Unifine Richardson Case

739 Words May 5th, 2013 3 Pages
Executive Summary Rob Pincombe, purchasing manager at unifine Richardson is responsible for procurement of honey from its suppliers. Unifine purchases one million pounds of honey annually with at 50:50 blend of Chinese and Canadian honey which costs him $1.08 per pound. Unifine, apart from in-house usage of honey, sells 80% of its honey to one large franchise and his customers demand product consistency. With Chinese supply blocked, which is a major supplier of honey to world meeting 20% of honey demand, honey suppliers can demand a high price. Unifine’s purchasing from a single source in the past, exposed its buying strategy to unforeseen risks from sudden fall in market supply, and also proves that Unifine Richardson is no more …show more content…
Honey is used in all of the Unifine’s products and its taste matters a lot to its consumers. Looking at the cost; honey costs 3-5% of its total expenditure, honey is like a commodity which is available from different sources but taste and price is the main criteria for buyer. So it falls under Leverage supplies and is important for Pincombe.
There is an urgent need to develop diverse supplier base to ensure uninterrupted supply; Pincombe needs to decide his short term and long term strategy. From the available options given by Harrington, Canadian- Argentinian blend does not taste good, so it is not an option. Canadian and US honey is available at a price of $1.75 CAN per pound and $1.10 US ($1.79 CAN). Keeping in mind fluctuation in US dollars and exchange rate, best option is the Canadian honey. Both taste good and looking at the price Pincombe should go for Canadian honey.
Long term strategy should include shaping the supply strategy by proper classification of product, doing market analysis, strategic positioning, and developing an action plan for securing uninterrupted supply; Pincombe should consider backward integration if buying raw honey and pasteurization can ensure proper ROI.
Recommendation:
To ensure continuous supply of honey, Pincombe should lock price of Canadian honey for at least six months, try to develop a diverse supplier base, and develop a long term supply strategy to avoid similar situations in future. Looking at the
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