Nature of Supply Chain Strategy Essay Example

these aspects of the supply chain.

Service

Service is a critical aspect for any food service organization, and should be given special consideration. Meeting customer demands through product customization and adapting to seasonal variations requires careful planning in supply chain management. The food supply chain has its unique characteristics such as lead time, shelf-life, seasonality, variety, and uncertainty.

Therefore, in order to improve our service rate and decrease the need to purchase out-of-stock items for daily consumption, we will focus on increasing parameters. Specifically, items with high demand or short shelf-life, such as bread, produce, seasonal fruits, salads, and chicken, are suitable for this approach. We can explore the possibility of developing nearby options for these items, which would reduce transportation and storage costs and allow for quick response in case of sudden demand spikes.

Logistics

Since we have plans to expand our restaurant to other locations within the city, logistics for maintaining the same quality of materials will also be crucial. Initially, we can consider hiring Third Party Logistics providers for a few days before eventually transitioning into our own logistics service.

Cold Storage Warehouse

The construction of a cold storage warehouse is crucial for us to meet the increasing demand and establish our presence in the food industry. This facility will ensure proper storage for perishable goods, preventing shortages or waste, and ultimately enhancing our overall service level and quality.

Speedy Response

To thrive in the food industry, it is vital that we can swiftly adapt to changing market demands. To stay ahead of these evolving requirements, our supply chain must be well-equipped and

ready to fulfill the needs and demands of our customers.

There are several areas that can be explored to improve information flow among suppliers and accommodate changes in requirements. Initially, we can establish a fixed schedule to streamline operations and make adjustments on a case-by-case basis. As we progress, we can consider creating a low-cost ERP system using Excel and Ms Access as our purchasing solution.

In order for the food industry to survive, it needs to constantly adapt to changing customer requirements. Therefore, in terms of supply, we can explore alternative sources for our current purchases. This will not only mitigate risks but also enhance customer satisfaction by adapting to changing market and service demands.

Restaurants often neglect the establishment of a supplicant standard. To improve the flexibility of the supply chain, there are several measures that can be implemented:

Categorizing products

Products should be categorized into groups such as dry, frozen, baked, fresh, etc. These categories should determine how they are obtained and stored in the inventory area. This categorization will minimize waste and optimize inventory usage.

Food products must be marked with their procurement date and type. This visual management technique is particularly crucial for perishable items as it allows older products to be consumed first, reducing waste and ensuring consistent quality.

The responsiveness of the supply chain can be evaluated using the 7 Vs framework.

The challenges faced by businesses create value for their products and the overall customer experience. This applies to restaurants, which are evaluated based on their offerings and the overall customer experience.

Velocity

In today's rapidly changing marketing conditions, trends that are popular today may not be available tomorrow. In the food industry, businesses must constantly adapt

to survive. This requires evaluating demand conditions, market structures, and being able to quickly change internal supply chain operations. Additionally, food joints must continuously innovate by regularly changing their menu variety, decor, and theme in order to succeed. It is also important to transition from economies of scale to economies of scope or economies of value.

The role of the supplicant in the restaurant is crucial for adapting to changing requirements of the product. Variability, which can be observed in aspects like changing requirements, lead time, excessive imposition of one item, wastage due to short shelf life, and seasonal variation in demand, disrupts any system. These variabilities must be considered when designing a robust supply chain for the business.

Visibility is extremely important for every procured or stored part in the restaurant business, especially because these parts have a short shelf life. Transparent supply chains facilitate proper consumption and procurement of materials, as well as transparency in the ordering process. Information communication technologies enable coordination of tangible and intangible assets within the supply chain, providing customers with confidence and ensuring dependability. Technologies such as barcoding and RIFF tagging can be implemented for accurate tagging and locating of parts.

Economic

By 2025, the middle class in India is predicted to grow significantly, making up around 41 percent of the population, totaling approximately 583 million people. Currently, this group consists of about 50 million individuals; however, their numbers are expected to rise substantially. As a result of this expansion, these households will have a considerable increase in disposable income. It is estimated that the amount of disposable income will reach 51.5 trillion rupees ($1.1 billion), which is eleven times higher

than the current level and accounts for 58 percent of India's total income.

The final group that will contribute significantly to spending in India's emerging consumer market are the global Indians. These individuals earn over 1 million rupees ($21,882, or $118,000 with consideration for cost of living) and consist of senior corporate executives, large business owners, high-end professionals, politicians, and wealthy agricultural land owners. Presently, there are only 1.2 million global Indian households, but they possess a total spending power of approximately 2 trillion rupees (McKinney. Com, 2014, Next big spenders: Indian's middle class).

There is a new generation of highly ambitious Indians emerging - young graduates from prestigious colleges in India. They have the ability to demand high salaries from both Indian and international multinational companies. These individuals lead lifestyles that are virtually identical to affluent young Westerners. They own luxury cars, wear designer attire, employ domestic staff like housekeepers and chefs, and frequently travel abroad.

The projection for 2025 estimates that this demographic will consist of 9.5 million Indians with an expenditure potential of 14.1 trillion rupees. This amount is equivalent to 20 percent of India's overall consumption (McKinney).

Mom, (2014) predicts that the middle class in India will soon become major spenders. As the income levels rise across society, there will be a significant change in consumption patterns over the next two decades. The focus will shift from buying necessary items such as food and clothing to making choices about discretionary spending on household appliances and dining out. Currently, there are 8 million households capable of affording discretionary consumption; however, it is projected to increase to 94 million by 2025. The restaurant market has experienced considerable

growth from PAYOFF to FYI 2013, with organized market growth at CARR 19.

1% The restaurant industry in India, primarily driven by the 15 to 44-year-old population, generated significant revenues in INNER scores in P'"2013. This growth can be attributed to the emergence of numerous national and international chains in the organized market. Over the years, international chains like Mac Dona's, KEF, Domino's, and Pizza Hut have largely dominated the organized restaurant market in the country. Snatchers.

The restaurant market in India has witnessed growth due to changing lifestyles, the increase in nuclear families, and a rise in arbitration. Moreover, there has been a shift in customer preferences from traditional Indian food to various cuisines such as Chinese, Italian, and Mexican. This change in taste can be attributed to the exposure to international cultures and lifestyles. As a result, the Indian population is exploring different cuisines and dining out more frequently, driving the expansion of restaurants offering non-Indian cuisine. It is projected that by 2018, Indian restaurant market revenues will reach INNER scores, with an expected compound annual growth rate (CARR) of 10.

The revenues of INNER scores increased by 9% from P'"2013 to P'"2018. This growth is mainly due to the rise in disposable incomes and changing food habits of people. In 2012, the health and wellness food market was valued at 7,100 cry. It is estimated that the market will grow by 5% during 2010-15. According to a report by the Indian Direct Selling Association and Ernst & Young, the sector witnessed a growth of 24% from RSI 3,330 core in 2008-2009 to RSI 4,120 core in 2009-2010. The average Indian consumer's increased consumption of goods

and growing awareness of health and wellness in households are crucial factors for this growth. These factors are expected to help the industry reach RSI 7,100 core by 2012-13," according to the report.

The survey highlighted that metros, tier II cities, and other cities are now equally contributing to the overall market. It also revealed that the health category holds the highest value, accounting for 47% of the sector's revenue, which is an increase from last year's 32%. The report further mentioned that personal care has gained popularity. Moreover, the survey indicated a positive outlook and a strong growth rate for the future of the Indian direct selling sector (Economic Times, 2011, Indian direct selling sector to touch INR 7,100 crore by 2020).

The service tax at all restaurants is currently 12.36% on 40% of the bill, as per the FYI 2014-15 budget. Initially, this tax only applied to air conditioned restaurants. However, the combination of the service tax and other food taxes leads to unnecessary increases in the bill. On average, dining out in NCR incurs approximately 29-30% in taxes, which can discourage eating out in Tier II cities. To promote growth in the restaurant industry, especially for new chains, these taxes must be reduced. This would allow smaller or entry level restaurants to thrive (Taught, 2014). Different VAT rates are imposed on various products like tea, alcohol, and vegetables. This uneven tax structure results in significant cost variation, particularly for products that involve imported food items. In order to streamline restaurant operations and reduce costs while attracting a larger customer base (Taught, 2014), these taxes need to be revised and appropriate brackets defined.

India has impressive

rankings in food production. It is the second largest producer of fruits and vegetables, the second highest producer of milk, the fifth largest producer of eggs, and sixth in fish. However, India does not rank among the top ten food exporting countries because its produce-supply chains are fragmented. This fragmentation results in a wastage of approximately 20% of all foods produced. To address this problem, there is an urgent requirement for significant enhancements in the cold supply chain infrastructure to prevent perishable goods from being wasted.

Due to wastage, the cost of perishable goods increases drastically and creates uncertainty in the supply chain. Although there have been some improvements in this area and thanks to the strong pro-market government at the center, the situation will definitely improve. However, further improvement is still needed to move us forward. The income tax exemption limit has been raised from khaki to RSI 2.5 lack in the new Budget presented by AND government. The tax bracket has also been raised from 2 lack to 2.5 lack. This move will result in more take-home income for the middle class, leading to increased spending on good quality food and other items.

The government has recently announced an increase in the tax on royalty and fee payments made by Indian subsidiaries to foreign parents from 10% to 25%. This measure will be helpful for the budding service industry and will benefit homegrown industries by curbing the dominance of foreign fast food giants in the Indian market (Archive. Intrepidness. Com, 2014).

The Indian Express reported that men will have to pay more tax on royalties earned from their subsidiaries in India.

Technological Improvement

There have been advancements

in logistics operations, supply chain management, and sourcing options. Information technology has played a significant role in this progress, with technologies like GAPS and Cogitating making it easier to track supplies and plan operations, especially for perishable products like food items. Restaurants can now plan their operations more efficiently by having a better view of supplies and products, resulting in a substantial reduction in inventory costs and food wastage (Vary, M. (2012).

The development of shopping malls and technological advancements in entertainment and infrastructure have contributed to the growth of food court-style restaurants. These advancements have also created a demand for this type of establishment and encouraged a culture of eating out. Furthermore, the use of social networking platforms, such as COMATE, has increased the visibility of restaurants and made dining out easier for young people. These sites indirectly contribute to the marketing of food joints, leading to higher consumption and revenue in the restaurant industry. Additionally, the younger generation is more open to eating out and trying foreign brands compared to their elders.

According to Eye. Com (2014), around 60% of Indians are under the age of 30, and India is gradually transitioning into a more urbanized society. This demographic shift, along with a rising focus on convenience, indicates potential future growth in this sector.

The availability of numerous healthy and hygienic eating options has altered the perception of eating out as being unhealthy. In the past, there were doubts about whether restaurants could provide products that catered efficiently to the Indian taste and were affordable enough to convince consumers to occasionally forgo their "home-cooked" Indian food. Consumers also believed that their homemade meals were tastier and

more hygienic compared to restaurant food. However, with the emergence of various foreign and Indian restaurants, there has been a significant change in this mindset. These restaurants have introduced a variety of healthy dishes and Indian flavors at competitive prices, resulting in an increased trend of eating out among both young people and families (The Economic Times, 2011). The entry of foreign food chains has played a major role in transforming the eating out culture, especially among the youth, as there were very limited options for dining out in the Indian market before their arrival.