Preliminary Findings – Area of Improvement and Preliminary Solutions
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Preliminary Findings- Area of improvement and preliminary solutions
Overall, Betagen can be considered a successful company that is able to generate a very high level of profitability and also customers trust and satisfaction with its ability to maintain the high product quality and level of customer service. However, as we study the well-managed supply chain of this company that seems to be almost perfect, we can still notice some areas that could be further improved. In this part, we will discuss some major issues in the Betagen supply chain and also proposals for solutions.
Problems in transportation facilities
As Betagens main product, or milk, is very perishable, a special transport capability such as weather control is required. The transportation manager of Betagen knows this point very well and therefore has been investing over 20 million baht per year in refrigerated-trucks in order to keep their products fresh and maintain the high quality until they reach customers. However, those expensive trucks required a very high maintenance cost whereas their values and conditions keep diminishing. The company has to replace those trucks times after times, but as the cost is extremely high, they cannot just replace all of the trucks that break down. Therefore, they have to keep repairing their old trucks and try to extend their life as long as possible.
As we visited their factory, we observed that some of their trucks are very old, which many of them are above 10 years. The manager told us that the oldest one they have is almost 14 years old. Since they have a lot of old trucks, they often face breakdown problems, not only in terms of the machine itself, but also include the problems associating with the temperature controller. Recently, the number of usable trucks in this company has reduced from 90 to about 80 trucks over the past few years.
Truck breakdown is considered to be a major issue in the supply chain that the manager is concerned about. Every truck has its own schedule, which each one may have to deliver products to many places many times per day. This means that a truck breakdown may cause, not only a delay of delivery for one order, but will affect the whole schedule for the day or sometimes the whole week. This will eventually result in customer dissatisfaction and lost sales.
Temperature controller breakdown is another problem, although it may not be as serious as the whole truck breakdown, it can also affect the quality of the products and the level of customer satisfaction. If it is only a few hours to go, they may just have to buy some ice cubes to help keep the container cool. However, if the truck still has a long way to go, the manager may decide to call the truck back or send another truck to continue the delivery, which that will cause a delay in the truck schedule.
In this case, we believe that hiring a third party may be a good solution for the problems. Nowadays, companies are more specialized and focused on the areas of their expertise. One company may not be able to manage every single part in the supply chain by itself and that is why outsourcing services are commonly used among many firms. By hiring a transportation company to deal with product delivery, Betagen will be able to focus more on developing their core competency, which is producing milk, and at the same time, benefit from the expertise of the transportation provider in delivering the products. The problems associating with the truck or temperature controller will be taken care of by the sub-contractor. Although the service may be expensive, but they will no longer have to invest a large amount for their own transportation facilities and labors, which that large amount of money could be invested elsewhere. Finally, once they can find a transportation company that is able to serve them with a desirable level of service, they might consider developing the relationship with the company, and collaborate and work together as partners.
Problems in production plan and inventory management
Betagen has a separated department for planning how much of the product should be produced each month, which the amount that they will produce is based on the forecasted sales. However, due to the fact that the level of competition is high and people changes to other brands with similar