Abhishek Malik N2

Unifine Richardson

What are the order winners for Unifi ne Richardson i.e., why woul d
customers buy from Unifi ne Richardson? How can you tell?

Unifine Richardson (UR) is a food producer that manufactures salad dressings,
ice-cream toppings, sauces and syrups. A key raw material for its products is
honey, which was sourced from China at $1.08 per pound. UR supplied its
products to the food service market, retailers and industrial customers.
Eighty percent of URs honey sales were to a large franchise retail operator for
use as dipping sauce. Being a large franchise retailer, it had tough quality
standards and demanded product consistency. Besides, it also purchased several
other products from UR, therefore was an important customer.

UR was considered to be a worthy producer and as a result had good clientele. IT
bought 1 million pounds of honey annually, therefore was a large producer.
It is mentioned in the case that a key client of UR was a large franchise retail
operator that not only procured honey from UE but also several other products.
This tells us that customers trusted UR for its product quality and consistency.


What opti ons shoul d Rob Pincombe consi der and which of these opti ons
woul d you recommend to Pincombe if you were hi red as a cons ultant?
Why?

Rob Pincombe is faced with a tough decision regarding sourcing of Honey in light
of recent government regulations, which has imposed a ban on importing honey
from China. China is a major producer of Honey and UR has been using a blend of
Chinese-Canadian honey. As a result, there is a shortage of honey and prices of
Non-Chinese honey have gone up significantly. There is also a concern of product
availability regardless of price.

Harrington Honey (HH) the only supplier of UR has limited stock (1 month)
and has presented 3 options to UR.

1. To buy 100% pure Canadian honey @ $1.75 per pound
2. To buy 100% U.S honey @ $1.79 per pound
3. To buy a blend of Canadian-Argentinian honey @ $1.42 per pound

Recommendations
To ensure uninterrupted supply of honey and avoid loss of a major customer, I
would recommend the following to Rob Pincombe.

As a short-term strategy, Pincombe should find a new supplier for 100%
Canadian honey to ensure consistent supply. 100% Canadian honey is cheaper
Abhishek Malik N2

than 100% U.S honey and meets all quality and safety standards. Additionally,
when compared to the Argentinian blend, it tastes better and does not run the
risk of non-compliance.
Additional advantages include
Consistency of flavor
No risk of duties while importing (anti-dumping),
Shorter lead-time
Better quality control
Lower transportation costs

In the long-term, UR should invest its energies to develop a diverse
sourcing base with multiple vendors so that future uncertainties can be
avoided. UR should also invest in backward integration by involving
local/regional honey farmers to ensure consistency and cheaper prices.

Although the 100% Canadian honey is more costly then the Canadian-
Chinese blend that UR is currently procuring and selling, the customers of
UR will not be happy with the price increase, which is close to 62%.
Therefore, UR should absorb some of this cost until a steady source of
honey can be found.

Alternatively, UR can use its authority to negotiate prices with HH and
lock down prices for future orders since UR is a high-volume customer.

Another alternative is to persuade their customers to use a substitute for
their honey dips until things get settled.

UR could also consider looking for alternate suppliers in Mexico, Turkey
or India, to see if this option is financially viable and the quality is
acceptable.

In the future, they might have to use two suppliers instead of one sole
supplier; however, this will reduce their leverage of bargaining power.
They have to make a trade off between price and risks.

Lastly, to prevent such incident from happening again, UR should monitor
the different levels of the supply chain for potential problems and rectify
them before they cause serious problems. To ensure this, all levels of the
supply chain will have to establish trust and control their preceding
levels.
For example, HH should advise its Chinese suppliers not to use any
antibiotics, which are banned by the CFIA. HH could help its Chinese
supplier by providing a list of approved antibiotics Thus, HH would be
helping its suppliers to prevent such incident from happening.
Additionally, if such a situation were to arise in the future, HH should
warn UR of potentials problem ahead of time before they occur. Instead of
doing this, they told UR that there was nothing to worry about because
CFIA did not have the means to test for the chloramphenicol and later
asked UR to switch to an alternate source without any notice.