Supply Chain Strategies in managing inte

rnal and external challenges- A Tale from

Wales Drink SMEs

By: Vasco Sanchez Rodrigues

Maneesh Kumar
Irina Harris
Anthony Soroka
 Literature backround

• MSMEs are the life-blood of any modern economy (Ghobadian

and Gallear, 1996; Kumar et al., 2011; Ward and Rhodes, 2014)
• Food and beverages supply chains are becoming dominated by
large companies with increasingly monopolistic practices (Ilbery
and Maye, 2005).
• As Lewis (2001) found, in the British beer sector, larger
companies are no longer viable on the national scale, medium-
sized family-owned firms could survive, and small breweries
offering high quality ales with clear branding also have a viable
future.
 Literature backround

• Research suggest that more microbrewers are entering the

industry and are vying for a smaller market (Ellis and Bosworth,
2015).
• This increases further competition among the brewers and also
questions the survival rate of these closely spatially located
breweries.
 Project Aims

• The paper aims to:

Explore the challenges micro and small breweries have in very

demanding supply chains
 Methodology

• Case study allows researchers to directly observe a contemporary

event, over which researchers has little or no control of the event.
It enables systematic measurement of various outcomes that are
aligned with research questions using multiple sources of data
(e.g. observations, interviews, and documentation) (Yin, 2012).
• Exploratory case studies were conducted using multiple methods
and tools for data collection that helped in data triangulation and
improved the validity of the findings (Meredith, 1998).
 Methodology

• We have undertaken 18 screening interviews to identify the most

suitable companies for the project.
• 11 case studies have been conducted
 South – 2; North – 4, West – 4; Mid – 1
 Micro – 6; SME – 5
• Four interviews conducted with policy makers, awaiting response
from account managers
 Preliminary findings

• In terms of internal operations practices, the main improvement

opportunities initially identified are:
 semi-automated to manual production processes;
 limited use of KPIs to inform decision making;
 No clear demand management and capacity planning strategy
in place;
 No exposure to tools of quality and continuous improvement;
 Limited awareness and actions on sustainable practices.
 Preliminary findings

• Regarding the case study companies’ supply chains, the main

areas of concern initially identified are:
 Limited number of raw material suppliers from Wales and the
UK which generate significant uncertainty in managing their
upstream operations;
 Uncertain relationships with suppliers and customers make
demand management very difficult;
 Although there is some support from the Welsh Government
and trade associations, it seems to be difficult for companies
to access to wider market channels, e.g. UK retailers and
exports.
 Preliminary findings

• With regards to the wider distribution network, the main

improvement opportunities initially identified are:
 Decision-making on where production and bottling capacity is
available in Wales seems to be reactive rather than proactive;
 Therefore, a cluster-based platform where companies could
hire capacity in the most economically effective manner seems
to be required;
 Freight transport is very costly, in particular, for micro
companies.
 Preliminary findings

• In relation to other challenges, the main issues identified are:

 Lack of access to wider networks, such as local colleges and
university, which could facilitate improvements in companies
within the Welsh food and drinks sector;
 Very high tax duty as a barrier to grow, according, to SEBA
and Drinks Wales;
 The current support the Welsh food and drinks producers has
from the Welsh government is good; nevertheless, a cluster-
based approach, which involve many companies from a sector,
would have a higher impact on the main targets the sector
have.
 Main findings

Findings
Internal Limited use of KPIs and quality management tools
operations No clear demand & capacity planning
Limited awareness of sustainable practices
Supply Limited number of raw material suppliers
chain Uncertain relationships with suppliers and customers
Wider Decision-making on where production and bottling
distributio capacity is available in Wales seems to be reactive
n network rather than proactive
Other Lack of access to wider networks
Very high tax duty as a barrier to grow
Cluster-based approach would have a very impact
 Main contributions

• This paper contributes to the literature by clarifying how micro-

companies and SMEs respond to the very demanding supply
chain environments where they operate.
• Our research also highlights the typical challenges micro and
small companies face currently.
• The main findings obtained during the research shows that
collaboration among stakeholders in the Welsh beer sectors is a
key enabler of sustainable growth.
• In particular, Welsh micro and small breweries should
collaborate more in core operational functions, namely:
 Procurement – to reduce inventory of raw materials and warehousing
space investment
 Production (brewing and bottling) – to make their growth in production
output more flexible, so reducing initial investment cost
 Logistics – reducing fixed and running cost of logistics, this is especially
impactful when they export beer to global markets
 Further research

• In 2016, two workshops will be organised with the sponsorship

of WRAP, beer associations and Welsh Government;

• Funding proposal has been submitted;

• Areas of further research include:

 Mapping of brewing & bottling capacity in Wales against
growth opportunities to identify horizontal collaboration
opportunities;
 Detailed assessment of the supply side;
 Environmental assessment of selected beer supply chains.
Thank you for your attention!

Vasco Sanchez-Rodrigues

sanchezrodriguesva1@cardiff.ac.uk