outcomes, companies can uncover and
remove inefficiencies in their processes.
50. Question 4: How could BPR help uncover
issues in a company’s supply chain?
In the insurance industry, claims typically
took 31 days to process from the time of
the accident to the resolution. Progressive
went through the BPR process and slashed
the process from 31 days to 4 hours by
offering a mobile claims process where the
company went directly to the site of the
accident, processed the claim on site, and
issues a check or arranged repair within
one of its shops.
51. Question 4: How could BPR help uncover
issues in a company’s supply chain?
How could BPR help the Chinese dairy industry?
China’s dairy industry could pinpoint areas in the production
process in which suppliers are cutting corners and design
quality checks at those points so that tainted milk doesn’t
enter the larger supply. By reengineering the process to insure
for quality control, the dairy industry can improve its
reputation and work towards eradicating such lapses in
product quality in the future.
52. Question 5: What are the pros and cons for
Starbucks of outsourcing the growing of its
coffee beans to Chinese farmers?
53. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Pros:
Starbuck has been
closing stores in the U.S.
to cut costs. Starbuck
could cut costs by
sourcing its coffee beans
from China, where
labor costs are lower.
54. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Pros:
Coffee is often priced by
the brand name of the
coffee. Starbuck could
dramatically decrease the
cost of its supply by
buying a more generic
Asian blend and creating a
market for its coffees.
55. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Pros:
Starbucks could
source beans for its
Asian stores closer
to where they are
located if it were to
buy beans from
Chinese farmers.
56. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Pros:
Starbuck has plans to
open 1000 new stories in
China over the next few
years and sourcing their
coffee from within China
will be favorable for the
company with the
Chinese government.
57. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Cons:
Chinese food products have
had issues with quality.
Because the demand for
coffee is outpacing its
supply, much like the case
was in the dairy industry,
there are opportunities for
suppliers in the production
of Chinese coffee to cut
corners.
58. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Cons:
Starbucks has built a
reputation to source fair-
trade coffee from small
farmers in developing
countries. If Starbucks
moves forward with its plan,
the Chinese plantations
could more closely resemble
corporate farms.
59. Question 5: What are the pros and cons
for Starbucks of outsourcing the growing
of its coffee beans to Chinese farmers?
Cons:
Starbucks has built a
reputation of superior
quality for its coffee drinks.
By branding Starbucks as a
trusted provider of premium
coffee, it has enabled the
company to charge high
margins for its coffee drinks.
China is not known for
quality coffee.
62. Conclusions and Recommendations
The dairy producers
should modernize their
customer relationship
management systems to
quickly spot issues from
customer complaints
regarding quality.
63. Conclusions and Recommendations
Starbuck should move cautiously
when rolling out the Chinese
farmer’s coffee products. The
company should consider gaining
experience with the Chinese
farmers by introducing the coffee
locally before taking the product
global.
64. Conclusions and Recommendations
Starbuck should work with the
Chinese government to establish
regulatory guidelines for the
coffee industry while it is in its
infancy.
