The Logistical Processes at Tate & Lyle Plc - Essay Example

?Tate & Lyle Contents Contents Introduction Company View: Tate & Lyle Plc 2 Tate & Lyle: Supply Chain 4 Tate & Lyle: The TNC 6 Conclusion 10 References 11 Introduction Tate & Lyle PLC is one of the world’s largest manufacturers of renewable food and industrial ingredients. It has been in business for more than 130 years and is one of Britain’s oldest and best-known brands in sugar products such as Golden Syrup and Black Treacle. It has a long and proud history in sugar refining; however, the group has now diversified to other renewable materials such as corn and wheat. Moreover, the group has diversified portfolio business operations throughout the globe, thus making it one of the leading players in renewable food and industrial ingredient industry. The subject of this report is the determination of the key factors that influence the logistical processes at Tate & Lyle Plc. This study is significant because Tate & Lyle has a strong global presence. Moreover, understanding the logistical processes of the group will help not only in clarifying and in addressing the issues encountered by the group in its logistical processes, but it will also provide clearer grounds in apprehending the theoretical and practical application of logistics. As such, the purpose of the report is the identification and discussion of the key factors that affect the logistical processes at Tate & Lyle Plc. In order to achieve this purpose, several academic literatures pertinent to the subject matter have been gathered. The electronic databases EConlit, Academic Source Premier, Business Source Premier, GoogleScholar and Jstor have been searched, and the following key terms have been used Tate & Lyle Plc, logistical processes, logistics, sugarcane industry, globalisation, and supply-chain management in the search. The report is divided into six parts. The first part is the introduction wherein the subject, both the purpose and structure of the report are presented. In the second part, a brief company profile is provided while in the third part pertains to the supply chain in Tate & Lyle. The fourth part of the report deals with the transportation arrangements adopted by the group, while in the fifth section the inventory costs of Tate & Lyle will be discussed. Finally, the last part of the report is the conclusion. Company View: Tate & Lyle Plc Tate & Lyle Plc manufactures a wide range of products. The group’s ingredients are produced from renewable raw materials primarily corn, sugarcane, wheat, and molasses (Datamonitor, 2008; 2010). These raw materials are transformed into ethanol, citric acid, sweeteners and starches, and through the help of technology, it becomes a valuable ingredient for food, beverages and other industrial commodities. The end-users of the Tate & Lyle’s products are wide and varied. It ranges from branded food manufacturers, beverages, pharmaceutical products, household products, building products, paper and board to consumer brands and animal feeds (Datamonitor, 2010). Tate & Lyle creates its portfolio of renewable ingredients using three main processes: milling, fermentation and sugar refining. The group's other essential raw material processes include its patented sucralose processing of sugar. Tate & Lyle maintains more than 45 production facilities throughout Europe, the Americas and South East Asia (Datamonitor, 2010, p. 20). The company is considered as one of the leading manufacturers in renewable food and industrial ingredients. It is one of the largest producers of white and raw sugar in the world including leading brands such as Tate & Lyle (UK), and Alcantara (Portugal) (Datamonitor, 2010, p. 21). In the United States, the group is the second largest sugar refining company holding 36% of the market share. Likewise, Tate & Lyle is also second largest company in sugar beet processing in the U.S (Brewster & Boland, 2009). In order to bolster their current position in the global market, Tate & Lyle continues to come up with products and programmes that are responsive to the demands of the customer, thus, optimising customer satisfaction and providing customisation of services. These include Tate & Lyle CREATE, Tate & Lyle Optimize, Tate & Lyle REBALANCE and Tate & Lyle ENRICH, all of which are innovative products and services responsive to the challenges of the global market and customers’ demands. However, despite the strong showing of the group in the global market, Tate & Lyle are currently threatened by strong market competition coming from companies like Danisco and Kerry that have stronger and greater financial and marketing resources (Datamonitor, 2010). Moreover, decline in consumer spending has been observed both in the U.S. and in Europe. This is due to the weak economic outlook resulting from the global financial slump, weak housing market indicators and customers’ sentiments (Datamonitor, 2010, p. 21). This is a serious concern for the group because most of its revenue comes from the U.S and Europe (Datamonitor, 20101). In fact, for the FY 2008, Tate & Lyle has derived 90% of its revenues from U.S. and Europe (Datamonitor, 2010). As such, decline in the consumer consumption in these two continents have a direct effect in the performance of Tate & Lyle. Finally, a new product ‘Neotame’ is gaining popularity in the market. Nutrasweet produces Neotame. In the face the company’s strengths and threats, the fact still remains that the chief and central logistical issue of TLS is coming up with appropriate strategy and tactic that that involves getting “the right way, the right product, in the right quantity and right quality, in the right place at the right time, for the right customer at the right cost” (Mangan, Lalwani & Butcher, 2008, p 10). Tate & Lyle: Supply Chain Due to TLS’ diversified business operations and wide end market use coupled with the growing demands of starch in the U. S. Market, Tate & Lyle’s supply chain is complex. Fig. 1 TLS Supply Chain This figure shows the multifarious stages and processes that are being performed in TLS supply chain before the product reaches the customer. However, it should be noted that the complexity of the entire processes involve not only the phases of manufacturing, but it also includes intricacies pertinent to the demands of the global market. Tate & Lyle: The TNC Tate & Lyle is a significant global player in renewable food and industrial ingredients. Globalisation has widened not only the market of TLC, but it also expanded the sources and processing of raw materials of the company. TLS operates nine plants in the U.S. and one in South America. They also have two blending facilities in U.S. and one in Mexico. In Europe, for the food and industrial ingredients, they have three plants in EU and one in Morocco. For the blending facilities in Europe, they have four in EU, one each in Australia, and Israel. Meanwhile, for their sugar segments, it spans Europe, America and Asia (Marketwatch, 2010). The activities of TLC are not only limited to offshoring, but they also established partnership with other notable industry players like “Almex for cereal starches and sweeteners, DuPont Tate & Lyle BioProducts for the production of Bio-PDO, and Sucromiles, for the production of citric acid and alco-chemicals… Eaststarch (cereal starches and sweeteners), Hungrana, Sedamyl and Orsan Guangzhou Gourmet Powder Company (Marketwatch, 2010, p 77). TLC has been involved in both offshoring and FDI, in forms of partnership, with other companies. Considering the complex technology required in the processing of the products of TLC, the volume, the name and quality with which the group has been known, offshoring and partnership with other business leaders are the only options for TLC in order to sustain its production. This becomes more significant, at this stage, wherein they are incurring losses in operations and they have enormous debt (Datamonitor, 2010), the group cannot afford to venture into outsourcing and other alternative modes of production. Primarily, they do not have sufficient funds (Datamonitor, 2010); and secondly, they cannot manage the risk increasing of ‘distrust’ among the stockholders and shareholders in a condition of weak market movements. This fact is further burdened by the reality of global economic downturn. In this regard, it is unrealistic for TLS to adopt alternative methods. Nonetheless, by locating their plants near their customers, they are able to respond immediately to the demands of the customers like developing customisation of products and services ,which includes Tate & Lyle CREATE, Tate & Lyle Optimize, Tate & Lyle REBALANCE, and Tate & Lyle ENRICH. This shows that by identifying and segmenting the market and then developing mass customisation, TLC has taken advantage of their proximity to consumers, recent trends in R & D and information. Tate & Lyle: Transportation The group uses a wide range of fleet for their transportation requirements. They use road tanks, road trailers, trains and conventional vessels. TLC has their own fleet, however, for UK bulk-distribution; it is outsourced to Hoyer UK Fleet. Ninety-four vehicles of Hoyer Fleet are used to TLC-UK, and it runs over 7million miles per year. For their exports outside Europe in Israel, Libya, China, Hong Kong and Singapore, conventional vessels and maritime container freight are being used. In this regard, it is shown that TLC uses and relies heavily on land and sea modes of transportation. Although in theory, airfreight is the most preferred mode of transportation because it is the fastest and most environmentally friendly means of transportation. However, there are certain existing limitations in this mode of transportation. Its limitations include high variable costs, ground handling, security in the ground, weight constraints, airports may be far from the exporters, and it is vulnerable to poor weather conditions. Moreover, in theory, it shows that all modes of transportation are currently made available to companies. However, as each company works in their conditions and budgets, there is no ‘one size, fits all’ in transport (Veselko & Bratkovich, 2009). In the case of TLC, they continue to look for alternative means of transportation that will reduce carbon emission, while at the same time, there is an increased travel. This is slowly being attained with the pioneering of the Project Scotrail, which is the travel, by rail from Thames to Scotland circa 12to 15 loads per day. What is remarkable in TLC’s transportation is they use outsourcing. This affirms the article that outsourcing are opted by companies for reasons such as costs, expediency, confidence, service and competency (Mello, Strank, & Esper, 2008). As such, it can be deduced that TLC uses not only offshoring and partnership with other companies, but that the company employs outsourcing in its transportation. This manifests that for TLS instead of employing all modes of transportation for their products, as theory suggests, the group employed outsourcing. It is the most viable alternative than buying your own fleet or using mode of transportation that are costly. This shows the flexibility of the company and their innovativeness in responding to changes and demands. Moreover, by choosing to outsource transportation rather than adapt other modes of transportation, TLC is concretely showing vital part of third parties in the success of goals of the organisation (Aghazadeh, 2003). TLC: Inventory Management Other inventory costs that are faced by Tate & Lyle include storage costs, inventory costs, service costs and risks costs. The value is added in the holding costs since the company has to keep up with the storage costs and the service costs, which also may increase the risks costs. In order to minimise waste, two identical philosophies have been adopted. These are lean philosophy and just in time (JIT). Lean philosophy is developed by Toyota. The core principle of lean and JIT is zero waste. For zero waste to be attained, it requires the elimination of waste, cooperation and collaboration of everybody, and continuous improvement of the production via encouraging innovativeness and creativity in the team (Womack, Jones & Roos, 2007). Moreover, zero-waste implies anything that devaluates the product in the eyes of the customer. In this regard, waste is not only those which are associated with over-production, defects and inappropriate material processing, but it also includes waste in time, waste due to delay, waste due to unnecessary movements, and waste of unnecessary inventory (Ballard, 2000; 2004; Koskela & Howell, nd). Theory suggests that waste should be eliminated especially because opportunity loss is profit lost. A dissatisfied customer is a value lost. An error in communication, in production, in time management and other unwanted movements and inventories lead to yield loss; thus, waste has a direct relevance to capital costs or profit loss, either which is not healthy. As such, it is suggested that Lean/JIT be implemented in order to eliminate waste (Wallin et al, 2006). JIT approach means that supplies arrive just when they are needed for production or resale (Pride, Hughes & Kapoor, 2009, p. 417). As such, companies maintain a reasonable level of supply and stock and require an exceptionally high level of coordination and collaboration among all the members of the group including third parties. Thus, maintaining a high level of confidence and trust among all those involved in the entire production phase is essential for the success of the project. Lean and JIT are effective for Tate & Lyle. This is maintained on the supposition that Tate & Lyle has recognised that at the centre of their business is customer satisfaction, and for this to be turned in to reality, they have incorporated changes that are responsive both to the customers’ demands and to the global market. Moreover, they have continuously adopted technological developments that will tackle not only their position in the market, but also increase their lead in the industry. In this sense, Lean /JIT is useful for Tate & Lyle because their service principles and values are focused on authentically responding and servicing the customer, providing satisfaction - that is the primordial motivation required for the success of JIT/ Lean (Womack et al, 2007). Tate & Lyle’s operations are exceedingly difficult, but despite its complexity, it is truly customer driven and quality motivated. In this regard, alternative methods suggested in theory, which are deemed relevant to minimising inventory costs, are all viable alternatives for TLC. It is crucial to emphasize Lean/JIT is not just a one-stop process, but it is integrated in all phases of the production. As elimination of waste is essential in increasing profitability and in returning investors trust, then, Lean/JIT is effective for TLC. Additional incorporation of technological advancements that will assist inventory like RFID is necessary developments and tools for the implementation of Lean/JIT. Conclusion In the course of the presentation, it has been shown that the key factors that drive the logistic processes of TLC are the groups’ customer centeredness, the intense global competition, their position in the market, and the economic condition. These factors show that TLC is a flexible organisation who uses the company’s current situation and the market’s status in order to develop the group’s strategy and tactic as it addresses concerns relevant to logistics. As such, It adopts and accommodates changes when necessary, It sells part of the company that is not performing It adopts outsourcing as it is more realistic, it implements technological advancements as necessary, It prioritises R & D as integral in sustaining their being one of the leaders of the industry Most significantly, they turn into concrete reality the demands of the customers. As such, at the core of Tate & Lyle’s logistics processes are customer satisfaction. References Aghazadeh, S-M 2003, ‘How to choose an effective third party logistics provider’, Management Research News, vol. 26, no 7, pp. 50 -58. Aoyama, Y & Ratick, SJ 2007, ‘Trust, transactions, and information technologies in the U.S. logistics industry’, Economic Geography, vol. 83, no 2, pp. 159 – 180. Ballard, G2004, ‘Traditional business structure and the lean ideal’, IN : LCI Relational Contracting Symposium, Retrieved from www.leanconstruction.org. Accessed on 4 May 2011. --- 2000, ‘Lean project delivery system’, LCI White Paper # 8, Retrieved from www.leanconstruction.org. Accessed on 4 May 2011.. Brewster, GW, & Boland, MA 2004, ‘Teaching case: The Rocky Mountain Sugar Growers’ Cooperative: “sweet” or “sugar-coated” visions of the future?’, Review of Agricultural Economics, vol. 26, no 2, pp. 287–302 Datamonitor 2008, Company Profile: Tate & Lyle PLC. Retrieved from www.datamonitor.org. Accessed on 5 May 2011. --- 2010, Company Profile: Tate & Lyle PLC. Retrieved from www.datamonitor.org. Accessed on 5 May 2011. Daugherty, PJ, Chen, H, Mattioda, DD, & Grawe, SJ 2009, ‘Marketing/logistics relationships: Influence on capabilities and performance’, Journal Of Business Logistics, vol. 30, no. 1, pp. 1 – 19. Koskela,L & Howell, G. (nd) ‘the underlying theory of project management is obsolete’, Retrieved from www.leanconstruction.org., Accessed on 4 May, 2011. Mangan, J, Lalwani, C & Butcher, T 2008, Global logistics and supply chain management, NJ: John Wiley & Sons. Marketwatch 2010, Company Profile: Tate & Lyle PLC. Retrieved from www.datamonitor.org. Accessed on 5 May 2011. McGinnis, MA, Kohn, JW, & Spillan, JE 2010, ‘A longitudinal study of logistics strategy: 1990-2008”, Journal Of Business Logistics, vol. 31, no. 1, pp. 217 – 236. Mello, JE, Stank TP, & Esper, TL Fall 2008, ‘A model of logistics outsourcing strategy’, Transportation Journal, pp. 5 – 26. Mentzer, JT, Stank, TP, & Esper, TL 2008, ‘Supply chain management and its relationship to logistics, marketing, production and operations management’, Journal Of Business Logistics, vol. 29, no. 1, pp. 31 - 46. Pride, WM, Hughes, RJ & Kapoor, JE 2010, Business, Mason, Ohio: South-Western Cengage Learning. ‘Tate & Lyle sells sugar division’ July/August 2010, Contech International, p 10. Saramanayake, P & Toncich, D 2007, ‘Integration of production planning, project management and logistics systems for supply chain management’, International Journal of Production Research, vol. 45, no. 22, pp. 5417 – 5447. Schoenherr, T 2009, ‘Logistics and supply chain management applications within a global context: An overview’, Journal Of Business Logistics, vol. 30, no. 2, pp. 1 – 26. Veselko, G & Bratkovic, T 2009, ‘Managing risks and threats in global logistics chains’, Journal of Maritime Studies, vol. 23, no 1, pp. 67 – 85. Wallin, CM, Rungtusanatham, J & Rabinovich, E 2006, ‘What is the “right” inventory approach for a purchase item?’, International Journal of Operations & Production Management, vol. 26, no 1, pp. 50 – 68. Womack, JP, Jones, DT & Roos, D 2007, The machine that Changed the world: The story of lean production—Toyota’s secret weapon in the global car wars that is revolutionizing world industry, New York: Free Press. Abstract Tate & Lyle PLC is one of the world’s largest manufacturers of renewable food and industrial ingredients. It has been in business for more than 130 years and is one of Britain’s oldest and best-known brands in sugar products such as Golden Syrup and Black Treacle. The subject of this report is the determination of the key factors that influence the logistical processes at Tate & Lyle Plc. This study is significant because Tate & Lyle has a strong global presence. Moreover, understanding the logistical processes of the group will help not only in clarifying and in addressing the issues encountered by the group in its logistical processes, but it will also provide clearer grounds in apprehending the theoretical and practical application of logistics. As such, the purpose of the report is the identification and discussion of the key factors that affect the logistical processes at Tate & Lyle Plc. In order to achieve this purpose, several academic literatures pertinent to the subject matter have been gathered. The electronic databases EConlit, Academic Source Premier, Business Source Premier, GoogleScholar and Jstor have been searched, and the following key terms have been used Tate & Lyle Plc, logistical processes, logistics, sugarcane industry, globalisation, and supply-chain management in the search. Some of the findings of the report are the key factors that drive the logistic processes of TLS are the groups’ customer centeredness, the intense global competition, their position in the market, and the economic condition. Read More