The core issue Unifine Richardson (UR) faces is their sole honey supplier, Harrington Honey (HH), will run out of Chinese honey in a little over a month because the Canadian Food Inspection Agency (CFIA) recently found traces of chloramphenicol (a banned antibiotic associated with causing a sometimes-fatal blood disorder) and rejected the contaminated honey. Until China finds a way to detect contaminated honey, Unifine Richardson cannot sell any of its current Chinese-Canadian blend. Because of the CFIA’s findings, the global supply of honey will decrease by 20%, thus causing an increase in price. Harrington Honey will not be able to maintain the honey stream.
The price of honey, globally, has already been on a steady incline…show more content… Additionally, a dual-supply strategy should be considered so that the company can use a hedging tactic to minimize the cost. Unifine Richardson only used one supply source, Harrington Honey. Depending so heavily on one supplier left the company vulnerable to risk. “The best supply chains identify structural shifts, sometimes before they occur, by capturing the latest data, filtering out noise, and tracking key patterns. They then relocate facilities, change sources of supplies, and, if possible, outsource manufacturing” (Lee, 2004). The company needs to look for alternative suppliers that acquire their honey from Mexico. The source location will not have a significant impact in their operations and UR will keep its delivery on time.
It is advisable that the UR purchasing manager contact its large customer to explain the current price increase, and understand what their needs are. The honey is primarily used as a dipping sauce for chicken wings. How critical is this dipping sauce to this customer to justify the 60% total increase? If the customer wants to maintain the honey purchases, or decides to cancel, UR needs to know ASAP. This customer represents 80% of their honey sales and it is possible that they might want replace the honey for a substitute product. For this customer, the honey could be a noncritical item, and might be replaced with salad dressings, which UR has the ability to offer. By creating