COOL

WATER CO.
Bottled Water Distribution Business

Fatema Obaid - 201101371

Table of Contents
Introduction .................................................................................................................................................. 2
Purpose ..................................................................................................................................................... 2
Terms of Reference ................................................................................................................................... 2
Method ..................................................................................................................................................... 2
Company Profile............................................................................................................................................ 3
What Is Supply Chain? .................................................................................................................................. 4
What Is Supply Chain Management (SCM)? ................................................................................................. 5
Cool Water Co. Supply Chain ........................................................................................................................ 5
Cool Water Co. Strategy................................................................................................................................ 6
Measuring Performance ............................................................................................................................... 9
Inventory Management .............................................................................................................................. 12
Possible Obstacles....................................................................................................................................... 13
References .................................................................................................................................................. 15

Introduction
Purpose
The purpose of this report is to examine a supply chain strategy that Cool Water Co which is a bottled
water distribution business would apply it to distribute the imported bottled water to local
supermarkets in Bahrain. In addition, the report will discuss the importance of measuring performance
of the supply chain and how the technology is used to manage the inventory. Finally, it will include
potential obstacles that the supply chain could face.

Terms of Reference
This report that aims to examine a supply chain strategy for Cool Water Co was requested by Ms.
Lorraine Cowley, Logistic Tutor at Bahrain Polytechnic. It will be submitted to Ms. Cowley in the 21th of
December as it was requested.

Method
The report contains much information which was gathered from different resources. Most of the
information was taken from the TLB6000 course modules and lessons especially for essential principles.
In addition, academic journals and articles from the internet were used to collect general information
that is needed for the supply chain examination.

Company Profile
Cool Water Co. Company is one of the companies
that import bottled water from an overseas country
and distribute it among number of local
supermarkets. The company is located in the Kingdom
of Bahrain specifically in the industrial area, Al Hidd.

Al Hidd has been chosen as a location for the

Figure 1: Location of Cool Water Co.

company due to several reasons:

It is an industrial area which has many and varied industries near the company and it has the
Logistics zone.

It is closer for Khalifa Bin Salman Port which gives the company the advantage as it will import
bottled water from an overseas country.

The cost of transporting the goods from the port to the companys warehouse will be low.

The ability to expand in the future because there is no residential area and it is a new area that
is not fully utilized.

For these reasons, Cool Water Co Company would have the advantage of selecting the best location
which mainly aims to maximize the profits and minimize the costs (CILT, 2010 b).

What Is Supply Chain?

According to businessdictionary.com, supply chain is defined as the whole entities that are involved in a
network that is directly or indirectly serving the same customer. The supply chain consists of:

Suppliers (supply raw materials).

Manufacturers (transform materials into products).

Distributers (deliver products).

Retailers/Markets (bring products to final users).

Ultimate Users (final user of the product).

Adding to that, the supply chain also includes the transportations and the storing facilities. The following
figure shows a supply chain:

Figure 2: Supply Chain.

In addition, the supply chain consist of two main aspects which are the upstream that include the
suppliers and manufacturers, and the downstream that includes the distributers, retailers and the final
customers.

What Is Supply Chain Management (SCM)?

According to businessdictionary.com, supply chain
management (SCM) is defined as the flow of information and
goods that includes (raw materials and final products)
through the components of the supply chain. The SCM
manage the flow of the previous things to provide to
customers their needs with the lowest cost to make them
satisfied (CILT, 2010 a). In addition, SCM coordinate between
generating orders, taking orders and fulfilling orders.

Cool Water Co. Supply Chain

As Cool Water Co Company is a distributer firm, it must be
Figure 3: Supply Chain Management.

included in a supply chain. The following graph shows the

supply chain that Cool Water Co Company is part of:

Figure 4: Cool Water Co. Supply Chain.

Cool Water Co. Strategy

In order to manage the supply chain that CWC is part from, a supply chain strategy is needed to be
applied. As the core competency for CWC is to move, store and deliver high level of customer service by
providing new type of a product to the market with the lowest possible cost and minimum distance to
travel; which will give the ability to CWC to compete in the market with other competitors and be
unique by providing special services.
CWC build its strategy based on five factors that directly and indirectly effect on its supply chain
management which are:

Speed.

Cost.

Quality.

Dependability.

Flexibility.

CWC according to its strategy chooses Pakistan as a supplier to

import water from due to these reasons:

Figure 5: Pakistan Flag.

Quality: Pakistan has number of natural resources for

water as it has number of rivers. In addition, Nestl which is a company that produces bottled
water and has a branch in Pakistan has the ISO 9001 that sets out the requirement for the
quality of water produced (Bulcke,).

Speed: according to port.com, the distance between Bahrain to Pakistan is only about 1000
nautical miles which is almost 4 days by sea; that gives it the advantage of supplying the market
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in the lowest possible time. Adding to that, the lean time for the water to be available in the
consumer hands is about two weeks and a half as the production will takes five days, 4 days for
shipping and a week to test water and distribute it to the supermarkets.

Figure 6: Route from Pakistan to Bahrain.

Flexibility: as billions of bottled water is sold every day which makes it one of the fast moving
consumer goods, the supplier needed to be flexible in supplying the distributer and market.
Pakistan has been chosen as a country to supply from because it has the flexibility to supply the
market quickly as it is not very far. Besides that, it must keep flexibility stocks, looks to previous
data and be quick in responding to orders as bottled water has a short life cycle.

Cost: Pakistan has been chosen also due to the cost it provides. As the bottled water will be
transported to Bahrain by ships in bulk which has the advantage of moving goods with low cost.

Also, Pakistan deals with the delivered duty paid (DDP) incoterm that states Pakistan or the
supplier is responsible for delivering the bottled water and responsible of all things including the
inventory costs until the products get to the distributer. Pakistan uses this incoterm because it
delivers number of products to the region not only Bahrain. In addition, the cost of the bottled
water from Pakistan is almost the same price that bottled water is being purchased in the
market.

Dependability: Pakistan would be a reliable supplier if it provides on time delivery for the
information, goods transporting and giving accurate time of the goods arrival. Despite that, a
service level is mentioned in the contract with Pakistan which insists on not providing less than
97% of service in each transit including the arrival time and the products conditional. Also, word
of mouth affect in these businesses but Pakistan has no much positive or negative reputation
that would affect the decision that has been made.

In addition to these factors, Pakistan has been chosen also because:

It is new business to have in Bahrain, which is importing bottled water from an Asian country.

Many expat are living in Bahrain especially Pakistani people that would like to have and drink
water from their country.

Furthermore, as the strategy of CWC includes the previous factors to manage the flow of goods from the
supplier to the distributer, the strategy also includes factors that manage the flow of goods from
distributer to supermarkets. The factors are the same but now we will show how CWC based on these
factors do its job and compete in the market to be the best:

Quality: CWC do its best to deliver goods in good condition and provide high quality level of customer
service; it does some tests on water before distributing it and responds quickly to customers wants.

Speed: as been mentioned before, the lean time for the bottled water is two weeks and a half, which
includes distributing the bottled water to the supermarkets. Adding to that, the location of CWC
Company which is near to the port gives it the flexibility to quickly collect the goods and distribute it.

Flexibility: CWC keeps safety stocks in case of any supermarkets need more goods to be flexible in
fulfilling all orders and provide just in time services and deliveries.

Cost: CWC will use medium size trucks (six wheels trucks) to distribute the goods to supermarkets.
Besides that, trucks will be highly utilized which includes no half trucks will go out of the warehouse and
one truck might be used to distribute in a route to number of supermarkets.

Dependability: CWC would be a reliable distributer because it is the middle man in the supply chain
which has to be accurate on the information sent and giving almost the exact time of when the goods
will be in the hand of the supermarkets.

Measuring Performance
As the market has different companies that provide different products and services; that all are
competing to exist in the field. Performance measurement is needed for all firms. According to
businessdictionary.com, measuring performance is a measurable indicator that is used in evaluating and
calculating the achievements of the company on meeting its goals and targets. It is important to
measure the performance of the supply chains capabilities as:

To ensure the organization is achieving its objectives.

It helps in budgeting and evaluating how effective is the companys strategy.

To measure the employee performance and find areas that needs improvement.

To know the place of the company in the market and whether it is able to compete or not.

As the market have many companies that each goes under a specific kind which are defined in the
following figure (CILT, 2010 c):

Figure 7: Type of markets.

CWC Company as a distributer company that distribute bottled water, is categorized under the steady
market where the demand for water is high all the year; that causes a high rate for the supply to fulfill
the demand. Therefore, performance measurement for CWC is importance as it will determine how

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effective the supply chain that CWC part from is performing. As a supply chain manager, the areas and
activities that would be measure in our supply chain are (CILT, 2010 c):

Customer service.

Internal efficiency (CWC performance).

External efficiency (supplier performance).

In order to measure these areas, key performance indicators (KPI) will be used to measure the up and
down stream processes that include sales predictions, inventory, suppliers, warehousing operations and
transportations (Hugos, 2006).
Moreover, as a CWC supply chain manager, I would also measure the five factors that CWC strategy is
built on according to the following table:

Quality

Quality will be measure through the customer service via feedback and customer
complaints.

Speed

Speed will be measure from the time that the order was given to the time it was
received to the distributer and the time it will be delivered to customers.

Flexibility

Flexibility will be measure by measuring how many urgent orders been sent and
how much the orders been sent on time.

Cost

Cost will be measure in comparative to other competitors. Besides, measuring

how much money is spending on transit and warehouse operations compare to
previous data.

Dependability

Dependability will be measure according to the service levels that have been
agreed on the contract and the service been provided in a year.

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Inventory Management
In order to CWC to exist and compete in the market, it needs to manage its inventory. Inventory
management is used to maintain the service levels that are required to fulfill the demand and to get the
products to customers with the best prices (CILT, 2010 f). Therefore, CWC is using different kinds of
technology as it is a critical component nowadays in different stages in the supply chain to manage its
inventory. These technologies include:

Electronic Data Interchange (EDI): as Michael Hugos (2006) states, EDI is a technology that is
used between companies that do business to transfer the data between them as a
communication way. CWC will use the EDI to communicate with its supplier in sending and
receiving the orders, invoices and shipment documents. EDI is a cost effective system that is
used with the internet to transfer the data between the supply chain components.

Relational Database: according to Michael Hugos (2006), relational database is a database

which organizes the data in groups and save them in tables in an electronic format. CWC will use
this database in storing the information of the company so it could retrieval them if anything
occurred.

Enterprise Resource Planning (ERP): as Michael Hugos (2006) clarifies, ERP is a system that
collects data of the company from various resources for several purposes. CWC would use the
ERP system to monitor the goods in stock, in order and in transit. Besides, it will be used in
monitoring the inventory and to easily make reports from the data collected.

Inventory Management System: will be used in CWC to calculate the economic order quantity
(EOQ) which is used to know how much is needed to purchase at each shipment (CILT, 2010 f).

EOQ=

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Radio Frequency Identification (RFID): according to Michael Hugos (2006), RFID is a technology
that is used to track the movement of goods through the supply chain from the manufacturer to
the customer. CWC will use RFID to track the bottled water while it is in transit to know the time
it would take to arrive to Bahrain. Besides, RFID would be used in tracking the trucks that would
deliver bottled water to supermarkets to evaluate and monitor the performance of the driver.

Bar Coding Scanner: it is a hardware that is connected to the computer and inventory system to
scan the shipment when it first entre the warehouse; this help in identifying the FIFO (First in
First out) as bottled water has an expire data and to manage the cost of inventory.

Possible Obstacles
Any issue that faced the flow of goods or information in the supply chain is considered as an obstacle.
CWC could face some obstacles in its supply chain. However, these obstacles could be overcome.
Following, some of the obstacles that could face CWC and how to overcome them:

Piracy: as CWC is going to import water from Pakistan by sea, it is possible that the ship would
be attacked or hijacked by pirates. In order to avoid pirates, the ship should sail in the high seas
but near the territorial seas of the countries along the route. Plus, having securities and
contacting with police guards if they doubt of anything.

Natural Disasters: the shipment could face natural disasters such as earthquakes, volcanos or
storms; which are force majeure that people could not do anything to. However, seeing the
weather forecasts before transporting the goods could help in avoiding or reducing the damages
that might occur.

Inaccurate e-mails and information: it is possible that some inaccurate information would be
sent in the supply chain that would cause delivering wrong quantities. This obstacle could be

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overcome through reviewing the data by more than one person before it been sent or if the
receiver doubt of the information he/she should ensure it before moving it to production or
transporting.

Bullwhip: bullwhip could be an obstacle as each part in the supply chain would increase the
quantity of needed items that would lead to distortion and having high inventory cost. This
obstacle could be overcome by working with salespersons to ensure the quantity needed or
allocating orders based on past sales and demand (CILT, 2010 h).

Diseases: water in Pakistan could get polluted or have a kind of disease that could make it not
good to be drink. Unfortunately, this obstacle could not be overcome and CWC will need to
change the supplier.

Distance: distance between the manufacturer and the distributer could be an obstacle if the
demand increases suddenly. This could be overcome by having safety stocks in the distributer
warehouse. In addition, distance from the distributer warehouse to the supermarkets could be
an obstacle also especially if there is traffic in the roads. This could be overcome by delivering
the goods in midnight or early morning before the sunrise.

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References

Books:
Hugos, M. (2006). Essentials of supply chain management. (2nd ed.). Hoboken, New Jersey: John
Wiley & Sons, Inc.

Websites:
Businessdictionary. (n.d.). Supply chain. Retrieved from
http://www.businessdictionary.com/definition/supply-chain.html
Businessdictionary. (n.d.). Supply chain management . Retrieved from
http://www.businessdictionary.com/definition/supply-chain-management-scm.html
Businessdictionary. (n.d.). Performance measure . Retrieved from
http://www.businessdictionary.com/definition/performance-measure.html
Ports.com. (n.d.). Sea route & distance. Retrieved from http://ports.com/sea-route/port-ofkarachi,pakistan/port-of-minasalman,bahrain/#/?a=0&b=13100&c=Port%20of%20Karachi,%20Pakistan&d=Port%20of%20Khal
ifa%20Bin%20Salman,%20Bahrain
Bulcke, P. (2012, July 25). Nestl ceo on the need for international standards. Retrieved from
http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1628

Course notes:

Chartered Institute of Logistics and Transport. (2010) a: (session1) Introduction: Supply Chain &
Logistics. Retrieved from Moodle database, Bahrain Polytechnic.

Chartered Institute of Logistics and Transport. (2010) b: (session2) Facility Network Design.
Retrieved from Moodle database, Bahrain Polytechnic.

Chartered Institute of Logistics and Transport. (2010) c: (session3) Measuring PerformanceSupply Chain Metrics. Retrieved from Moodle database, Bahrain Polytechnic.

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Chartered Institute of Logistics and Transport. (2010) f: (session6) Inventory management.

Retrieved from Moodle database, Bahrain Polytechnic.

Chartered Institute of Logistics and Transport. (2010) h: (session8) Cooperation and

coordination in Supply Chain. Retrieved from Moodle database, Bahrain Polytechnic.

Pictures:

Figure 1: Location of Cool Water Co.. Retrieved from

https://maps.google.com.bh/maps?q=Bahrain&bav=on.2,or.&bvm=bv.58187178,d.bGQ,pv.
xjs.s.en_US.EeLgqkzqnSg.O&biw=1366&bih=585&dpr=1&wrapid=tlif138763520952511&um
=1&ie=UTF-8&hl=en&sa=N&tab=wl

Figure 2: Supply Chain. Retrieved from http://organizations.weber.edu/sascm/

Figure 3: Supply Chain Management. Retrieved from

http://www7.shu.edu/business/supply-chain-management.cfm

Figure 5: Pakistan Flag. Retrieved from

http://www.google.com.bh/imgres?um=1&sa=N&biw=1366&bih=585&hl=en&tbm=isch&tb
nid=x1IxLYvwzK6wIM:&imgrefurl=http://artscouncil.com.pk/pakistan/&docid=9wVOlJwPf7t
bJM&imgurl=http://artscouncil.com.pk/wp-content/uploads/2011/10/PakistanFlag.png&w=2560&h=1707&ei=pUCvUtSqMeS50QWH_4DICA&zoom=1&iact=rc&dur=369&
page=1&tbnh=144&tbnw=216&start=0&ndsp=20&ved=1t:429,r:1,s:0,i:87&tx=152&ty=67

Figure 5: Route from Pakistan to Bahrain. Retrieved from http://ports.com/searoute/port-of-karachi,pakistan/port-of-minasalman,bahrain/#/?a=0&b=13100&c=Port%20of%20Karachi,%20Pakistan&d=Port%20of%20

Khalifa%20Bin%20Salman,%20Bahrain

Figure 5: Type of markets. Retrieved from Moodle database, Bahrain Polytechnic.

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