Pamba Easy Meals

Pamba easy meals is a relatively small soya food processor in Tzaneen. After a modest beginning the company moved from Strength to strength and is currently the biggest of its kind in the Limpopo province. The company has been growing at an average growth rate of 10% over the past 3 years. In spite of negative market conditions during the past 12 years, the company has managed to survive. The companies viability is insured through quality improvement, product innovation and unique customer service.

Pamba Easy Meals is a relatively small manufacturer of soya based products, serving the geographical markets of Limpopo, Mpumalanga, Gauteng, North-west province, Namibia and Botswana with a broad product line. Pamba Market their products through a network of sales representatives. The representatives report that there is a strong pressure to increase the service to retail chain stores. They report that the retail buyers are raising questions about the number of stock outs that they have recently been experiencing. These buyers have even suggested that they might switch to other brands, if the service is not improved.

Pambass product lines focus on varying additions of dehydrated vegetables, herbs and spices, vegetable oils, starches, flavourants, rice and noodles. Other products are gravy, custard, Jelly powder, cool drink powder, milk-blend powder and rooibos tea. Pamba caters for the lower income groups in the rural areas, which are dependent on non-perishable foods.

The target market is served mainly by agricultural cooperatives and Pamba is the main supplier of Soya products. Other target markets are retailers, caterers, and Pre-packers of ration packs, wholesalers as well as entrepreneurs involved in primary school feeding schemes. All products are delivered on order as stipulated.

Pamba makes use of their own transport for distribution to the outsourced warehouses. Although they strive to maintain low transport costs, the costs are still high due to the negative effects of economic fuel factors and fleet maintenance. Products are produced in Tzaneen. Production takes place in large batch quantities in order to maintain low production costs, and to ensure consistent production quality. As items are packed they are generally transported to the warehouses in mixed

truckloads.

Product inventories are normally stored around the country in five outsourced warehouses. The sales representatives call on customers and generate orders, which are sent by email to these outsourced warehouses. The outsourced warehouses then arrange transportation to the retail customer. Orders are generally small, amounting to five or six cases per order, or about 150 kg to 200kg at a time. These orders are delivered using contract carriers, selected individually by each outsourced warehouse. The orders are delivered using contract carriers, selected individually by each outsourced warehouse. The costs are then billed to Pamba. Transport costs are high, because of the small shipments. Delivery

schedules vary by carrier, some provide fast and reliable service, while others have been erratic to the point that customers have commented on poor delivery service.

The location of the current customer base is 60% in Limpopo, 20% in the North-west province,10% in Mpumalanga, 5% in Namibia.

Pambas Management is divided into two major departments. One is marketing and sales, and the other is production. (there are also several smaller staff units for human resources, purchasing and finance.) Production is the older of the two. Marketing came about almost as an afterthought and had a difficult time establishing credibility within the company.

Production is responsible for Scheduling production as well as arranging transportation and maintaining inventory in the warehouses. Staff members are motivated by a production bonus on a weekly basis. Staff are informed of marketing and production objectives as well as any problems that may have occurred or may occur. Employees receive in-house training and current employees fill new positions. Staff are encouraged to improve their housing training and current employees fill new positions. Staff are encouraged to improve their housing, by means of loans granted by the company. All staff members receive the benefits of a pension fund as well as a medical aid fund. Due to the above-mentioned incentives, the company maintains a high level of team spirit and motivation, with low personnel turnover. Customer service is improved by constant communication with the sales representative network. In the event of an emergency, customer service is rendered as a per cost. Pamba takes products not sold and managed back for credit. No order is too big or small for Pamba. The local crops of soya beans do not fulfil the local demands, therefore necessitating Soya bean imports. The meat industry also makes use of texturized vegetable protein, leading to a further shortage of Soya beans. Currently there is only one supplier of texturised vegetable protein in South Africa, situated in Mokopane, approximately 150 Km South-west from Tzaneen. This main supplier has obligations in terms of foreign contracts, leading to shortages. Due to the volatile exchange rate, it is too

costly to import soya beans. Over the past months there has been an erratic supply of the basic raw material leading to Pamba being unable to meet its demands.

There are a variety of role players in the soya food industry. Competitors in Pambas market are Nutritional foods, Imana, Ayos and Umgeni. As in most industries there are many new entries, but they do not survive and leave the market quickly, Product differentiation, price and service offerings are most competitive.

Source: Strategic logistics management. A supply chain management

approach. 3rd edition.

Question E [20 Marks]

Warehouses should aim to provide value-adding services as well as minimising operating costs. Taking this into consideration, your company has decided to build a new warehouse to cater for your customers in Johannesburg. The logistics manager has requested you to provide them with recommendations on the external factors that need to be taken into account prior to the detailed design of the warehouse? . (600 word to answer and examples)