Introduction

The report is based on leading chocolate and chocolate compound maker based out of
Singapore by the name of Aalst Chocolate and carries information on the companies supply
chain activities and tries to show the effectiveness and shortcoming of the company’s supply
chain. Effort has been taken to identify steps that can be taken to address the shortcomings.
Finally the report ends with the discussion on sustainability on Aalst Chocolate’s supply
chain.

An Outlook on Aalst Chocolate

The Singapore based company gets 98% of its revenue from exports making it an export
orientated company. Aalst Chocolate was founded in the year 2003 in Singapore. The
company has presence both in B2B and B2C market through its five brands that it owns, the
B2B chocolate brands like Aalst Industrial and Cacao Ivory, serve brands like Lotte, Dunkin
Donuts all of whom are leading MNC’s while the other brand Patissier serves the food
service industry. Brands such as Louella and Aalst Black are positioned to address consumer
chocolate market which gives the brand B2C market to serve. The brand effectively uses the
brand of SINGAPORE as the country is known for its reputation for food safety which is
exceptionally important in food industry to provide reassurance to the customers. The
company is capable of producing 30,000 tonnes of Chocolate annually which if compared to
its European competitors is small but the company is taking slow but strong steps to
increasing the production capability and market share. The company is the only Singapore
Brand that can make not only chocolate overtures but also chocolate compounds. Aalst
Singapore’s 50% shares were acquired by Wilmar International, providing both the
companies added values. Since with this joint venture Aalst chocolate will be to leverage on
wilmar’s huge manufacturing and distribution network in Asia as well other geographies and
Wilmar the joint venture will provide an entry into consumer product segment. India, China
and Japan are the company’s largest markets and the company is betting heavily on growing
further in markets like India and China. The company maintains highest standards while
sourcing its raw materials and generally does the sourcing of cocoa from West African or
Latin American Cocoa.

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The heart of the Aalst Chocolate – Supply Chain Management

For any organisation to be nimble in tackling competition and unforeseeable circumstances

having a solid and dynamic supply chain is of utmost importance, which is why Aalst
Chocolate maintains a robust supply chain. If one was to look at the supply chain of the
company through SCOR Model, one can see the effectiveness with which the company
operates and the various ways it cashes on leverage opportunities created by upstream and
downstream relations with customers and suppliers. The company follows the basic SCOR
Model which consist of Source, Make, Deliver, Plan, Enable and Return.

To understand further one can look into the following diagram as well
Seeds-cultivation Cocoa Beans supplies Chocolate Production Storage and Distribution Delivery &
B2C
Inputs for Chocolate Storage,
Cocoa Delivery to
the Overtures Selling to
Beans for B2C &
cultivation & B2B
Chocolate Customer’s
of Cocoa Chocolate customers
Production Customer
Tress Compound like Lotte

PLAN PLAN PLAN

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 Deliver Source, Make, Deliver, Source, Make, Deliver, Source, Make, Deliver Source
Return Return Return Return Return

Supplier’s Supplier. Supplier Aalst Chocolate Customer Customer’s Customer

SCOR MODEL

Plan:

Component PLAN

SOURCE MAKE DELIVER

INPUTS GRADING AND SHIPMENT

PRODUCTION

*COCOA  Separation and Roasting  Distribution

*OILS  Blending of other components  Delivery
*SUGAR  Grinding  Final
*FATS  Stirring Consumer
*MILK  Moulding

At Aalst during planning it is ensured that planning process include determining resources,
requirements and establishing the chain of communication for production to achieve
maximum efficiency in operations. All the factors from Inputs like Cocoa, Fats, Oils to
Shipment of Chocolates to both B2B customers like Lotte as well as B2C customers using
brands like Louella are taken into consideration.

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Source :
Component SOURCE

Supplier’s Supplier Supplier

INPUTS SOWING Cultivation HARVEST Distribution

*Cocoa LAND *Controls *Harvest *Packing

Seeds
*Fertilizers Irrigations *Pruning *Classification *Transport

For Aalst understanding not only its functions but also the happenings at the place of supplier
is critical to ensure there are no shortages and breakdown of supplies. In order to do so the
company takes keen interest in knowing the supplier’s supplier in order to prevent and
mitigate any supply outages. The journey of the company’s main raw material starts from the
supplier’s supplier who gets the seed and invests in land for bringing up cocoa plant to the
time when the supplier gets the cocoa plant and the crop after which he readies and
dispatches to Aalst, the journey of which is shown above.

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MAKE :

Component MAKE

Supplier Production Storage and Dispatch

Grading and Chocolate
Inputs Mixing Production
Shipping

*Cocoa *Control *Separation *Packing

*Mixing Containers
*Oil *Inputs *Grinding *Wrapping
*Stirring *Classification
* Fats *Co-Product *Moulding *Shipping

In the making of the chocolate, chocolate compounds and chocolate couvertures the company
undertakes various steps and processes to achieve the final quality product. It all starts with
procuring the right ingredients which meet stringent quality checks, followed by
identification and separation of different grades of Cocoa after which along with the right
amount of co-products like milk, sugar etc. the processes like Blending, mixing, moulding
etc. are started. On completion of the production appropriate packaging is done depending on
the product.

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DELIVER

Component DELIVER

Packaging and Storage Distribution and Delivery Stations

Customer (B2C) Final

Store Shipping Shipments
(B2B) Consumer

*Product *Product *Routes *Customer *Retail Outlets

*Deliveries Plants *Transport
*Inventory *Orders *Exports *Customer *Online Sales
*Domestic Premises * Deliveries

Once after completion of Product manufacturing the next key area is to deliver the product
depending on the classification of the product i.e. whether the product is meant for B2B
customers like Lotte or for B2C customers. Packaging for B2B customers is done in
containers whereas packaging for B2C packaging is done using wrapping of chocolate bars.
When it comes to dispatching of products again various methods are used like exporting to
customers abroad or delivering the goods at retail outlets or customer premises like in the
case of Chefs.

RETURN
At Aalst Chocolates the support extended to both customers in B2B & B2C segments is
adequately ensured to address returning and receiving returned products for any reason, this
is because the company believes that a good return management and return of its raw material
(for failing to comply quality) can be an important source of competitive advantage. There
are adequate channels of communication and procedures laid to handle returns from
customers as well for returning raw materials to suppliers.

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A Study of Aalst chocolate’s Supply Chain & Supply Chain Management.

In the wake of various changes and challenges at the end of the suppliers of Aalst Chocolate,
there has been quite a number of disruptions. The disruptions in the supply chain can be
mainly attributed to factors like shortage in Cocoa due to factors like Climate Change, pests
effecting trees etc, one other factor that often disrupts the supply chain is political
uncertainties in countries of West Africa and Latin America. Lack of consistency in product
quality is also effecting the company. Inadequate demand forecasting can also lead to excess
inventories build up and excess production being carried leading to wastage of resources.
Delays in shipping due to various like storms or ship breakdown can also affect the
company’s operations and its ability to fulfil orders.

A number of steps can be taken to increase the efficiency of the supply

chain and minimise the wastage of resources, the very first thing that can be done is gradually
increase the amount of buffer inventory to ensure continuation of operations in case of any
unforeseen outage in supply chain. Adoption of Risk Pooling can again minimise the risk of
operations getting effected due to some problem at the supplier end like washout of crops or
shutdown of ports etc. The introduction of Updated ERP software can increase the
company’s efficiency by integrating the components of the company including most of the
supply chain process by sharing and organising information and data, this helps as there is
automatic transmission of data if an event happens, say a sale occurred than that data is
transmitted through ERP software, which automatically determines the effects of the
transaction on other areas, such as manufacturing, inventory, procurement etc. Identifying
and keeping track of Key Performance Indicators like Inventory Turnover, Inventory Days of
supply and fill rate can also help boost the effectiveness of the supply chain. With the
company venturing into B2C segment it can introduce Vendor- Managed Inventory (VMI) to
create and maintain a forecast and an inventory plan.

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Aalst Chocolate’s supply chain sustainability:
In today's business environment, besides competing for costs and profits, organizations
have a new focus on sustainability. Many studies show that companies with "sustainable
culture" perform better in the long run than other companies (Wu, 2006). Recent studies
show that businesses need to be sustainable due to pressure from stakeholders, such as the
government, consumers and the wider society (Chrismann & Taylor, 2002). Sustainability is
considered a normative concept of how people must treat their natural environment, and how
they are responsible for each other and in the future (Kates, 2001).
Over the past decade, researchers have been trying to expand the boundaries of
sustainable development into supply chain management, to investigate sustainable supply
chains management (SSCM) (Wu, 2006). Based on the Triple Bottom Line model (TBL), it is
becoming increasingly clear that SSCM should address both environmental and social issues
(Kleindorfer, 2005). Currently, an increasing number of companies start applying indicators
such as environment, health and safety, and social factors to measure the sustainability of
production (Beske, 2012). V.G. Narayanan and Ananth Raman, two professors from Harvard
University (USA), have studied many supply chain management situations of benefit among
supply chain partners and made the statement that "A supply chain Applications can only be
strong if every company in the chain has a reason to stick together and go in the same
direction! " (Narayanan & Raman, 2004).
Richard Lee, CEO of Aalst Chocolates, understands the Triple Bottom Line model as
well as the importance of integrating sustainable concepts in the supply chain into business
operations. Therefore, Aalst Chocolate has been developing daily to access supply sources
and build sustainability in supply management. As Asia's top quality chocolate supplier, the
company keeps a close eye on the demand and supply of cocoa in order to have timely action
wisely. In order to meet the supply needs of materials in production and business in the short
and long term, Aalst Chocolate has built a large supply network from reputable suppliers and
managed sustainably in West Africa and Latin America.

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 In addition to building a large supply network, based on the Triple Bottom Line model,
Aalst Chocolate also takes actions to show responsibility for people and the environment at
their cocoa farms. The company has invested in newer efficient machines to increase
productivity and profits while getting better product output meeting highest product
standards, at times better than the industry standard. The company works closely with
partners, non-governmental organizations, traders and especially farmers to grasp the difficult
situation and challenges to bring together solutions to bring mutual benefits. for all parties.
Through face-to-face conversations, short-term training courses, the company has come up
with solutions to the problems of local people such as supporting education as well as
improving the living environment. Since then, the company creates close links with suppliers
of raw materials as well as attracting more potential customers.
Another core activity in managing Aalst Chocolate's raw material supplies is to become
Wilmar International Limited's business partner since August 31, 2017. Wilmar is a fat
producer. Top specials are used in the manufacture of chocolates and compounds. Through
this cooperation, Aalst Chocolate has more advantages in sourcing raw materials to ensure
product quality, sustainable food safety for the production of its products. Aalst Chocolate
believes that this suitability supply chain will ensure the necessary supply of materials even
in unforeseen interruptions.

Conclusion : An Understanding of the report and the company

The company through its various initiatives is trying to overcome its shortcomings for
example the joint venture with Wilmar will provide the necessary capital to acquire top notch
machines which will provide the better quality with increased productivity. The joint venture
will also provide the supply security when it comes to supplies like sugar, oil and fat. The
reach of Wilmar will also help Aalst Chocolate to penetrate into new markets. There should
be better margins for the company due to Upward and Downward integration of Supply
Chain.

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