JC’s Pie Pops (http://www.ilovejc.com/) is a fast-growing frozen-food brand. The
ID: 370189 • Letter: J
Question
JC’s Pie Pops (http://www.ilovejc.com/) is a fast-growing frozen-food brand. The CEO, Jennifer “JC” Constantine started the company in 2013 and currently they serve over 4,000 grocery stores across the US. (Read the story here and here).
JC’s has had issues with its supply chain in the past and it has limited their growth; They had to refuse the request to do test runs by some grocery store chains due to supply chain and manufacturing limitations. Due to recent investments, JC’s has overcome the manufacturing issues. Currently, they are planning to expand their business by serving more grocery stores. JC’s wants to develop the supply chain and logistics to meet this objective.
Your team is responsible for proposing methods to develop the supply chain and logistics network for JC’s.
Following are some information provided by JC’s management.
• JC’s Pie Pops currently serves 4200 stores. JC’s wants to increase that by 50% in next 2 years. Demand is expected to increase by 50% in the next 2 years as well.
• Currently, JC’s has one manufacturing facility, which has the capacity to manufacture the increasing demand for the next 2 years.
• The finished goods warehouse does not have room to grow.
• Currently, the finished goods are transported to the retail stores by a third-party transportation company. JC’s can secure investments to build a new central distribution center (location not decided) which can transport goods to regional distribution centers and then to retail stores.
• JC’s currently purchase raw materials for their products from many different suppliers. There is no clear method for purchasing raw material.
• JC’s manufacture their products based on the demand forecasts and deliver them to the retail stores. Some retail store chains have shown interest in coordinating with JC’s to share the point-of-sale data and enter sales contracts.
Objectives
Analyze JC’s current supply chain and logistics network and identify current issues.
Identify possible issues of expansion related to supply chain and logistics. (Assume there are no issues related to manufacturing).
Discuss possible solutions for the issues identified above.
Propose the best course of action for JC’s to develop the supply chain and logistics network to accommodate 50% sales expansion in next two years.
Explanation / Answer
Let us answer the questions one by one:
Analyze JC’s current supply chain and logistics network and identify current issues.
JC has a reasonably good supply chain, though there are some issues which exist:
Identify possible issues of expansion related to supply chain and logistics. (Assume there are no issues related to manufacturing).
The possible issues of expansion would be quite a few. First, you would have the issue of transportation - since they have only one factory, if an order comes in from an area which is at the far end of the country, it is going to cost a lot to transport this shipment. This means non-uniform pricing, based on the location of the retailer. Secondly, there is no supplier loyalty (as they buy from multiple suppliers). This means if there is a sudden demand spike, there is no single supplier you can bank on blindly to support during this period. Third, they do not have adequate warehouses to store products in case of a demand spike.
Discuss possible solutions for the issues identified above.
Propose the best course of action for JC’s to develop the supply chain and logistics network to accommodate 50% sales expansion in next two years.
JC should first ensure that it has adequate warehouses to cater to the increased demand. It should immediately start construction of warehouses so that its current warehouse storage capacity is doubled - this ensures that there is sufficient buffer for the future
The warehouses should be well equipped to store frozen foods for reasonably long periods of time. This will enable JC to implement the hub and spoke model for logistics
JC should use Point of Sale data to accurately forecast future demand (since retailers have agreed to share the same). This will help JC stay ahead of the curve by anticipating spikes in demand.
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