Supply Chain Management Analysis:

Agida  Catadman  Dantes  de Leon  Estanislao  Lope  Peralta

 Objectives
 To observe a local, semi-integrated company comprised of
feed mill, poultry farm and trucking operations

 To analyze the key Supply Chain Management (SCM)

processes in the operations and give a sound rating of the
companies performance in terms of SCM

 To give recommendation on how to further improve

operations through utilization of SCM
Outline
I. Video presentation: How the company’s
operations work.
II. Company History
III. Organizational Chart
IV. Operations Flow Chart
V. Key Supply Chain Processes
VI. Q & A with the President
VII. SCM Rating and Analysis
VIII. Conclusion and Recommendations
Company History
 Late 1980’s – Mrs. Cecilia Picones- de Leon,
a midwife, started chicken wholeselling in the
local market.
 Early 1990’s – Mr. Nilo M. de Leon, a seaman,
accrued some capital and retired early to
concentrate on trucking/trading of live chicken.
 1995 – the couple explored the broiler growing
business considering the market potential they
established from trading.
- they started with 5,000 birds
 1998 – they engaged in feed milling,
mixing their own feeds for their farm
○ First feed mill was located beside their
residence
 Presently, the company has a feedmill
capable of producing 10 metric tons of
feeds per day, a total farm capacity of
100,000 birds per cycle and hauls 20,000
broilers to costumers in and around Metro
Manila every week.
Did you know that…
The Average Monthly Production/Sales from
NDL Poultry Farm Could Feed
100,000 People a Delicious Chicken Meal

Or more than 1.2 Million

People for an Entire Year!!! 
Organizational Chart
 Operation Flow Chart
Feedmill Supplies
Raw Material Order Office
Suppliers
Delivery Schedule
Yellow Corn, US
Soy Bean meal,
Feed Wheat, Order request
Fishmeal, Loading
Porkmeal, Coconut Low
Oil, Enzymes, inventory
Amino Acids, Delivery
Vitamins, Feedmill RM Inventory
Minerals, Toxin
Binders,
Antioxidants, etc Inspection

Fail QC Pass QC
Unloading
Feedmill Production and Delivery
Low
RM Inventory Order request
inventory

Feedmill
Feed Production
and Delivery
Office
Schedule

Hummer Milling Premixing

Final Feed Mixing

Packaging

Finished Feeds
Stacking

Loading and
Delivery FARM

Day-old-chick loading schedule

Feedmill Operations Map
feeds
Feedmill
excess feeds
Hatchery, FARM
Day-old-chick (DOC) DOCs
Supplier

Loading schedule
Loading

Office DOCs
Brooding Flock Health
Monitoring
Ready for next loading
Cleaning & Growing
Disinfection
Ready for harvest
Hauling Weighing

Delivery QC Fail

Weighing and QC Pass

CUSTOMER inspection
Unloading
Farm Operations and Delivery

Wheat Microingredients Feed mill Map

Finished Feeds
Rice
Soy Bean Meal Stacking
Bran

Hummer Coco
Oil Loading
CORN mill 1
2-stage Area
Silo 1/4ton
Mixer
Hummer
mill 2

Weighing
Animal Proteins Scale
Key Supply Chain Processes
 Customer Relationship Mgt
Main clients are chicken dealers from Pasig,
Laguna, Antipolo, Binangonan, and other wet
markets
Small clientele (less than 20 regular
customers)
Individual/Personal client identification
Sales secretary coordinates daily orders
Key Supply Chain Processes
 Customer Relationship Mgt
Payment terms are permitted for long time
clients
Network gives leverage – industry updates
available for customers
 Target is to keep long-term customers
Key Supply Chain Processes
 Demand Mgt – FARM
Farm supply is only 50% of market demand
Slack is outsourced from other farms around
Luzon
Difficulty in allocation since this is done on a
daily basis – volume of orders highly
dependent on price and available sizes
Day-Old-Chicks(DOCs) are prebooked 3
months in advance
Key Supply Chain Processes
 Demand Mgt – Feedmill
Allocation and purchasing is often “in panic”
No specified replenishment level for stocks
A lot of unnecessary hoarding
Production allocation is done on a weekly
basis
Key Supply Chain Processes
 Order Fulfillment
No structured ordering system and supplier
accreditation
Telecommunications – low tech!
Purchase orders
Key Supply Chain Processes
 Supplier Relationship  Industry leaders
Process
 Supplier identification  vs. Strict evaluation – undergo
and selection with no testing, price evaluation,
formal structure supplier accreditation and trials
before actual purchase

 Cost management–  vs. establishing long term

always seek best prices supplier – informal tie up based
on past experience (delivery
speed, openness to returns,
reliability, quality, price)
Key Supply Chain Processes
 Supplier Relationship Management
Pay on time!
Follow transactional protocols
As much as possible, do not lie! Trust is not a
cheap commodity.
Key Supply Chain Processes
 Product Development and Commercialization
Few personnel are given access to seminars,
symposiums, higher education, etc.
There is lack of empowerment among different levels
of organization – decision-making highly centralized
Very few general and staff meeting
 Purchasing Behavior
Feedmill Order Lead
Inventory time
Microingredients
Acidifiers, Amino 1-2 weeks
Acids, Antibiotics,
Anti-Coccidials,
Enzymes, Toxin
Binders, Vitamin,
Mineral Premix,
etc
# of Suppliers Behavior of Purchasing Frequency of
Purchase
multiple varies greatly in terms of once a month to
allowable terms, delivery once every two
speed, price, etc. Some months
products like Vitamin
premix is under a yearly
contract.
 Purchasing Behavior
Feedmill Behavior of Frequency of
Order Lead time # of Suppliers
Inventory Purchasing Purchase

Raw Materials

adversarial, with
2-3days multiple every 2 weeks
price bid
Corn

3 weeks to 1 pre-booked, no once to twice a

2
month price bid month
Soya

pre-booked, with
2-3days 2 once a month
price bid
Oil
monthly 1 semi-contractual once a month
Animal Protein
 Purchasing Behavior
Order Lead # of Frequency of
Behavior of Purchasing
Farm Inventory time Suppliers Purchase
at least 1
1 semi-contractual once a week
Day Old Chick month
included in included in DOC
1 included in DOC deal
Hatchery Vaccines DOC deal deal
once every two
1-2 weeks 2 to 3 quality/ efficacy driven
Farm Vaccines months

Farm Equipments and Utilities

Plastic ware 1 month multiple bidding once a year
Metal ware 1 month multiple bidding once a year
Wood and hardware 2-3 days multiple "suki" discounting as needed
 Q&A with the President
Why don’t you outsource your feeds?
“Savings on feed cost are too large to ignore. And it implies more employment to
our fellowmen.”
Why don’t you produce your own chicks?
“Lack of finances and technical know how limits integration.”
Why not simply buy and sell chickens instead of growing?
“We are now expanding our market and outsourcing more . Maintaining a
growing inventory allows flexibility during shortages or surplus.”
Why not dress and process your live chicken yourself?
“Because we fear going too far off our core competence which is growing and
trading”
Q&A with the President

Are you looking for further integration or further

outsourcing in the future?
“We are looking at more tie-ups. Expansion requires more
capital and higher risks. Small operations want to
maximize opportunity. No general rules, but instead we
decide on impulse. The determining factor in any activity is
whether we see more profit or not. In the long run this may
not hold. We need more consistent supply flow to become
more productive.”
Analysis
 Key Points

NDL vs World class poultry industry

Analysis
World class poultry – Internal supply chain focus,
supply focus and network mgt focus all working in
parallel

Short Term Progress: Proactive - Cross-functional

team orientation; emphasize the balance between
customer satisfaction, inventory risk and
investment; centralized data; improved
procurement; development of suppliers; long term
contracts
Analysis
 Key Points

NDL vs World class poultry industry

Stage 1: Internal supply chain focus
Analysis
Stage 1: Internal Supply Chain Focus
Two major process blocks: Feed mill and Farm
Focus its activities in ensuring that the two major
process blocks above are operational, which means
that the main focus is to be able to process the raw
materials into the product that it will sell.
Analysis
 Key Points

NDL vs World class poultry industry

Stage 1: Internal supply chain focus
“Model 2” – Mechanical
Analysis
“Model 2” – Mechanical

Transactional Focus, “Bull whip effect”, Relationship

with some suppliers adversarial, Data historical
present, Reports routinely done, very few
organization meetings
Analysis
 Key Points

NDL vs World class poultry industry

Stage 1: Internal supply chain focus
“Model 2” – Mechanical
Pillars of SCM - DSL
Analysis
Pillars of SCM – DSL

○ Demand Management – not focused on demand, sustaining the

demand is the priority. Internal supply is only 50% of demand.
Focus on client relationship is very crucial

○ Supply Management – no established long term suppliers and no

formal supplier evaluation and accreditation. Relationship is
generally adversarial with just a handful of regular suppliers

○ Logistics Management – poor communications system and poor

data management/record keeping
Analysis
 Key Points

NDL vs World class poultry industry

Stage 1: Internal supply chain focus
“Model 2” – Mechanical
Pillars of SCM – DSL
Efficient Supply Chain – Functional Products
Analysis
Efficient Supply Chain

Broiler birds or broiler meat is primarily a

functional product and therefore, the goal for
the production process is to be efficient.

Competitive cost and quality gives tremendous

advantage in commodities industry.
Recommendations
 Over-all
Invest in technology
Hire a few more technical personnel
capable of responsible empowerment
More tie-ups – consistency is the name of
the game
Capitalize on information network. This
may open doors to better customers and
suppliers
Recommendations
 Farm
Focus on core competence, feed milling
requires a significant aggregate inventory
value. Finances may be diverted to more
trading sales or growing expansion.
Look for regular chicken supplier to
guarantee consistent supply
Returns management protocol should be
considered
Recommendations
 Feedmill
Consider a replenishment level for stocks
Formalize supplier evaluation
Facilities upgrading