Strategic Analysis of Phoenix Beverages: Operations Management Report

This report analyzes Phoenix Beverages, a major brewery in Mauritius, focusing on its operations management. It begins with an overview of the company, its products, and market. Task 1 evaluates the trade-off between quality and cost, assessing the adoption of Total Quality Management (TQM) to achieve cost objectives. Task 2 examines how supply chain risk management helps maintain revenue and the benefits of stress testing. Task 3 applies Kraljic's matrix to develop procurement strategies, recommending interventions. Finally, Task 4 discusses the impact of competition, cost, and internationalization on logistics and the impact of third-party logistics on operations. The report provides a comprehensive view of Phoenix Beverages' strategic challenges and opportunities within its operational framework, aiming to provide insights into its business development and management strategies.

Organisation summary

Summary:
Phoenix beverages is the largest brewery in Mauritius. The area in which it serves and
distribute its Phoenix beer in Mauritius. The products which this company serve are Beers,
Spirits and wines, soft drinks such as Coca-Cola, Eski, spite etc. Headquarter of this company is
in Pont Fer, Vacoas-Phoenix, Mauritius. It was founded on 9 September 1960. It has around
1,168 employees. Its brand portfolio includes Phoenix fresh, Stela pil beer and Phoenix Cider,
Blue Marlin etc. this company operates 2 production plants phoenix, Mauritius. It has m ore than
10,000 outlets across the globe. The target group of this company are independent agents &
financial advisors.

INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................5
Evaluation of the company to have a trade off between quality and cost...................................5
Assessment of adoption of total quality management to achieve the cost objectives of Phoenix
beverage company.......................................................................................................................6
TASK 2............................................................................................................................................7
How supply chain risk management help the company to maintain a positive stream of
revenue .......................................................................................................................................7
The benefits of adopting stress testing in managing supply chain risks ....................................8
TASK 3............................................................................................................................................9
Kraljic's 2*2 portfolio matrix help the company in developing procurement strategy...............9
Three possible interventions in the supply chain strategy and recommend the most effective
intervention...............................................................................................................................11
TASK 4..........................................................................................................................................12
Importance of competition, cost & internationalisation on logistics .......................................12
Impact on the operations' strategy of the company of it opts for third party logistics..............13
REFERENCES..............................................................................................................................13

INTRODUCTION
Operation management can be defined as an area of management that is concerned with
controlling & designing the process of production. It has various functions related to the process
of creation of services and goods such as organising, planning, controlling and coordinating of
resources of an organisation. Phoenix beverages limited is a distributor and producer of non-
alcoholic and alcoholic beverages. Total quality management also can impact on the operations
and objectives of the organisation in positive manner as well as in negative manner. This
company preliminary provides wide range of wines, sparkling drinks, beers & table water. It is
the authorized bottler of the goods & products of Coca-Cola company limited in Mauritius. This
study will show importance of supply chain risk management which helps the company to
maintain a positive stream of revenue. Kraljic's 2*2 portfolio matrix also supports the company
in developing its procurement strategy (Rompas, Pangemanan and Rumokoy, 2018). This report
will also show the importance of competition analysis which have the impact on operation
strategy of Phoenix.

TASK 1
Evaluation of the company to have a trade off between quality and cost
Strategic objectives of an organisation linked and related to its mission and vision. He
vision of Phoenix beverage is to become the leading beverages supplier in Mauritius and in the
region. The main aim of strategic objectives is to set the target and then achieve them in an
effective manner. Trade off can be defined as an opportunity cost which is the most preferable
alternatives for an organisation (Lozano-Durán and Zipfel, 2015, pp.12-19). In trade off a
company has to give up one thing in order to get something else which it requires the most
(Pietzonka and Seifert, 2018, p.190602). Phoenix should choose quality over cost of products
because customers prefer quality as compare to cost. Most of the customer prefer products at low
prices but when they prefer products at low prices then they have to compromise with quality.
There are various factors which pit pressure on beverages companies to focus on quality rather
than cost. For example, governmental agencies to tell the company about nutritions and safety by
which it becomes essential for the company to concentrate on providing qualitative products (Lo
Storto, 2016, pp.52-63). If the manager of Phoenix is able to offer higher quality products and
services than the other sellers who charge the same price, the main and initial impact will be on
increasing demands of Phoenix beverage company. It is said that the higher quality is
automatically rewarded with higher price to the extent that customers perceive the higher quality
and respond to it by choosing services which the company and provider use.
Phoenix beverage company's export strategy is depends and relies on long lasting
relationship and mutual trust. For maintaining this relationship with its customers it should
require to focus on quality rather than cost. This trade off can help them in increasing their brand
value and also can increase loyalty and honesty of customers with its company. This company
also has established metrics for the evaluation of the supply chain service and also has installed
various parameters in order to carry out a sustainable growth.
Quality products can also reduce the cost of replacing faulty goods. By focusing on
quality Phoenix beverage can build a positive reputation and image from their targeted and
potential customers (Batt and et.al., 2017, pp.1618-1628). Quality is critical to satisfy customers
and maintain their loyalty in order to continue to sell products to them in the future. Poor quality
increases costs. If the company do not have a proper and effective quality control system then
they may incur the cost of analysing nonconforming services in order to determine root causes.

Assessment of adoption of total quality management to achieve the cost objectives of Phoenix
beverage company
Total quality management can be defined as a customers oriented process whose main
aim to continuous improvement for business operation for satisfying customers needs. A cost
object refers a product and department for which the company measured cost. Maintenance
department and products can be defined as a cost object for direct labour, direct material etc.
Total quality management is the best approach that companies seek in order to improve their
performance and quality with the aim of achieving determined organisational goals (Wei and
et.al., 2017, pp.1-18). With the help of total quality management approach, Phoenix beverage
company can maintain & increase their revenue and can also achieve their cost objectives. This
approach and concept has been proved a systematic approach which helps the companies to
improve their overall business process that related to services and products. It has various
benefits which so it is important for Phoenix beverage company Ltd to adopt this approach.
Benefits of this approach are as follows:
This approach addresses overall organisation performance and also tell managers of the
company about the importance of processes along with suppliers and customers interfaces. For
implementing and adopting TQM approach effectively it is required for the manager of Phoenix
beverage company to provide a clear vision in order to have the clear understanding to their
employees that what they want to achieve (Giannakis and Papadopoulos, 2016, pp.455-470).
If the company wants to make it successful then it requires careful planning as it is a
radical change for the company. Benefits of implementing and developing this concept is the
standardization of work that can directly give the opportunity to the firm to reduce the cost.
The main benefit which Phoenix beverage company can take of this approach is it can
reduce its operating cost. To provide a quality products and services and to do a quality job by
providing satisfactory products to customers is not only enough for the success of the company
but also it requires managing the cost for achieving the goals. There are various examples and
reason which become the reason of internal failure cost such as: rework, scrap, waste & failure
analysis. On the other hand external failure cost happens when the company fails to reach design
quality standards. In order to remove these types of failure the company should adopt total
quality management approach. This approach can reduces these types of wastages and errors and
it also helps them in increasing productivity and profitability. It reduces the operational and

manufacturing costs due to lower scrap level. With the help of total quality management the
manager of phoenix can focus on improving quality and can analyse the scrap level which can
also reduce the space of extra raw materials.
TASK 2
How supply chain risk management help the company to maintain a positive stream of revenue
Supply chain risk management can be defined as the implementation of strategies which
the company makes in order to manage every day's risks based on the risk assessment with the
main aim to ensure continuity (Giannakis and Papadopoulos, 2016, pp.455-470). Phoenix
beverage company can take advantages and get success only when it has the strong chain of
suppliers with it works. So it is important for the leader of Phoenix to recognize factors which
promote strong risk management in the supply chain.
Supply chain risk management is becoming increasingly important for the companies and
its is important for Phoenix beverage company in order to extend their business globally. There
are various risks which the company has to face such as: macro environmental risks like political
factors, social factors, economic factors, operational risks includes those which occur within the
internal process of the company and functional risks includes those factors that exist among
functions of the company which support supply chain processes and maintain a positive stream
of revenue.
For removing all types of risks it is important for Phoenix to make a strategy and a set
planned course of action. By reducing all types of risks the company can easily increase
productivity and maintain a positive stream of revenue (Ho and et.al., 2015, pp.5031-5069).
There are various importance of supply chain risk management. Some importance are
discussed below:
Boost customers services
 With the help of supply chain management Phoenix company can deliver correct product
assortment & quantity that is required by its customers.
 By reducing all types of risks it can deliver products on time which is important to satisfy
customers (Dubey and et.al., 2017, pp.1119-1130).
Reduce operating costs

 It decreases purchasing cost of the company as retailers depended on supply chains in
order to deliver their products quickly by which it manages purchasing costs.
 It decreases production costs also as manufacturer also rely on supply chains to deliver
raw materials by which it can avoid material shortage.
 With the help of supply chain management and organisational skill they can make their
position in the market which can decrease it is supply chain cost.
Improve financial position
 By delivering products on time to its customers it can increase cash flow. It also increases
its company's value.
 Supply chain management decreases fixed assets of Phoenix company such as
warehouse, plants, transportation vehicles in the supply chain (Hugos, 2018).
Improves quality of life
 Societies with highly developed supply chain manufacturer are more able to exchange
their goods between customers & companies at lower prices. With the help of this all type
of customers can buy and afford to purchase products with their income which raise the
standard of living.
 With the help of supply chain, Phoenix can manage warehouse, transportation and also
operates all supply chain in the society, Hence there are various jobs in this field. By
creating job it provides employment to unemployed person.
The benefits of adopting stress testing in managing supply chain risks
Stress testing is a model and challenging exercise. It is complex as it consumes time and
demand outputs from a broad range of stakeholders. There are various benefits if stress testing in
supply chain risk management because it can help the manager of Phoenix company to consider
factors which affects the company in positive manner as well as in negative manner. Stress
testing helps the manager in removing major disaster that can occur in implementing supply
chain strategy that result to shuts down production for a long time (Rajesh, Ravi and Venkata
Rao, 2015, pp.238-257). There are some right question which can help the business to test
supply chain strategy in right manner.
By adopting stress testing, Phoenix company can easily identify its primary customers in
order to serve them. Supply chain has various stakeholders and each of the stakeholder tries to
pull the company in disparate manner. With this the company can focus on the one whose needs

must be met firstly. Stress testing also support the business in considering that on what critical
metrics the company wants to track. It is important for Phoenix to manage all the things which
are measured and also analyse that the right things are being measured in the right way.
By adopting stress testing, Phoenix brewery can analyse that what strategic boundaries
that have set. In this step it can see that in this boundary they include logistic management or
not? Is it includes risk management or not? By analysing all these factors it can easily manage
risks of supply chain. It is not possible for the supply chain organisation to do all the things at
their own b it requires collaborating and helping team members. Stress testing help in to analyse
the level of collaboration and team members' commitment. There is a requirement of knowledge
and skills in managing supply chain risks and for getting success in removing and reducing all
the risks there is a need of workers to help each other.
Stress testing is an effective and forward looking exercise in managing risk of supply
chain. There are various risks occur and manager spends their 40-60% of their work in handling
risks. For reducing risks it is important to enhance understanding and management in order to
minimize the cost of risks and to maximize business goals. This model assess risk related to
supply chain. It allows the Phoenix brewery to determine the level of risks which it can tolerate
in each material and in service category. By following stress testing steps which includes to
identify suppliers, distribution centres and plant capacity it can increase its sales and
productivity. By positioning stress testing in right manner, manager of Phoenix brewery
company can make prepare itself for unforeseen events. It can help them in identifying risks
mitigation priorities for the near, medium and long term (Louis and Pagell, 2019, pp. 329-366).
Manager does not only identify risks buts also it can analyse the impacts on particular
department as it can have the clear idea of what risks might have an impact on cost, sales,
revenues and its reputation.
TASK 3
Kraljic's 2*2 portfolio matrix help the company in developing procurement strategy
Kraljic's matrix is a strategic tool that is beneficial for the manager of an organisation as
this tool guides employees and managers to identify and recognize its weaknesses and make
strategies to remove and decrease weaknesses. It is a purchasing model that can be used by the
manager of Phoenix beverage company analyse the purchasing portfolio of the company. This

effective model also supports them to gain an insight into its methods of working of purchasing
department (Montgomery, Ogden and Boehmke, 2018, pp.192-203).
This kraljic model is based on 2 dimensions. With the help of dimensions products of the
company can be classified. The two dimension are supply risk and financial or fit impact.
Financial impact: This impact defined from low to high. It shows and includes the
importance of the purchase. The costs of theses materials of purchase have impact on the
profitability of the company.
Supply risk: This is defined from high to low. This includes and shows the scarcity of
supply and to what extent materials are up to date and technologies which can be used for
supply.
Illustration 1: kraljic portfolio purchasing model
Sources: (kraljic Matrix, 2019)

This model is divided into 4 segments and classification with the aim of understanding
and implementing this model in an effective and easier manner. The main aim of this
classification is to determine in which segment of the model fits the best. With the help of this
model Phoenix can easily understand the ways to optimize purchasing costs and purchasing
risks.
Non-critical items: This items are those who have low risk and low impacts of the
profitability of the company. Examples of this items are office stationery which are used at
workplace. The uses of stationery do not have a significant impact on the purchasing power of
the business.
Leverage items: This includes those items who have a high profitability with a lower
risk factor. Phoenix can purchase this types of items from different suppliers and from different
suppliers they can determine the value of the cost price of their outputs. The changes in the
quality and in prices can have a large impact and affect the cost price.
Bottleneck items: It is just opposite of leverage items as it has higher risk with lower
profitability. In this type of items and for supplying this type of items the company has few
suppliers that behave oligopolistically as they force prices upward. This type of products are
essential for the company but they find difficulties to obtain them (Ho and et.al., 2015).
Strategic items: It is non-critical items that has high profitability impact and high supply
risk. This types of items and products do not cause the higher problems in respect to purchasing
performance. Examples of this items are raw materials & substances which are required by
Phoenix beverage company in order to manufacture its products.
Each of these items shows a different supplier buyer relationship types and then suggest
the best set of sourcing strategies. This is an effective model that can show the strengths and
weakness of suppliers and impacts of all these factors upon their business. This model is based
on the availability of potential suppliers and the level of competitive pressure. With the help of
this model it can increase their procurement strategy by defining a particular criteria and the
impacts of purchasing on its operations.
Three possible interventions in the supply chain strategy and recommend the most effective
intervention
There are some ways and interventions by which a supply chain system can lead the
business performance of an organisation. The main aim of any type of business to optimize

supply chain is to improve and increase accuracy and delivery time and the best customer
service. Some interventions and ways that is required for the top management to adopt in order
to maximize the supply chain system's potential of their organisation.
Improving distribution network
Distribution network is an effective intervention that can affect the sales strategy and
delivery tracking of an organisation. The main aim of companies to increase their sales by
satisfying their customers and for delivering products to customer, distribution channels play a
vital role. There is an importance to review essential parts of distribution network such as
purchasing software of the company. To review this software in order to see that how its works
with the delivery system.
Customer cash control
It is other and important intervention to improve profitability of customer orders and their
relationship. For reducing costs of errors it is important for an organisation to measure order
processing (Madani and Rasti-Barzoki, 2017, pp.287-298). In this measurement the company can
see whether the right products are delivered in the right quality to the right place and person. The
best supply chain process can help the business to avoid expensive errors. Setting payments can
also decreases the time between orders and payment which can greatly reduce the cost related to
this.
Supplier cash control
There are some type of products which are called bottleneck items in which company has
to face difficulties to find different types of suppliers. It leads higher supplier cost. For reducing
this type of situation, the company can take an insight in their payment contracts with their
suppliers. In this type the company can consider some elements such as the ways to avoid
unnecessary stock and also to avoid cost for correction in orders and supplies. An organisation
can order the required products from suppliers which can reduce the errors in supplies (Batt and
et.al., 2017).
Recommendation
From the above intervention of supply chain, it can be recommended to Phoenix beverage
company to adopt and focus on maintaining customer relationship and customer cash control. By
measuring order processing Phoenix can improve and manage its supply chain. It should focus
on providing the products on time to the right person. It increases the loyalty of customers