Company Characteristics and Products
Janine Allis founded Boost Juice bars in 2001. The company’s home country is Australia. Janine’s aim was to provide a healthy alternative to fast food, especially for children. She enlisted the help of a nutritionist and came up with several menus. Thereafter, she raised funds from friends and with the help of her husband set up the first Boost Juice Bars Store.
The company has grown through franchising and now has 190 stores spread all over the world. Initially, the menu consisted of various types of juice and smoothes. Today, snacks, soups, banana bread and wraps are served alongside the juice and smoothes. These are popular with customers especially during the winter.
Boost Juice focuses on providing healthy snacks and fast food that can be eaten quickly or taken to the office. The company avoids using preservatives and other additives to food. Instead, natural cultures are used to preserve the food. This means that the company needs a constant supply of fruit and milk.
Theirs is a short supply chain. It consists of the farmers who provide the milk and juice, the Juice Bars and finally the consumer. The farmers deliver the milk and fruits to the bars daily. Each bar has a cold room to preserve the products. The juices and smoothes are all made in the bars. The processes are standardized and this increases the employees’ efficiency in preparing them. A customer will usually wait an average of five to seven minutes for their order (Franchise Expo,3).
Customers can now get some of the Boost Juice products from supermarkets as well as the Boost Juice Bars. This is quite convenient as there are more supermarkets than Boost Juice bars. This is a new distribution channel and has opened up new opportunities to the company (Kirby,23).
The Supply Chain
The aim of Supply Chain Management is to provide value for the customer while minimizing the cost to the members of the supply chain. In the case of Boost Juice, customers would like to get healthy products at an affordable price. The task for the company therefore is to provide this healthy food and drink at that affordable price. This can only be done if all the components of the supply chain work together efficiently and effectively.
Boost Juice operates a just in time system of procurement, purchasing only when absolutely necessary. The company has created excellent supplier relationships which are crucial to the success of this strategy. This system supports their low cost strategy as it helps in reducing the holding cost for inventory.
The company has also managed to do away with a substantial proportion of the cost of rotten fruits and milk, which is common in the industry especially during summer. The company also operates an Electronic Data Interchange and an Intranet which aids communication with suppliers.
Orders are placed automatically when inventory runs low and suppliers confirm whether or not they will be able to deliver (Boost Juice Bars Limited,2).
The company bargains with suppliers for lower prices in return for purchase in bulk. This is possible only in Australia where their operations are large scale. In other countries like South Africa, suppliers have more power than the buyer, Boost Juice Bars. The company employs several tactics to find out what the customer wants. Research is done on focus groups and customers are encouraged to give their feedback via email.
This has ensured Boost juice stays ahead of its competitors and satisfies its customers’ needs. Knowing what the customer wants and delivering it creates competitive advantage. Boost Juice has managed to succeed in this area due to excellent management of its supply chain.
The company’s supply chain management can be said to be effective as it has enabled it to meet its goal of venturing into the international market. The company also earns a profit of more than $10million annually. This indicates that whatever strategies they are employing are actually succeeding. Their good people skills have enabled them to recruit suitable people who share the vision of the company. Their Love Life philosophy also draws people to their Bars.
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Importance of Supply Chain management to The Company
Supply Chain Management can be classified as a core competence for any business in today’s world. Failure in any part of the supply chain will usually result in customer dissatisfaction and loss of revenue.
Thus, Boost Juice needs to invest in management of information and materials that flow in its supply chain. Customer satisfaction is a critical success factor in business, without it, Boost Juice would be put out of operations in a short time.
Customers require service and product providers to be responsive to their needs. Supply Chain Management empowers companies to respond promptly to their customer’s needs. Establishing open communication channels with consumers helps in predicting their needs and thus creating products that satisfy these needs (Boost Juice Bars Limited,4).
Changes in supply and demand can be anticipated and dealt with in the best way possible as early as possible. This is also a result of management of the flow of information in the supply chain. Instances of stock outs or over production can be avoided through Supply Chain Management. It also leads to better supplier relationships which lead to credit and discounts.
Supply Chain Management helps Boost Juice to save time and money. Information is available therefore reducing the uncertainty in the planning process. Efficiency in procurement and transport help in lowering operating expenses. This in turn raises the profit margins (Boost Juice Bars Limited,3).
The Practise of Supply Chain management at Juice Boost Bars
The company’s supply chain management is evident in the database and IT system LeaseEagle™. This system enables the company to manage its franchises all over the world while keeping in touch with suppliers and other business partners. Multiple users can work on the system simultaneously, improving information sharing.
The selection of partners who will own the franchise stores is also an element of supply chain management. There is a set criterion that prospective partners have to meet before joining the Boost Juice family. This is an attempt at ensuring efficiency in the production stage. New partners are required to work in their juice bars (Boost Juice Bars Limited,1).
Finance flows along the supply chain in the same way as information. Boost Juice ensures it pays its suppliers promptly in order to keep them in business. The company recognizes that they need the farmers if they are to continue in operations.
Late payment of suppliers is poor practise in Supply Chain Management as it leads to poor supplier relationships. This will impact negatively on the supply chain and result in poor value for the customer with high cost on the members of the supply chain.
The company relies on customer feedback in order to create new products. This feedback is collected by the individual Juice Bars and analysed centrally. If the juice bars fail in their duty to collect customer feedback, the company may find itself losing revenue to competitors. Suppliers are crucial because they provide the raw materials necessary to make the food and drink.
Recommendation
Boost Juice should consider vertical integration as a means of securing a constant supply of fruits and milk for its juice bars. This is a form of backward vertical integration. The implementation of such a plan would require the company to purchase fruit and dairy farms. Owning the farms will enable the company to control the quality of produce delivered to its Juice Bars.
High quality raw materials should lead to high quality end products and greater customer satisfaction than before. Transport costs can also be minimized by locating the Juice Bars close to the farms. The company can also benefit from the profit margins on the milk and fruits. The coordination between the farms and the juice Bars can also benefit greatly from such an arrangement.
There are several considerations Boost Juice Bars has to make before adopting this proposal. The company should consider whether it has or can obtain the necessary manpower to manage the farms. Vertical integration is expensive and suitable sources of funds would have to be sought.
In case the company finds vertical integration to be too expensive or unsuitable to its mode of operations, then other options can be sought. This would include long term contracts with the best suppliers or joint ventures with the farm owners (Franchise Expo,4).
Works Cited
Boost Juice Bars Limited. Boost Juice Bars. 2005. Web.
Franchise Expo. Boost Juice Bars. 2010. Web.
Kirby, James. Janine Allis: Business Secrets of the Woman Behind Boost Juice. Chicago: John Wiley and Sons, 2005.