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An Informal Report on the Management of PK Foods Loyalty Scheme Project

The purpose of this informal report is to evaluate the viability of a customer loyalty scheme being launched by PK Foods and make necessary recommendations on how the management of the project can achieve optimum results for the company’s supply chain initiative. PK Foods is launching the loyalty scheme project to protect and expand its market share of snack products following increased competition in the snacks market.

The loyalty scheme project will be managed through a clear set of objectives because the functional and operational success of the project will largely depend on the creation of an enabling environment which facilitates the achievement of the set objectives. Taylor (2004) is categorical that setting of clear objectives and proper definition of tasks form the basic framework for observing order and pursuing cohesion in the management of organisational projects. Therefore, the objectives of this project will be as follows:

• To improve and assert the company’s competitive advantage in the snacks market through integration of external and internal competencies. • To develop criteria for achieving customer service performance and standards set by the company by implementing optimized product and service delivery as well as innovation and synchronisation of the supply chain. • Improve the stocking and display of PK Foods products in retail stores so as to continuously satisfy the inherent consumer demand by building alliances, relationships and trust in the supply chain systems of the company.

• To retain the company’s current retail network but also to expand its entire supply network channels through a performance-based point system that will see retailers of PK Foods products receive different types of gifts relative to their sales volumes. • To enforce proper coordination and efficient management of the loyalty scheme so as to ensure that all participating retailers are adequately recognised and rewarded.

• To increase the margins of profit by limiting the costs of launching the project to the set budget and ensuring success of the project through increased sales. • Avoid liability costs associated with the defects that may be identified in any of the gift products awarded to participating suppliers. All these objectives are subject to the provisions and limitations of the upstream and downstream supply chain linkages prevalent at PK Foods.

As such, this report will adopt a three pronged analysis that include: ‘(1) systems approach – which views the supply chain as inventory management of the flow of goods between suppliers and consumers; (2) strategic synchronization – which emphasises on the convergence of operational and management strategies; and (3) customer management – which views the creation of sustainable customer satisfaction through individualised service and innovation of supply chain management services’ (Lysons & Farrington, 2006, p.

95). Project Activities The PK Foods loyalty scheme program is subject to the key principles of supply chain management which include integrated processes, shared information, shared risks and rewards, strategic cooperation and creation and maintenance of long-term partnerships and relationships.

As Lysons & Farrington (2006) point out, the basic tenets of supply chain management processes demand the incorporation of the key ingredients of the supply chain processes that include customer relationship management (CRM), customer service management (CSM), demand management and order fulfilment all of which facilitate the ascertainment and subsequent integration of customer needs to the strategic framework of the loyalty scheme project.

The aspect of demand management will particularly be vital in the management of the activities of the entire project because it will impact on the convergence of supply requirements to demand forecasts. Moreover, demand management enables the striking of enduring balance between the needs of external and internal customers. Taylor (2004) acknowledges that greater supply chain processes stand to achieve greater flexibility, synchronisation, standardisation and effective inventory control through employment of demand management strategies.

This means that timing and efficiency will be the key determinant factors in the implementation of project tasks that include: current situation analysis, System upgrades, sourcing for merchandising staff, production of 40,000 catalogues, distribution of the catalogues to retailers, purchase of gifts, drawing of points, distribution of gifts and writing of report and recommendations. These tasks are summarised by a Gantt chart timescale in appendix 1A.

In the example in appendix 1A, time allocated to the completion of the project is represented by the horizontal bars. The different processes linked to the implementation and sustenance of the project is based on a progression model that only allows the commencement of the next step after conclusive completion of the previous step by ensuring that each stage is timed. Therefore, the Gantt chart will serve as the tool for planning and controlling the supply chain processes of the loyalty scheme project.

The key project activities will also include monitoring of the physical flow of the goods, management of information and control of the supply entire chain process. Monitoring of the physical flow of the goods will enable the project management to the ascertain the exact production logistics vis a vis the inventory management. The first step will involve a detailed analysis of the functional capacity of the company’s current supply chain management processes with particular references to production, storage, distribution and retailing.

Apart from enabling the understanding of the existing structures which dictate the functions and attitudes of the systems of the supply chain, this analysis will also provide a logistical background against which to initiate integration for the project’s entire supply chain management tasks. Information management is an activity that will incorporate the application of order processing systems, forecasting of demand, monitoring of efficiency and use of computer systems to assert control.

Taylor (2004) emphasises on the significance of operational systems in the processing of orders to ensure efficiency in the physical flow of goods. The main highlights of information order processing will involve use of automated supply chain management systems such as electronic data interchange (EDI) to track stock movements and initiate supply and delivery of new stocks to different retail outlets within the projects limits for awarding points. Information management will also involve demand forecasting with the aim of avoiding underestimating or overestimating demand for the company’s entire retail network.

This is out of recognition of the fact that forecasting future demand is a fundamental aspect for management of modern supply chain logistics because such forecasts influence the production levels, distribution modes and materials and inventory requirements (Taylor, 2004, pp. 9-10). All these activities will be subject to a SWOT (strengths, weaknesses, opportunities threats) analysis to determine the controllable elements as well as identify the external factors that may affect the company’s systems, logistics and inventory management. Commercial Risks in the Project

The biggest risk that stands in the way of the PK Foods will be the failure to meet the project’s objectives and ultimately the resource investments committed to this particular project. This may be as a result of a particular factor or combination of factors in the entire supply chain processes of the products. For example, geographic factors such as distance or impassable terrains may lock out many retailers. The project may also be hindered by factors such as lack of interest from retailers as well as lack of technologically advanced equipments for real time required to relay communication across the supply chain networks.

Appendix 1B illustrates how risks may stem from the failure of either one or a combination of factors in the project’s chain of the activities. Such projects risks can be avoided by putting in place monitoring and control mechanisms which will ensure the commitment of adequate and qualified resources throughout the project’s life cycle. Conclusion The PK Foods loyalty scheme project is ultimately a unique yet effective way of developing sustainable relationships with retailers and suppliers of the company’s products.

The project represents an innovative mode of reaching out to retailers to ensure that they stock adequate amounts of the company’s stock but also accord sufficient displays of snacks from PK foods. The significance of this mode of strengthening a company’s supply chain network through cooperation with wholesalers and retailers has been acknowledged by Petersen et al (2008) who state that ‘supplier socialisation processes serve as channels for integrating into operational interactions and partnerships (p.

60). Thus, the loyalty scheme project will offer PK Foods a realistic opportunity of achieving greater competence and efficiency in the management of its supply chain processes. Recommendations A detailed analysis of the PK Food loyalty programs demonstrates that the project has far reaching yet complex processes. Therefore, this report recommends the employment of adequate human, financial and technological resources with the capacity to match the magnanimous nature of the project.

The report particularly recommends the use of technological resources to initiate flexibility and effectiveness in the entire processes of implementing the projects. For example, the achievement of efficient CRM and CSM can be optimised through the use of software applications. This factor has been stressed by Lysons & Farrington (2006) who state that ‘CRM and CSM software applications facilitate organisational processes of capturing and tracking all types of customer interactions’ (pp. 98-99).

The report further recommends the integration of supply chain management processes at PK foods to eliminate duplication of functions and achieve maximum efficiency. References Brown et al, Strategic operations management 2nd ed. Elsevier Butterworth Heinemann. Lysons, K. , & Farrington B. (2006), Purchasing and supply chain management, Pearson Education Ltd. Lock, D. , (2007), Project management, 8th ed, Gower. Nokes, S. , & Kelly, S. (2007). The definitive guide project management: The fast

track to getting the job done on time and on budget, 2nd edition. Financial Times: Prentice Hall. Petersen, J. K. , Handfield, R. B. , Lawson, B. , $ Cousins, P. D. (2008), ‘Buyer dependency and regional capital formation: The mediating effects of socialisation process and supplier integration’, Journal of Supply Chain Management, vol. 44, no. 4, pp 53-65. Taylor, D. (2004), Global cases in logistics and supply chain management, Thomson Business Press. Slack et al, (2007), Operations management, 5th ed, Financial Times: Prentice Hall. Appendices

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