Ntuc Fairprice Essay

NTUC FairPrice is a social enterprise of Singapore National Trades Union Congress (SNTUC), the only trade union centre in Singapore. Founded in 1973, the vision of the organization was to moderate the cost of living. NTUC FairPrice is now the largest supermarket chain in Singapore, they consist of 1.FairPrice Supermarkets 2.FairPrice Finest 3.Cheers 4.FairPrice Xtra, 5.FairPrice Xpress 6.FairPrice Online 7.providing their service to 300,000 odd customers daily (Superbands). IKEA IKEA was founded in Sweden in 1943. Their uniqueness lies in their design furniture for flat packs for self assembly, by the customers (IKEA, 2011). IKEA’s business practice is known for cost control and continuous product development.IKEA is operating in 38 countries. Although IKEA’s primary intention is to have its end users to transport the furniture by themselves, in Singapore, where many of its consumers may not have their own transport, they also offer delivery service. Procurement, Purchasing And Sourcing FairPrice Firstly, we take a look at Fairprice’s logistic processes, Procurement, purchasing and sourcing. Searching suppliers and conclude agreement Suppliers require meeting Fairprice’s product quality requirements especially for their cold chain management. It helped Fairprice and suppliers gain competitive advantage by contribute quality products for a long period to the demand customers as it gave positive effect on its revenue.For each product group, only limited number of suppliers can supply. Receiving stock requirement from NTUC’s stores They are IT enabled where stock requirement are sent to DC based on their inventory management in which stocks reaches its reorder point needs to start ordering new stocks. Purchasing orders with suppliers Tracking their orders, invoices and payments via SAP Ensuring delivery sent at DC/Stores Perishable products are sent directly to stores. Non-perishable products like butter, cheese are sent to DC. Processing consumer returns and non conformance To process non conformance in which suppliers fails to meet Fairprice’s product quality requirements in their product and dealing with returns in stores using Goods Returned Note. Fairprice’s procurement assures to have a long last and continuous relationship with their suppliers. IKEA All products from IKEA are manufactured according the designed code of conduct â€Å"The IKEA way on Purchasing Home Furnishing Products†(IWAY), as it require main IKEA’s relationship with their suppliers. All suppliers must achieve the requirements.IKEA sources internationally with 5 countries which is China, Italy, Poland, Sweden, Germany. Their 2 main focus is to increase sustainability of their suppliers and increase uses of sustainable raw materials. IKEA aims building long term relationship with suppliers that share same values. They focus to encourage suppliers having developments become sustainable and independent of IKEA presence by committing to IWAY.IKEA’s auditor’s visits suppliers regularly to assure that IWAY’s requirements are met.The compliance and monitoring group (CMG) ensures that same audit requirements are used worldwide. There are 4 major categories of suppliers which is Home Furnishing with 13,800 suppliers, Food with 76 suppl iers, catalogue with 50 suppliers and Transport service with 263 providers. IKEA purchased products both regionally and globally so as to have low price with high quality.They have a purchasing unit called IKEA component in which develops raw materials and components for their product and acts as sub-supplier to IKEA suppliers manufacturing finished products. Inventory Management Fairprice The second logistic process that we are going to look into is the Inventory management. Fairprice and Ikea have designed their inventory management in a way that it will reduce costs and positively impact the company’s return on investment. Fairprice has 2 warehouses and they only hold finished goods in their warehouse. This enables the company to largely reduce the time Fairprice will need to hold the inventory. Inventory cost such as carrying cost and risk cost will be reduce. Fairprice’s inventory management adopts the push approach. The stocks from each outlets will reach a certain stock level where the store staff will make the orders to the GLS (Grocery Logistics of Singapore). GLS will have enough time to consolidate all order from different outlets and enables them to make lesser trips for delivery, thus save the delivery cost and also prevent a stock out situation. IKEA IKEA adopts a special inventory whereby they manufacture their products by a push approach. The operational forecast and the tactical forecast are combined to create a final forecasts on store levels which will be aggregated, reconciled and compared with the same frames based on the retail and distribution services forecast group level. IKEA’s store operations focuses on the Pareto’s law by supporting high-flow facilities and low-flow warehouse that are more manual. In its high-flow warehouses, IKEA employs automatic storage and retrieval systems (AS/RS) to drive down its costs-per-touch. IKEA have large bins, which is sufficient enough to cover sales for one day as what is sold is captured by Point of Sales (POS) system and what comes into the store is also known via Warehouse Management System (WMS). Thus, very little cycle counting is done. However, IKEA is able to detect any abnormalities. For example, when the system expects a certain volume of a particular product to have been sold during a two day period and less products was actually sold, the system will trigger and will direct in-store logistics to head to the location to do manual checks. With this process and system, it enables the right goods to be in the store with higher certainty as compared to the traditional retail forecasting/replenishment process. Warehousing and Distribution Fairprice The third process is warehouses and distribution. FairPrice faced problems till 1993 as suppliers used to deliver their products to Fairprice stores directly. This recorded up to 200 deliveries everyday with more than 30,000 products to managed and their distribution system were unproductive and was prone to errors. After 1993, Fairprice’s manage the Grocery Logistic of Singapore(GLS) Distribution Centre which is central distribution centre(DC) .GLS manages 2 distribution centres at Penjuru and JooKoon. In 2002, Fresh Food Distribution Centre(FFDC) is Fairprice’s centralized refrigerated DC to implement only fresh food items which they need right temperature to kept fresh. This allowed Fairprice improvise their supply chain management of these perishable products through a better temperature management control. It’s essential knowing the temperature for perishable products. Products like milk, chilled pork and dairy products are delivered directly to the stores b y suppliers to avoid spoilage. There are 6 warehouse handled under FFDC with different controlled temperatures ranges between -20 to 18 degree Celsius. The temperature in each of the warehouse is controlled and observed assuring that products are kept safe at the right temperatures. This enables NTUC Fairprice increases its efficiency and manage its supply chain as moving stocks faster helps maintain the freshness and improve quality of products. They provide proper infrastructure to maximize storage management and able to improvise the process of handling the fresh food, especially with the right temperature therefore reducing spoilage. By having Hazard Analysis Critical Control Points (HACCP) certified, they devote maintaining good standard food safety and hygiene in DC. They operate 7 days a week and deliver more than 28 million cartons to the stores per year.