Trang Tien Ice Cream: Logistics Issues and Recommendations

Topics: Supply chain management, Logistics, Supply chain Pages: 8 (2219 words) Published: August 1, 2013
Company Profile

Being introduced into the market from 1958 in Hanoi, the product Trang Tien ice cream, owned by Trang Tien Ice Cream Joint Stock Company, has earned quite a big reputation and become a well-known product in the confectionery industry throughout the country. Trang Tien Ice Cream JSC (Trang Tien, for short) has received the Vietnamese Products Favored by Consumers award in 2011 (ongmienui.com n.d.) and Thang Long Golden Brand award (kemtrangtien35.com n.d.), in return to its over-fifty-year concerted effort to bring the best quality products to customers. Behind its success, how does Trang Tien create value for its products through logistics activities in keeping the business running? In answering to this question, three examples are chosen and will be examined clearly below.

* Combining manufacturing and distributing plants
By having own stores in Hanoi where ice cream is manufactured and sold directly to end customers, Trang Tien is able to reduce warehousing cost as well as transportation cost, two relatively high costs in logistics (Adapted from: Council of Supply Chain Management Professionals 2007). Trang Tien can literally replenish their stock anytime without lead-time or order placement, which contributed greatly to maximized reduction of stock-out cost.

* Packaging Design
Purchasing and instant consuming is the traditional way of Trang Tien’s customer service. However, realizing the need of takeaway purchase from customers, Trang Tien introduced packaged ice cream in 2008 (kemtrangtien35.com n.d.) and opened various small retailers in Hanoi for larger distribution. This practice helps add more value to products in terms of design, preservation and handling process as well as creating new level of product differentiation (Coyle et al 2009).

* Cooperating with third party logistics company
In 2009, with huge success in Hanoi, Trang Tien decided to reach for customers in Southern Vietnam with the packaged ice cream products. The company established relationship with VNT Co., Ltd to distribute its goods through VNT’s distribution system in Ho Chi Minh City (Vinacorp 2009).

Issues and Strategies

As a business running, logistics problems are certainly inevitable. These problems more or less do affect the logistics and supply chain system of the company; some of the problems will be discussed in this report along with possible solutions in eliminating them.

1. Product Seasonality

It is obvious that ice cream is strictly a seasonal product for its favored temperature when consuming (Harrison 1998); therefore, Trang Tien’s sales revenue varies in different time intervals during a year. This poses a challenge for the company to estimate the most appropriate amount of inputs and outputs for each season to avoid both stock out and over stock. In looking at this, the company should consider applying a logistics strategy specialized in demand management. In this case, I would suggest CPFR (Collaborative Planning, Forecasting and Replenishment) to be examined and put into action. CPFR is basically about the collaboration between partners in a supply chain jointly planning business activities and forecasts for synchronized operation (Larsen et al 2003, p.532). By two-way information sharing between partners, CPFR can help deal with demand and order forecasts and better them to the maximum. Tradeoffs in implementing CPFR are as follow: Advantages| Disadvantages|

* Enhance business relationship (1): to assist future business plans between members * Improve customer service (2).| * Trust-based relationship (3): difficulty in finding trustworthy partner to share sensitive information. * Investment requirement (4).| 1. Boone & Ganeshan 2002

2. JD. Edwards and Company 2003
3. Fliedner 2003
4. Småros & Främling 2001

According to Blanchard 2007, Unilever was one of the first companies to apply CPFR; as a result, the company gained various achievements...
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