Case Study Lipton Ice Tea Marketing Essay

Case Study Lipton Ice Tea Marketing Essay Lipton Iced Tea is a beverage launched by Lipton in collaboration with Pepsico. Lipton is an established brand in the tea market while Pepsico has a prominent presence in the soft drink industry. Ever since the popularity of tea started to grow in the West, particularly in the United States of America, the tea market has evolved through various stages. In order to dominate the market, major tea producers like Lipton, Tetley and Nestea have kept on coming up with innovative varieties of tea. Lipton, which has the reputation of being the most innovative brand in terms of variety launched cold beverage, Lipton Iced Tea, thus adding a new dimension to the tea market. Lipton Iced Tea enjoys even more popularity after the recent researches stated the healthy benefits of consuming tea. Moreover, the iced tea was a good way of targeting those consumers who do not enjoy hotter beverages. Lipton faces a major competition from Nestle Nestea and Snapple. However, Lipton Iced Tea successfully managed to lead the market. Considering the threat from new and existing rivals, Lipton has kept is marketing strategy quite strong an aggressive. Besides positioning its product as the healthiest and the most refreshing drink available in the market, Liptons intelligent packaging and pricing strategy has significantly contributed to its success. Its low prices make Lipton more affordable as compared to its competitors and its packaging makes it instant and easy to use. While Lipton Iced Tea has an overall strong position in the market, however, its synthetic taste remains its weakness. Therefore, Lipton can further strengthen its position by enhancing the taste. On a macro level, Lipton enjoys a positive press, not only because of its efficient quality management system, but also due to its sustainable and environmental friendly production practices. Introduction Tea is a household icon in most parts around the world. Almost in every country that has tea consumers, when you think tea, the first name that hits our minds is Lipton. Lipton tea originates from the house of Lipton, currently a major subsidiary brand of Unilever. Lipton was founded by Thomas J. Lipton, an Irish man, who came to United States of America in the late eighteen hundreds. He started by a small grocery store and expanded it into a chain of stores around America. By the end of the nineteenth century, when demand of tea boomed in the Europe, the British tea brokers pressed Lipton to stock their tea in his stores. This gave Lipton an idea of coming up with his own brand of tea, and thus, Lipton Tea was born. Tea at that time was expensive and was considered a rich mans drink. Thomas Liptons idea was to come up with a more affordable brand so that even consumers from less strong economical background can enjoy tea. Lipton has continued to grow since then, which led it to go public in the early twentieth century. By late twentieth century, Lipton started operating as a subsidiary company of one of the world biggest corporate house, Unilever. Since its birth, Lipton has been on a road to continuous growth and expansion. This growth was not just in terms of exploring new markets, but also in terms of introducing a wide range of products. Today Lipton holds major market share both, in the United States of America and around the world. Ever since Lipton has stepped into the tea industry, tea has gone much beyond than a conventional household beverage. From time to time, Lipton is known to introduce new additions in the tea industry and one of the most innovative and popular addition is the Lipton Iced Tea. This product came into being after Lipton collaborated with PepsiCo., which is primarily a soft drink company. The Market As a tea brand, Lipton is the market leader both, in the United States of America and around the world. With a wide range of tea variety, Lipton serves people from all classes, social backgrounds, and regions. From students to grandparents, from China to the United States of America, Lipton is the key tea brand that serves almost all market segments. Focusing on Lipton Iced Tea in particular, Lipton has segmented its consumers according to lifestyle. In general, Lipton Iced Tea has two major targeted groups of consumers. The first group covers those people who lead a busy life style and are hunting for something instant. This group mainly includes, students, employees, working women and other similar consumers who live a hectic and busy life and are in need of an instant product to refresh them. Liptons idea of selling tea in ready to dip tea bags and instant sachets has been very successful among this segment. Tea in this kind of packaging proved not only affordable but also easy and quick to use. The second group of people comprises of the health conscious segment. Consumers from this particular segment may not necessarily lead as busy life as the first group, however, they are potential consumers because of the healthy benefits offered by the product. Ever since the researches have stated the medical advantages of tea consumption, Lipton has played on these reports in order to position its product successfully as healthy, energizer with immense health benefits. Since Lipton has always positioned its tea as a health beverage that provides antioxidants, its market share has continued to grow with the passage of time. Moreover, many people prefer Lipton to other brands due to its affordability, quality and user friendliness. In order to further diversify its clientele, Lipton has introduced further varieties of Iced Tea that includes, Diet Iced Tea and Flavored Iced Tea in Mixed Berry, Lemon, Raspberry and Peach flavors. Since Iced Tea is essentially a cold beverage, the integration of flavors with the beverage has made it popular in the younger groups as well. Since Lipton recognizes the fact that its potential consumers include people that are either health conscious or are have a busy routine or they opt for Lipton due to its affordability, it continues to develop products that are healthier, easier to use and are more inexpensive. Size and Growth of the Market In earlier days, coffee was a comparatively more popular beverage in the United States. However, in the recent past, the tea has gained much popularity, thus resulting in a phenomenal growth in the American tea market. The primary reason for this popularity, according to some survey reports, is the fact that tea is a healthier and more refreshing brew as compared to its counterparts such as coffee. Furthermore, the introduction of flavored tea and other tea varieties such as green tea and iced tea has broadened the consumer base. Another reason, besides the health factor, for the popularity of tea is the fact that it is instant and is readily available as a ready to drink brew. While initially, tea was known to be a drink of colder regions, however, the innovative introduction of iced tea has made the beverage popular among the inhabitants of warmer temperatures as well. According to market surveys, 85 percent of the total tea market in the United States of America is made up of iced tea. It is also said that iced tea sales has seen an average annual increment of 145 percent. Although the iced tea market is dominated by various top tier brands, however, Lipton holds the greatest market share of 32.6 percent, followed by Snapple with 26.5 percent share and Nestea with 10.8 percent share. Lipton leads the market not only in America, but also around the globe. Environmental Impact Lipton is known to have understood its Corporate Social Responsibility well. As an organization, it adheres to the concept of sustainability. The biggest evidence for this is the fact that Lipton grows its tea plantations in the Rainforest Alliance Certified estates. These estates are certified by the Rainforest Alliance organization, which is a non-profit entity, aiming to conserve the environment, managing farms efficiently and protecting the rights and welfare of the workers and their families associated with those farms. Moreover, Lipton has also switched to bottles that use 20 percent less plastic. This is another step towards an environmental friendly business activity. Competition The American tea industry is mainly dominated by Lipton, Snapple and Nestle. Focusing on the Lipton Iced Tea, in particular its major competitors remain Snapple and Nestea, a product of Nestle. While Lipton teamed up with PepsiCo to launch its iced tea, Nestle joined Coca Cola to get into competition. Just like Lipton and Nestle, PepsiCo and Coca Cola are into direct aggressive competition with each other. Therefore, the objective behind Nestlà ©s teaming with Coca Cola was to compete with the Lipton-PepsiCo partnership and to ensure a strong global distribution system. However, Nestea focused on a more packaging based marketing strategy and unlike Lipton, it failed to offer a variety of flavors to cater various tastes. Lipton, on the other hand, not only focused on offering variety, but also marketed its product and positioned it as an ideal healthy and ready to drink beverage. As a result, it did not only create brand loyalty for Lipton among conventional tea drinkers, but also su cceeded in capturing the consumers from the soda drinkers segment as well. This kept Lipton much ahead of Nestea as far as completion is concerned. The competition gap between Nestea and Lipton Iced Tea is filled in by Snapple iced tea, which is the second most popular brand after Lipton. Unlike Nestea, Snapple has an edge of offering a wide variety of flavors and initially, it did come up as a strong competitor for Lipton. However, the relatively smaller size of Snapple and its failure to position itself properly in the market resulted in the loss of major market share to Lipton. Although the weaknesses of its competitors have always kept Lipton ahead of them, however, the threat is always there and in order to maintain its position in the market, Lipton has to ensure constant innovation and improvement of its product. The Marketing Mix As mentioned earlier, despite of being a market leader, Lipton ice tea faces a constant competition from other dominant brands in the tea market. This prompts Lipton to maintain an aggressive marketing strategy to create brand loyalty and to ensure its leadership in the tea market. Liptons marketing mix is designed as follows: Product As a product, Lipton ice tea has a lot to offer as a unique selling point as compared to its rivals. The biggest edge that Lipton has is the recent research reports stating the medical benefits of consuming tea. Lipton has been successful in creating an image that Lipton Ice Tea is the healthiest beverage currently available on shelves. Apart from that, Lipton ensures constant and continuous innovation in the product and it keeps on coming up with newer and more improved flavors. To further increase its consumer base, Lipton introduced the diet and unsweetened range of ice tea, so that diabetic patients, who generally avoid tea, can also enjoy the beverage. Promotion Lipton Iced Tea is aggressively promoted using both, above the line and below the line promotional strategies. It generally uses print media and television for the promotion of its product. Liptons main promotional strategy is to position its product as the most refreshing, energizing and healthy beverage available in the market. Besides conventional advertising, Lipton also keeps on coming up with parallel promotional schemes. Its latest scheme involves buying two Lipton Ice Tea products and getting a chance to win a Convertible car. Placement In order to ensure a strong, efficient, massive, broad and uninterrupted distribution system, Lipton teamed up with PepsiCo, which already has a well-established distribution system around the globe for its soft drinks. Therefore, Lipton Iced Tea is distributed through PepsiCos distribution channels. Lipton Ice Tea is readily available in the market. It can be easily found in all retail outlets ranging from a small grocery store to a large hypermarket. Besides conventional retailing, it is sold via vending machines. Lipton has also maintained an online presence and its products can be ordered and purchases through the internet. Pricing Lipton believes in catering to mass market without ignoring the consumer segments with lesser purchasing power. For this reason, Lipton Iced Tea is available in a wide range of prices that starts as low as 41 cents. This makes Lipton the most affordable brand in the market and forces a large number of consumers to opt for Lipton. It also offers larger economy packs at a price of about US$ 34. This aggressive pricing strategy has a major contribution in keeping Liptons competitors at a lower position. Packaging Lipton has effectively and successfully used the color Yellow as Liptons personal color. It is as if thinking Yellow means thinking Lipton. Furthermore, Liptons packaging is an integral part of its marketing strategy. Lipton Iced Tea is available not only in cartons and in boxes, but it is also available in ready to drink bottles, ready to use tea bags as well as pocket sachets. This does not only make the product easy to use, but also instant and easy to carry. This instantaneousness and user friendliness makes the product popular in consumer segments of all age and social backgrounds, especially among the students and the employees. With time, Lipton keeps on bringing about changes in its packaging, thus improving the products quality and making it easier for consumers to use. SWOT Analysis Strengths Lipton is beyond doubt, the strongest tea brand in the market. Its biggest strength is its partnership with PepsiCo and its incorporation with Unilever. This makes Lipton a strong brand as association with both these firms ensures efficient distribution system as compared to its competitors. Another strong point that Lipton has is that press has always been in Liptons favor. This is due to recent researches portraying tea as a beverage with medical benefits combined with Liptons successful marketing strategy of projecting its product as medically fit for consumption. Other strong points on Liptons side include its affordable price, the user friendliness of the product and the variety of innovative flavors offered by the company. Weaknesses Although, a variety of flavors is available, some survey reports claim that Lipton Ice Tea needs to work on taste enhancement. Some consumers complain that they find it too synthetic and the taste, and in some cases, the after taste of the ice tea is awkward. A few consumers also complain that although they find the drink cool and refreshing, however, they find it tasteless at the same time. Opportunities Having a strong brand image combined with cost efficient production system, Lipton has the opportunity to weaken its competitors without getting into any price wars. By working a bit more on taste enhancement, it can take away the remaining market share that is held by its rivals. Threats Although so far Lipton had successfully fought back the competition, however, in order to maintain its position in the market it will have to make sure that it remains in the process of continuous innovation. Recommendations/ Conclusion Lipton Ice Tea is at present, one of the strongest brands in the brew market. However, it can further strengthen its position by improving its shelf presence and increasing its shelf life. Although some companies tend to ignore the importance of where there product is placed in a super market, however, in practicality, the way a product is displayed in a store has a great, and at times a direct impact on its revenues. Increasing shelf life would mean that the product would last for a longer time, which will result in consumers to prefer Lipton to its competitors products. As mentioned earlier, that some consumers have reported the weak taste of Lipton Ice Tea, it will have to work with its taste experts in order to develop the taste to suit consumer requirements. Failure to do so, might lead to a loss of potential market share to existing or new competitors. The fact that press has been constantly praising Liptons quality and researchers are seconding Liptons claim of offering a healthy beverage, can be utilized to increase its consumer base by pursuing informative advertising campaigns. Lastly, it has to ensure that it keeps on coming up with both new flavors and improved packaging so that it appeals more to the consumer and is able to maintain its image as an essential household product. It can have kids as its potential consumers by coming up with flavors that suit their taste such as chocolate and strawberry. Appendix Based on figures from online sources.

Numeric Investors

Diversey, founded in 1923, in Chicago, currently sales in 160 countries. It started its operations in India during the year 1998 as one of the major providers of cleaning, sanitation and hygiene products and solutions to institutional customers across the industries in India market. It established itself as pioneer in providing the cleaning, sanitation and hygiene needs of the large government and private institutional clients from different industries in India. The clientele spread across various industry segments like hotels, airports, metro, railways, hospitals, shopping malls, offices of the MNCs companies etc. Challenges in Indian Industry:- The cleaning industry in India is majorly unorganized sector accounting for almost 70% of the market. The perception of cleaning as a daily chore rather than a science followed by the lack of awareness on the criticality and sustainable benefits of hygiene and cleaning resulted in lot of resistance and reluctance on the part of the institutional customers, in accepting the need to shift from labor-oriented cleaning process to technology-oriented cleaning products and services. Diversey wanted to change this mind-set in India market. It gained more than 30% of the market share in the organized cleaning market segment by 2012. It was the only company in India, which was in the business of providing end-to-end cleaning product and services solutions to the customers and it had a nearest global competitor in Ecolab, who also entered the India market directly in 2008. In the cleaning equipment segment, Diversey competed with 4-5 key namely Roots Multiclean, Eureka Forbes, Diversey, Dulevo and Karcher. However, unlike Diversey, most of these equipment players focused only on offering the cleaning equipment products. Point of differentiation – A total solution provider, which combined the cleaning, sanitation and hygiene product offering with consulting services to improve operational efficiency for its customers. – Offering cleaning products, which did not involve any banned chemicals or harmful substances. -Offering the best quality product to its customers and provided supplementary education and awareness on need based usage of the same Segmentation 1. According to type of industry:- building service contractors, hospitality & healthcare, retail & food service and food & beverage 2. According to size of customer:- it divided its customer according to the size within any industry as a. International large accounts as customer having presence in multiple countries b. Large domestic local accounts as five star hotels, large corporate hospitals, large Indian corporates c. Mid-size units as hotels, hospitals and offices; and d. Smaller units as roadside eateries, offices, shops Goal A sales turnover of INR 10,000 million by 2015. Problem Identification There are primarily five main issues that have been identified. 1. How to benchmark the products and services against the local competition, especially against the low-cost and low-quality local players, who were offering low-quality but cheaper products for cleaning purpose. 2. How to change the social mindset of majority of the Indian customers, who believed that cleaning and hygiene was a day-to-day chore, which did not require anything else other than any simple cleaning agent. 3. How to convey the importance of applying the right type and composition of chemical solution for each of the specific need, i. e. he one-size-fits-all mindset of the Indian customers. 4. How to create a distribution channel, which could change the existing relationship and convert ‘Dhobis’ to Diversey. 5. How to manage the inventory of slow moving but time critical spare parts for the cleaning equipments Strategic options To capture market share in organized sector 1. Communicate the eventual low cost of use of Diversey products in the long run to by linking it to the costs reduced due to reduced maintenance costs. 2. Focus on attracting the attention of customers of hospitality, edical-care, airlines etc on the health aspect through advertisements and print ads in magazines served in hotels, airlines etc. which is achieved far better by using diversey products. This in turn would lead to increased demand of diversey products as the customers would be more health-conscious and force the above industries to cater to their demand which would be fulfilled by diversey’s products. 3. Press on the fact that diversey gives personalized end to end serv ice and after sales service according to the needs of the clients. Communicate that diversey uses world class products which are highly safe and effective. Hence it increases the life of the surface on which the product is used and does not affect the health of the applicant. To capture market in unorganized sector 1. It’s important to change the mindset of people to shift from water-based cleaning to chemical-based cleaning which could be achieved by giving free demonstrations at their homes by hiring trained cleaning gangs. 2. Increase brand awareness through advertisements which focus on the health and germ protection advantage by the use of diversey products over the use of cleaning by water. And specially focus on children protection from germs which would drive families spending into diversey products. 3. Create awareness through social media through videos and blogs highlighting the superiority of diversey products over pochas and involve young minds into it who will be the future prospective buyers. 4. Portray diversey products as safe which can be used by all members of the family, reduces time to clean and gives effective results. . Use R&D to come up with a multi-purpose product which could satisfy one-fits-all mindset of the people. Diversification 1. Provide cleaning service to clients by hiring cleaning gangs or recruiting and training people as training gangs on daily or weekly or monthly basis as per client’s requirements. 2. Enter into business of cleaning houses by launching in tier 1 and tier 2 cities where people could use diversey products to clean their clothes which could bring in customers by eliminating dhobis and in turn promote diversey products. 3. Foray nto the business of providing waste handling and storage equipments as this business would supplement their core business. Inventory reduction 1. Standardization of products and use of common parts to make different products would reduce inventories 2. Identification of parts of products and not stocking those which could be manufactured quickly after the demand of the product. 3. Tracking of demand of each product from each region over time should be done which would give a fairly rough estimate of the inventories to be kept for that product.

Vendor Managed Inventory - Free Essay Example

Sample details Pages: 13 Words: 3788 Downloads: 1 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? Vendor Managed Inventory (VMI) is a planning and management system in which vendor is fully responsible for the replenishment of inventory based on timely point of sale information to the buyers (retailer) place. This concept helps increases the customer responsiveness by reducing the supply and demand gap thus giving the satisfaction to end customer by increasing availability of the desired product when customer wants it. Supply chain partners must share their vision of demand, requirement and constraint to set the common objectives (Guillaume et al; 2008). Don’t waste time! Our writers will create an original "Vendor Managed Inventory" essay for you Create order Quality of buyer supplier trust and relationship, quality of ICT system and intensity of information sharing has positive impact on VMI implementation (Marloes et al; 2008). Information technology combined with VMI offers a clear view of inventory holding location giving supplier better information for replenishment planning (Malla et al; 2007). Before implementation of VMI, analysis of the level of uncertainty of customer demand is needed as high uncertainty in demand negatively influences the performance attained through VMI (Kazim Sari 2007). Upstream data transferred to suppliers i.e. current inventory level and accurate sales forecast is the most important factor for the successful implementation of VMI (Astrid Vigtil, 2007). Benefits of VMI implementation depend on circumstantial factors surrounding the implementation and dyadic intentions (Jongkyung et al; 2009). Implementing VMI is not solo effort it can be beneficial if company wide effort is involved (George kuk, 2004). VMI supply chain has improved dynamic response which causes reduction in manufacturing on cost and transportation demand (S.M. Disney et al; 2003). VMI gives benefits to retailer as manufacturer stock more to reduce risk of stock out which in turn reduces retailer holding and shortage cost and increases its profit (Brendra k et al; 2004). No previous studies have ever offered to measure the implementation of VMI in FMCG sector of Pakistan. This paper is an effort to resolve that gap existed in previous literature. Implementation of VMI in FMCG sector of Pakistan is a major challenge for the FMCG companies and the retailers both. Maintaining of high quality error-free service in the dynamic and uncertain environment of Pakistan with lack of ICT infrastructure (information and communication technology) is a huge pressure. Due to heterogeneous customer base complete VMI implementation in this scenario is not possible so FMCG companies need to carry out its operation in both the way i.e . for the both VMI and non VMI customers. For flexible and fast communication between FMCG producers and retail chains proper ICT infrastructure is mandatory. So companies need to invest web-based information transfer systems like EDI (electronic data interchange). Adoption of VMI is not an easy task for companies as it requires heavy investment and commitment of retailers that how much they are willing to share POS information. Before full and final implementation of VMI companies must need to find out the necessary factors as the clear and fault free implementation will have a great influence on future business performance outcomes. Objective of this paper is to find out the suppliers/manufacturer perceived objectives, drivers, obstacles, performance outcomes for implementing Vendor Managed Inventory (VMI) in FMCG sector of Pakistan. Organizational objectives = Lead-time reduction, improvement in forecasting accuracy, improvement in customer service, improvement in profit ma rgin, improvement in rate of return, increase sales, control of bullwhip effect. Strategic drivers = Competition, shorter product life cycle, global supply chain, corporate restructuring. Obstacles = Ineffective organizational structure, lack of suitable it infrastructure, improper decision-support tool, lack of trust and mutual understanding between supply chain partners, internal/external integration. Performance outcomes = Effective production planning, effective forecasting, effective replenishment, effective inventory control and management, effetient logistics and distribution management. This paper is organized in sections. Section 1 offers the introduction; section 2 presents the literature review on previous research practices on VMI; section 3 is comprised of methodology: section 4 consist of data analysis and section 5 draws the conclusion and policy making regarding the findings. LITERATURE REVIEW Jan Holmstrom (1998) studied a single case study to analyze the benefits of implementation of SAP R/3 in VMI between vendor and its wholesaler. It is found that administrative cost for vendor product is reduced with reduced delivery cost which in turn gives benefit to end customer through low prices. It is also found that demand variability, inventory level and order per delivery lead time also greatly reduces which give competitive advantage to both vendor and whole seller. It is suggested that full benefit can be attained if vendor extends its number of customers. Sila cetinkaya et al (2000) studied the inventory replenishment and shipment decision in VMI through analytical model. Manufacturer with random demand patterns and retailers dispersed in different geographical areas are taken into account. Manufacturer has the freedom of holding small sized orders and dispatches it until the consolidation volume gathers. It is found that inventory costs are reduced if the inventory a nd shipments decision optimally coordinated. Susan cohen kulp (2002) studied the impact of internal information (sales and inventory) accuracy and its reliability on supply chain profits in vendor managed inventory. Theoretical models of two system traditional and VMI are analyzed which indicates that the accurate information helps manufacturer to forecast the consumer demand accurately which increases manufacturer and retailer over all profits. Hypothesis was tested through survey of 53 divisions of manufacturers in the FCPG industry. Result shows that use of VMI increases with the detail and reliability of retailers internal information and wholesale prices are lowered with the extent of VMI use. It is suggested that VMI will lead to higher supply chain profits if retailer and manufacturer both are willing to share accurate information and use this information in taking inventory management decisions. Terrance et al (2003) identified the distinction between supplier managed inventory (SMI) vendor managed inventory (VMI) through theoretical framework. Economic value analysis (EVA) is used to determine the non financial benefits and burdens of VMI and SMI implementation and effect of VMI and SMI on enhancement of share holder value.it is suggested that EVA analysis will help manager to identify the opportunities to increase the share holder value across both firms. S.M. Disney et al (2003) studied the effect of VMI strategies on transport operation and order batching activities. Three different scenarios traditional, internal consolidation and VMI are modeled through system dynamics methodology and tested through simulation. It was found that VMI supply chain has improved dynamic response which causes reduction in manufacturing on cost and transportation demand. Transportation cost saving in VMI is possible for long term and short term and this saving is not effected by escapable and inescapable cost. This paper may help in developing the policy regar ding VMI and supply chain (distribution, production scheduling etc.). S.M. Disney et al (2003) investigated the comparison between VMI and traditional seriously linked supply chain in producing bullwhip effect. Different equations are developed and simulation model testing was applied. Four variables as a source of bullwhip; price variations, rationing and gaming, demand signal processing, and order batching, were tested in traditional and VMI supply chain scenarios. It was found that through VMI supply chain all the variables can be avoided through well designed system. Demand signal processing and order batching can only be eliminated through inventory holding in traditional supply chain. For future it is suggested that VMI would be of greater benefit if the supplier uses inventory and sales information in making production and inventory management decision process. Johanna et al (2003) studied the greater demand visibility impacts on manufacturer production and inventory ma nagement and how it modifies the operational efficiency. Discrete event simulation is chosen as approach to study manufacturer of FMCG serving three distributors which serve several retail outlets. From result it is shown that greater demand visibility has positive impact on operational efficiency which greatly depends on product with shorter production planning cycle and low replenishment frequency. This research was limited to products with stable demand so it is suggested to do more research on products with variable demand. Jonah tyan and hui-ming wee (2003) studied the retailer and manufacturer partnership in the implementation of vendor managed inventory (VMI) system in the Taiwanese grocery industry. Case study analysis between PG a manufacturer of FMCG and Wellcome supermarket chains stores was selected. It was found that through VMI supply chain inventory level of retailer declined and service level of manufacturer distribution center improved. It is suggested that VMI w ould be effective to shorten the process of replenishment and give competiveness and opportunity to grow to both supply chain partners. Integration of online e grocery in VMI business model will be increasing its benefits. George kuk (2004) investigated the determinants and outcomes of VMI in electronic industry through survey of 94 employees of 25 companies who fully implemented VMI. Four hypotheses were created having 3 independent variables: organization size, number of employees involved in VMI and type of logistic integration, 3 dependent variables: information quality enhancement, service quality improvement and cost reduction. Through ANOVA testing it is analyzed that large level of employee involvement, small size of organization and integrated logistics achieves more benefits of VMI. It is suggested that implementing VMI is not solo effort it can be beneficial if company wide effort is involved. Brendra k et al (2004) investigated how the substitution brand competitio n gives benefit to retailer in VMI. Two level supply chain is taking having one retailer and 2 manufacturer of competing substitutable brand and through analysis of mathematical model it is found that VMI gives benefits to retailer as compare to non VMI as due to increase competition manufacturer stock more to reduce risk of stock out which in turn reduces retailer holding and shortage cost and increases its profit. For future research it is suggested to include inter retailer intra brand substitution competition. Pamela danese (2006) identified the way to use extended vendor managed inventory (VMI) both upstream and downstream amongst various supply chain partners to organize the information and material flows. Case study analysis approach is used taking supply chain network of leading pharmaceutical company GlaxoSmithKline (GSK). Through collected data it is shown that Information flows among the supply network members, information systems and performance monitoring system are some of the requisite of extended VMI. In GSK Information flow is achieved by EDI system which enhanced the service level, production capacity, and the inventory management. Central information system helps in production planning and order cycle processes in up stream and downstream supply network. Performance monitoring system motivates and improves the performance and allows supply chain members to over come their reluctances to share information. It is suggested that collaborative planning, forecasting and replenishment (CPFR) should be taken into consider future research on extended VMI. Yuliang Yao et al (2007) explored how supply chain parameters affect the cost saving in VMI and sharing of this benefit between buyer and supplier. Two level supply chain having single supplier and single buyer modeled. Through analysis of model it is found that inventory cost reduction greatly depend on ratio of order cost of supplier to buyer and ratio of carrying cost of supplier to buyer. Buyer takes all the benefits of inventory reduction whereas supplier inventory level may increased which may lead to high logistic cost to supplier side. So its suggested to have side payment arrangement between buyer and supplier to get VMI worked in long run. Malla et al (2007) investigated the impact of VMI model on organizations inventory associated cost. Case study of market leader of tyre manufacturer has taken which has which has largest distribution network across India, USA and UK. Through simulation of model it is found that integration of information technology provide a clear picture of inventory holding locations which helps supplier in planning and replenishment of inventory across supply chain, which reduces bullwhip effect, safety stock and W.I.P and improves customer service. Some of the limitations of this model are high initial investment cost and lack of integration of systems. Astrid Vigtil (2007) investigated the required information exchange in VMI with the support of five buyer-supplier pair in Norwegian geographic. Semi-structured detailed interviews were conducted with the representative of different companies having logistic managerial position or similar. It was concluded through interviews that flow of upstream data is more critical rather than downs-stream data. Visibility of current inventory status and sales forecast are most important factor for suppliers and there is different kind of information needed depends upon operational mode of buyer in make to stock and make to order. In future it is implicated that for the higher efficiency of VMI electronic integration and automatic data transfer should be priorities as it supports supplier in planning of replenishment. Kim et al (2006) explored the major factors for success of vendor managed inventory (VMI) in oligopolistic New Zealand food industries. A thorough investigation of case studies and literature review concerning from other industries and countries revealed se ven industry-level factors unified into a step-wise framework essential for successful VMI and strategic supply chain relationships. These factors are: identifying industry structure; evaluate rivalry within industry, determination of buyers power, industry profitability, improved long-term relationships, investment in supply chain technology and adoption of supply chain best practices. It is suggested that these framework will help to supply chain partners who wish to increase profitability through VMI but these conclusions are needed to be revised before applying to other less concentrated industries. .Kazim Sari (2007) examined the benefits of VMI in achieving the increased performance through different levels of outside supply capacity, demand uncertainty, and lead time. Data were collected through simulation model; Crystal Ball, an MS Excel add-in. After retrieving data statistical test MANOVA is applied and it was concluded that high uncertainty in customers demand has nega tive influence on the VMI performance. There is also a direct relationship between the manufacturing capacity of outside supplier and performance of VMI. As long as the ratio between retailer and supplier lead times remains constant the performance level of VMI remain unchanged. For future implication it is recommended that before taking any decision relating VMI implementation it is necessary to conduct cost-benefit analysis if upstream information sharing is poor or customer demand is highly uncertain. Mikael Stahl Elvander et al (2007) proposed the structure for the numerous setups that could be arranged while establishing a VMI system. Semi-structured interviews were conducted from 15 company of Switzerland. Six framework were prepared and tested against the focus group consisted of representative of nine different companies including suppliers and customers who already had implemented VMI, in workshop. Through workshop it was deduce that there are a number of different ways in which VMI system can be configured, that will limit a suppliers likelihood to employ the information made accessible through VMI. It is suggested that the challenges related to operation and management may differ in different VMI system configuration. This should be taken into consideration in order to find best optimal VMI system configuration. Atul B. Borade Satish V. Bansod (2008) studied motives, drivers, obstacles and benefits of VMI practices in e-environment. Key variables were compared between small and large Indian industry questionnaires were filled by 112 large companies and 86 small companies and hypothesis was tested through independent sample t-test. It was resulted that motives, drivers, obstacles and benefits are considerably different for small and large enterprises while adopting VMI. It was found that the major objective for SMEs is profit improvement and for large companies is improved customer service. Driver for SMEs is competition and for large companie s it is global supply chain. Obstacle in implementing VMI for SMEs is lack of IT infrastructure and for large companies is lack of trust between supply chain partners. Objective for SMEs is profit improvement and for large companies is improved customer service. Benefits gain for SMEs is better forecasting and for large companies is improved logistic and distribution management. It is suggested that IT can gives companies advantages to maximize end consumer value and reduce operating expense as it gives the real time information of marketing conditions. Guillaume Marques et al (2008) examined the integrated view of the VMI. Outside the short term pull system inventory replenishment, partners have to share their demand forecast, requirements and their limitations to fix middle/long term common objectives. In order to conduct the study 28 articles were review and it was concluded that there was no doubt about the real application of VMI in industry. What clearly is VMI and how can it be correctly implement in supply chain is not clear. It cannot be justify whether VMI is a model, a process, a strategy, a relationship, a link. Juhwen et al (2008) studied the supplier performance enhancement in term of total relevant cost/unit. Three different models were proposed for single supplier with heterogeneous retailers, one is uncooperative model with independent inventory management system, second model was VMI model in which supplier is responsible for inventory replenishment order cost and certain degree of holding cost and third model was VMI/CRE model, in which VMI is combined with CRE (common replenishment epochs) strategy. Data was analyzed through Algorithm and numerical experimental design and it was concluded that VMI and VMI/CRE results are significant for supplier performance as compared with uncooperative model. For the future implication it is suggested that the supplier are required to provide incentives such as price discounts to compensate the loss es which are bear by retailers so that aligning ordering schedules with CRE. Marloes J. T. Claassen et al (2008) studied the perspective of buyer in term of benefit gained through VMI. Research model was formulated having four key variables; quality of ICT system, quality of information, intensity of information sharing and relationship quality. Sample of 64 Dutch buyer responded through email and model was tested through Partial Least Square (PLS) technique. It was resulted that the quality of the buyer-supplier relation, quality of IT-system and intensity of service level has an impact on buyer-perceived VMI benefits and it is not impacted by actual quality of the information shared. Furthermore three outcomes of VMI performance are higher customer service level, efficient control over supply chain and cost reduction to some extent. It is proposed that the primary benefit of VMI implementation is not cost reduction; it is high customer service level and supply chain control whi ch can be obtained through better relationship with supplier and efficient IT infrastructure. Peter Southard and Scott Swensethy (2008) investigated the cost advantage gain from technology enabled vendor managed inventory. Actual data was taken from two Agricultural cooperatives farm fuel delivery systems of Nebraska due to its variable demand patterns and competitive environment. Inventory costs, delivery costs and stock outs were measured as performance outcome. It was resulted that technology enabled vendor managed inventory reduced costs and improved customer service levels. It is suggested that use of technology enabled vendor managed inventory can deals with many logistics problems. Jouni Kauremaa et al (2009) found out the types of benefits of VMI program and its sharing at the five levels (supplier vs. buyer). An exploratory multiple case study research methodology was used. Quantitative and qualitative data were collected through semi-structured interview from five op erational levels. It is concluded that for buyer and supplier, VMI can lead to strategic and operational benefit both which is depending on pair intentions and contextual factors surrounding the given application. It is suggested that with the help of contextual factors VMI system can be designed with more accurate and perfect implementation targets. Kari Tanskanen et al (2009) investigated the challenges faced by the construction industry at corporate level to manage logistics and to evaluate VMI as a solution of logistics for small items. Three residential house construction companies were elected located in Helsinki, quantitative and qualitative data were collected through web cameras observations and interviews. Percentage analysis was applied on quantitative data and on the bases of outcomes it was concluded that VMI is a suitable solution for small item logistics for the construction companies. For future it is implicated to work on other industries located in different geo graphical location. Jongkyung Park et al (2009) investigated a framework for integrative SRM (supplier relation ship management) system by exploring broad approaches to overall SRM functions. Frame work includes five stages: Setting up of purchasing strategies, Selection of a supplier, Cooperation, supplier valuation and enhancement and endowment of continuous improvement. For this past studies related to SRM were examined and a framework for an integrative SRM system was recommended through which a case study was performed constructed on the systematic hierarchy procedure with a field survey. Results shows that the benefits of SRM can be obtained through the suggested framework and it is applicable to real fields through application case. It is recommended that this framework will help purchasing manager to analyze strategic features of SRM before and during the SRM system operation. Francesco Zammori et al (2009) identified the standard configuration of a vendor managed inve ntory (VMI) contract which will be a building block for the initial explanation of the agreement. For this study an Italian plant was selected as an ideal candidate because of complexity of its manufacturing process and the data in the form of the information flow and the technical specifics which are critical before any operational setup are recognized and discussed and formed as parameters for the explanation of the elementary frame of the agreement. It is revealed that VMI agreement should be organized into segments by having generic and legal sides and official aspects included in the annexes. This will increases the flexibility of agreement As VMI relationship progresses with the time.it is proposed that this flexible structure of VMI agreement can be easily implemented by several industrial fields. Atul et al (2010) studied the difference in the practices of VMI in small and large Indian industry. Key variables were objective, drivers, obstacles and impact of VMI in large a nd small Indian industries, questionnaires were filled by 98 large companies and 63 small companies and hypothesis was tested through independent sample t-test. It was resulted that objectives, strategic drivers, obstacles and affected operational areas are considerably different for small and large enterprises while adopting VMI. It was also found that the major objectives for adopting VMI are customer service and profit improvement. For future it is recommended that the research should be perform on more variables and for other geographical (culture) areas. METHODOLOGY Aim of this paper is to find out the suppliers/manufacturer perceived objectives, drivers, obstacles, performance outcomes for implementing Vendor Managed Inventory (VMI) in FMCG sector of Pakistan. Data were collected through primary source and research approach is to be mixed of qualitative and quantitative as the aim of this paper is to explore the supplier perception and opinion about implementation of VMI in FMCG companies operating in Pakistan and this opinion is converted into quantitative terms through five point likert scales. Existing literature was used to design the structured survey questionnaire. The questionnaire was designed on a five-point interval scale.

Descriptive Essay Golf Essay - 2371 Words

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