W6A1 Case International Supply Chain

Student’s Name

Institutional Affiliation

Introduction

Anheuser-Busch In-Bev is a multinational drink and brewing company based in Belgium. AB InBev has its functional branch offices in New York City, Mexico City, Johannesburg, and Sao Paulo. The company has been in operation since 2008, and it has managed to experience rapid growth. Currently, it has over 630 beer brands that are distributed widely to over 150 countries. AB InBev came into being after a merger between AmBev and Interbrew. AB InBev has the intention of introducing a new product called BIER in Poland. The problem that it is facing is how to put a proper supply chain for the product. It needs to be well conversant with where production will take place and how the importing activities will be conducted.

Analysis

AB InBev has always tried to differentiate itself from other players in the beer industry. It executes strategies that are different from others in terms of pricing and distribution of products. This organization is always focused on growth and having a culture that revolves around distributing high-quality products. The fact that it now wants to introduce a new product in Poland is another well-thought step. The past years have had AB InBev importing products from its subsidiaries in the United States. This is because the country is stable and the firms there are doing well. Since it is a multinational company, it will be essential to set up a plant from where the new product will be manufactured and distributed to Poland.

Related Assumptions

Several assumptions have to be made to come up with a proper solution to the problem at hand. To set up a new firm and supply location, it would be essential to assume that three product location factors exist (Chopra & Sodhi, 2014). The three factors are country, technological, and production factors. Any firm that wants to introduce a new product in the market should make sure the country is stable, technological factors are effective, and that the target consumers highly demand the product.

Solutions/Alternatives

The first potential solution to this problem would be to import the new product from the United States since it already has offices in New York City. The United States has skilled labor, and this would be used in the supply chain. Since the fixed cost, in this case, is likely to be high, the best thing will be to set up the production site in one country (Schaltegger et al., 2014). The third solution is to utilize the availability of low-cost labor in a country that is well established and doing well economically.

Evaluation

All the proposed solutions to the supply chain at AB In-Bev are viable. However, the idea of setting up a production plant in the United would be the most effective. This is because the country is stable in terms of transport, regulations, and availability of skilled labor. The disadvantage is that the cost of importing from the country would be high due to tariffs (Jacobs et al., 2014). A high fixed cost means that a firm can only produce in a single location. Since AB In-Bev already has branches in the United States, it can utilize them to reduce the cost of setting up a new one. The problem is that the firm would not respond to the local demands as BIER is targeting Poland. Low-cost labor is essential because it helps in setting up appropriate and affordable prices on the end products. Even though this is true, the firm can experience hidden costs in the form of poor workmanship, low productivity, and high employee turnover.

Recommendation

The most preferred solution is to import from the United States. This is because Poland does not have ready plants for BIER. Using what already exists helps in cutting the cost of construction. This means AB In-Bev will only spend on transport and tariffs that are needed during importation. The importing of goods will also help in the economic growth of the United States and therefore get more power to supply the new product.

Implementation

The implementation team has to consider the existence of skilled labor. Also, the production team in the United States has to be well conversant with the new product fully. The presence of formal and informal trade barriers also must be considered during implementation (Hugos, 2018). AB In-Bev has to will have to upgrade the firms in New York City to ensure they can produce the new product alongside others. The next thing will be to set up an appropriate transport channel that will ensure the delivery of BIER to Poland is taking place as expected.

Conclusion

AB In-Bev has been doing well in its business line, and introducing a new product means it has to change some of its strategies. Currently, there are stricter drinking laws, and that means AB In-Bev has to be in line with them while operating in the United States. To set up a new production site and supply the new product, it will have to use what already exists in terms of manpower and machinery. This will help reduce the cost of production, keeping in mind that the product is still new, and the demand has not yet been established.

References

Chopra, S., & Sodhi, M. (2014). Reducing the risk of supply chain disruptions. MIT Sloan management review, 55(3), 72-80. Retrieved from: https://openaccess.city.ac.uk/id/eprint/14261/3/

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons. Retrieved from: https://books.google.co.ke/books?hl=en&lr=&id=bvNKDwAAQBAJ&oi=fnd&pg=PR11&dq=setting+up+a+supply+chain&ots=E1kYob1X-z&sig=lpVD5GdTSzd6-Itpm2bkiTMBxq0&redir_esc=y#v=onepage&q=setting%20up%20a%20supply%20chain&f=false

Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2014). Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin. Retrieved from: https://d1wqtxts1xzle7.cloudfront.net/55110245/jacobs14e_preface.pdf?1511639588=&response-content-disposition=inline%3B+filename%3

Schaltegger, S., Burritt, R., Beske, P., & Seuring, S. (2014). Putting sustainability into supply chain management. Supply Chain Management: an international journal. Retrieved from: https://www.emerald.com/insight/content/doi/10.1108/SCM-12-2013-0432/full/html