Supply Chain & Ethical Issue: Heineken

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Supply Chain & Ethical Issue: Findings and Recommendations

Heineken Company

A. Introduction

Ethics is one of the most important factors to build reputation and trust of a business among suppliers and consumers. Heineken, a Dutch brewing company, is one of the world’s international most brewers. The company was founded by Gerard Andriaan Heineken in 1864 in Amsterdam (Heineken UK 2012). With operations in 71 countries, the Heineken family owns 125 breweries, employs around 70,000 people, brews and sells more than 250 brands in 178 countries around the world. Four generations of the Heineken family have been energetically contributed to the success and expansion of the Heineken brand throughout the world. During the development from 1864 until now, the company has encountered a few controversies. This report will analyze how Heineken beer is brewed up following a 148-year-old recipe, identify the company’s ethical issues along the supply chain and make recommendations based on research related to the issues.

B. Supply Chain

Heineken beer brewing is an entirely natural process with pure ingredients. There are only four used ingredients, which are water, malted barley, hops and yeast. The company buys barley from western farmers, usually from Europe. And the hops are bought from Germany or Ethiopia farmers. The water is bought from local water company. Yeast is supplied by biological company. These four ingredients are transported to the factories around the world to brew beer.

According to Heineken International 2011, as beer contains 95 percent water, it is the most important raw material in Heineken beer. After purified by plants to remove minerals and salts, water is stored in giant tanks. Malting the barley is next. The barley is dipped in barley tank for 36 hours to start germination. After over a week, in order to remove the seed roots the barley is burnt in the mill. Now, the barley has been turned into malt. The malt now is boiled and passed into the mash tank. Then, it has to be grounded and mixed with water. The mash is moved to filtering cooper once brewing process has completed. When the temperature reach the correct point, the starch in the malted barley is transformed into malt sugars and the brew becomes wort. Then, the wort is brought to the wort cooper and hops are also added. Here the mixture is boiled in order to get rid of bacteria. After that, the wort is cooled down to 8 degrees Celsius and yeast is added. The fermentation process takes place in fermentation tanks. After a week, the resulting brew called ‘green beer’ is transferred to lager tanks. Here it matures for between four and six weeks until the alcohol contents reach 5%.

After the beer is made, it is transferred to large tanks for packaging and removing bacteria. They are packaged in cans and bottle with exclusive Heineken brand sealed. From the brewery, Heineken beer containers are distributed to retailers, bars, restaurants and supermarkets around the world by trucks and ships. The two major distribution markets are Europe and America (Elshof P. 2005)

C. Findings

According to Environment Agency (2011), the Heineken Company was fined £10,000 for some environmental breaches in recent years. On 5 August 2008, Heineken’s Tadcaster brewery site caused 32,600 liters of cider channeled to the close plant. 3 days after, 32,000 liters of beer were lost. The reason was found that a worker has mistake in chosing the operating mode on a large tank of beer. In addition, on August 2009, 11,000 kilograms of yeast was trasferred to another tank which caused by loose pipe worked. As a consequence, there was a lack of yeast in a few hours. It can be seen that the brewery did not provide training materials or detailed procedures for accurately system operating. What is more, the brewery could not be maintained in good condition. An Environmental Agency spokesman implied that “Small breaches in procedure can...
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