To: Olam International Management Team and Board of Directors From: UBC MBA Core Code 337 Subject: Tough times, tough decisions Word Count of Memo : 984 Olam International is a global success story in the agribusiness industry.
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Also, the supply chain (‘farm gate to the factory gate’) cuts out middlemen in the form of wholesalers, distributors, processors, has improved profit margins and strengthened the relationships with the end customers (HBR, Olam International, October 28, 2009). The major objective of the supply chain is to decrease costs in the business. My analysis suggests that Olam’s logistics segment of the supply chain could be a potential source of added profit. The company has the most extensive logistics network for agricultural commodities in Africa, Asia, and India. The company’s logistics segment is akin to a batch flow process as large volumes of products such as cashews, rice, and cocoa share nearly identical routes (cashews, cocoa exported from Africa and same routing for rice back into Africa). These same routes are used for metals like gold and copper as Africa is a large net exporter. Olam could become a third party logistics supplier (3PL) to deliver products directly to …show more content…
Marketing Olam should consider investing in its organic certification and fair trade sourcing services for its global customers. The organic food industry is growing in the developed markets faster than the traditional food industry as more and more food companies bring out organic lines of products. Also, growth of the middle class in the developing markets bodes well for these services as well. The company’s competitive advantage lies in the control of its supply chain all the way back to the farmer which would benefit both suppliers and customers. Organic and/or fair trade product suppliers would have greater distribution and marketing exposure due to Olam’s global supply chain network and the customers (food companies) would have a more direct way of getting organic and/or fair trade foods. Food companies would view this as a more convenient and less costly avenue for procurement.
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Also, the supply chain (‘farm gate to the factory gate’) cuts out middlemen in the form of wholesalers, distributors, processors, has improved profit margins and strengthened the relationships with the end customers (HBR, Olam International, October 28, 2009). The major objective of the supply chain is to decrease costs in the business. My analysis suggests that Olam’s logistics segment of the supply chain could be a potential source of added profit. The company has the most extensive logistics network for agricultural commodities in Africa, Asia, and India. The company’s logistics segment is akin to a batch flow process as large volumes of products such as cashews, rice, and cocoa share nearly identical routes (cashews, cocoa exported from Africa and same routing for rice back into Africa). These same routes are used for metals like gold and copper as Africa is a large net exporter. Olam could become a third party logistics supplier (3PL) to deliver products directly to …show more content…
Marketing Olam should consider investing in its organic certification and fair trade sourcing services for its global customers. The organic food industry is growing in the developed markets faster than the traditional food industry as more and more food companies bring out organic lines of products. Also, growth of the middle class in the developing markets bodes well for these services as well. The company’s competitive advantage lies in the control of its supply chain all the way back to the farmer which would benefit both suppliers and customers. Organic and/or fair trade product suppliers would have greater distribution and marketing exposure due to Olam’s global supply chain network and the customers (food companies) would have a more direct way of getting organic and/or fair trade foods. Food companies would view this as a more convenient and less costly avenue for procurement.
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