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TABLE OF CONTENT EXECUTIVE SUMMARY

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TABLE OF CONTENT

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INTRODUCTION 1.1. BACKGROUND INFORMATION OF THE COMPANY 1.2. CHENG YEW HENG BACKGROUND

2. ANALYSIS OF CURRENT SUPPLY CHAIN 2.1. MANUFACTURING OPERATIONS 2.2. COMMUNICATION PROCESS

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3. DISCUSSION AND ANALYSIS OF STRENGTHS AND WEAKNESSES 3.1. STRENGTHS 3.1.1. Quality Assurance 3.1.2. Multiple Sourcing 3.1.3. Centralized Warehouse 3.2. WEAKNESSES 3.2.1. Silo System 3.2.2. Manual Labour 3.2.3. Lack of Visibility in Inventory Level

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4. Conclusion

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5. Bibliographies

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Appendix

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1. INTRODUCTION 1.1. BACKGROUND INFORMATION OF THE COMPANY Cheng Yew Heng

Organizational Type

Business-to-Business Business-to-Consumer (Jewels)

No. of Employees

100 - 200

No. of years in operation

72

Product’s Nature

Perishable

Target Market Segmentation

Psychographic

Position in Supply Chain

Manufacturer Distributor

Organization’s Main product

Rock Sugar (Manufacturer)

Table 1 | Background Overview of Cheng Yew Heng

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1.2. CHENG YEW HENG BACKGROUND

Figure 1 | Cheng Yew Heng Sugar Trading

Cheng Yew Heng (CYH), a SME in Singapore, was established in 1947. Originally a local sugar manufacturer, CYH has grown into a successful trading company in Asia. CYH imports refined sugar from Thailand, Europe and India and exports Sugar to neighbouring South East Asia countries. The company acts as a local distributor to major industrial manufacturers, wholesalers and retailers as well as to End Consumer by supplying the markets with a variety of traditional manufactured products. Over the years, CYH has progressively improved through remodeling their business strategy to adapt to the current target market by developing a retail brand name “Jewels”. However, CYH is not capable to fully capitalize on the demand, due to the constraints of the current manufacturing site of 30,000 sq. feet. (GOH, T. 2016). In addition, the manufacturing operations of CYH consist of physical manual labour and is lacking in terms of a proficient customer service, in which other industrial players are intensifying the competition by improving efficiency in their overall supply chain. Thus, this report will showcase the supply chain operations of CYH as well as explained the strength and weakness of the company.

1.3. TARGET MARKET OF JEWELS

Figure 2 | Jewels Rock Sugar Sticks

Jewels, established by CYH as a multi-channel retail front, directly caters towards the younger generations by offering Crystallized Rock Sugar as their product, distributing them through E-commerce platforms and Retailers.

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2. ANALYSIS OF CURRENT SUPPLY CHAIN

Figure 3 | Cheng Yew Heng’s Supply Chain Overview

Within the supply chain, Cheng Yew Heng acts as a manufacturer and distributor. Due to nature of CYH's goods being a commodity, it is usually considered a push system. However, CYH’s business model is designed to predominantly cater to B2B demands. Hence, industries such as Food & Beverage Chains and Manufacturing Industries is considered a pull strategy as CYH offers both Refined Sugar and manufactured goods on request. In Addition, CYH supplies manufactured goods (E.g. “Jewels”) to distributors such as Supermarkets, Retail Outlets and Vending Machine in which case is regarded as a push scenario (SHIAO, V. 2017). In an event of an inventory shortage, it can be devastating to the company. Hence, CYH has assured their consumers that their supply lines will never be disrupted (Yew Heng, C. 2013). Procuring from multiple reputable suppliers has allowed them to mitigate risks as compared to outsourcing to a single supplier. CYH procurement team source for several types of refined sugar in bulk, at a cheaper rate from their offshore suppliers (Yew Heng, C. 2013). Although Sugar is a common commodity offered by multiple suppliers, CYH still managed to make substantial profits through economies of scale from bulk purchase, allowing them to supply and manufacture at competitive cost advantage. Procured goods are then shipped to the port then delivered to the small-scale centralized manufacturing plant to transform the goods by providing value added qualities to the product.

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Given their centralized location, CYH took the opportunity to provide their own bulk logistical service to distribute goods to their retailers. However, the manufacturing plant has limited number of docking platform due to the constraint of limited space being utilize as a warehouse and as a manufacturing plant. Therefore, CYH is currently utilizing a bulk tanker delivery system that allows the company to deliver 22 tonnes of Sugar (SHIAO, V. 2017). However, upon delivery of goods to the retailer should there be a deviation from the agreed contract, CYH offers “exchange” of product. (Yew Heng, C. 2013).

2.1. MANUFACTURING OPERATIONS

Figure 4 | Cheng Yew Heng’s Manufacturing Process

Refined Sugar delivered from CYH’s supplier are manually counted in terms of the number of bags and are stored at a block stacking storage system ready for manufacturing. The Manufacturing operations of CYH is a simplistic traditional process to manually sieved refined sugar for impurities. This process requires the sugar to be melted and heated into syrup, whereby it will be manually stirred by the workers for an hour, until it reaches the right viscosity (Othman, Z. 2018). This syrup will then be transferred into the storage for crystallization process to take place.

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Figure 5 | CYH’s Manufacturing Process/Storage System

Value-Added properties are mixed into the crystallize form to give its additional flavour and colour to form different traditional variety of Rock Sugar (Guide M. 2017). The finished goods are then pack with the customized packaging from the local supplier “TECKWAH” and then stored in a LIFO block stacking system (Packly 2018).

2.2. COMMUNICATION PROCESS

Figure 6 | Electronic Data Interchange Process

CYH employ Electronic Data Interchange process (EDI) as a tool to transmit documents within supply chain partners. EDI is a standardize communication process use between their suppliers for inventory replenishment and distribution to retailers. Currently based on the Supply Chain Overview (Figure 3), there is no integrated information flow from CYH to the retail outlet, thus the manager in the retail outlets do not have information pertaining to CYH’s inventory. Lacking information flow between supply chain partners pose as a potential threat for the retail companies doing business with CYH, without an integrated system CYH has faced multiple customer service issues regarding the gap between information (GOH, T. 2016)

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3. DISCUSSION AND ANALYSIS OF STRENGTHS AND WEAKNESSES 3.1. STRENGTHS 3.1.1. Quality Assurance

Figure 7| HACCP Steps

Being in the food manufacturing industry, CYH comprehends that food production procedure and quality directly affects their supply network. CYH executed Hazard analysis and critical control points, otherwise known as HACCP, for their food production (BiTES 2016). As a food safety initiative, HACCP is a deterrent framework. It bases on potential physical, biological and chemical dangers that could occur during the assembling procedure and make the finished product unsafe. An essential issue of the HACCP benchmarks is to locate any potential dangers with the objective of executing product quality control measures. Any disruption in food processing will result in a bullwhip effect downstream. The objective was to guarantee quick, consistent food creation while keeping high quality consistency. Through HACCP, CYH main driving force is to accomplish high consistent quality goods as a competitive advantage to dissuade rivalry and meet client’s needs. By accelerating food production procedure and decreasing return of food because of sub-standard quality, CYH diminishes the time required for taking care of reverse logistics when goods are return and furthermore lessen stock space to hold return products which directly affects their internal supply network as appeared for a case study where HACCP was implemented to an ice cream chocolate plant (Junchao et al. 2014).

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3.1.2. Multiple Sourcing

Figure 8 | Kraljic Matrix

CYH has assures its consumer with steady and uninterrupted supply flow of quality goods. CYH can capitalize on its high bargaining power since sugar is genuinely a low-cost commodity (Ref from Kraljic Matrix) and supplied by many. CYH outsource to several suppliers overseas and take leverage competition between suppliers. It would be irrational for CYH not to take advantage on the low-cost being offered, hence procuring the commodity in bulk capitalizing on economies of scale allows them to manufacture at a cost competitive advantage. In addition, multiple sourcing is deemed as a strength as it helps keep CYH’s inventory at an optimal level, reducing carrying and holding cost (Yew Heng, C. 2013). Additionally, multi sourcing allays potential disruptions and mitigating risks in the supply chain. Situations such as stock out can be prevented as the continuous of supply will be ensured from the multiple sources. Instead of only sourcing from a single supplier, CYH chose to widen its selection of suppliers such that it will not be overly independent on one, thus increases the flexibility in managing its inventory. Moreover, a surge in demand can be easily addressed through engaging multiple suppliers, ensuring customer’s demands and orders are met. (Jaggaer 2015).

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3.1.3. Centralized Warehouse CYH operates as a centralized warehouse within Singapore. Because of its centralized location, CYH can gain easy accessibility to nearby ports and retailers. From this, CYH can capitalize on its additional role in providing logistical transportation service. Recently, CYH implemented a fleet of bulk tanker trucks capable of trucking 22 tonnes in a single delivery, which significantly reduce lead time by doing multiple trips in comparison to the one tonne previously (SHIAO, V. 2017). The centralized warehouse is integrated with its manufacturing plant where processes are streamlined into a centralized location. The integrated systems reduce handling time and focuses on overall cost in the supply chain from manufacturing directly to distribution. CYH can gain better cost savings and production capabilities while providing improved efficiency.

3.2. WEAKNESSES 3.2.1. Silo System For CYH, “Supply Chain Silos” occur between its distribution center to retail stores. The absence of perceivability of real time information turned out to be an obvious shortcoming towards CYH's distribution network. For example, a retailer’s out of stock situation may be relayed to the distribution center due to the lack of sales information regarding the buyer’s behavior demand of the “Jewels” product being push to its retailers. CYH won't effectively be able to make accurate forecasting and strategic decisions for their operations this will result in lack of inventory to supply towards CYH’s downstream supply network. In addition, the time required to access critical information has created a tremendous gap between information gathering and data trade requiring to replenish inventory to provide retailers. Evidently the lack of an integrated system has caused CYH’s inability to meet demands advertently, thereby losing out on potential consumers (GOH, T. 2016). Research has showcased that successful logistics organization breaks down “Supply Chain Silos” to make keen, quick decisions precisely to attain great inventory visibility and ensure smooth communication to both upstream and downstream, to compete with competitors (Gonzalez 2015).

3.2.2. Manual Labour The manufacturing process of rock sugar is labour intensive and this serve as a weakness to its supply chain as it is unable to achieve efficiency in its input. As more workers are required to handle every part of the manufacturing process physically, this will increase the cycle time between the manufacturer and the retailer.

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From melting of the sugar, to crystalizing the final product of the rock sugar, every segment requires the physical attention of its employee of CYH. Even packaging of the rock sugar requires 6 people to pack into 3 kg bags. Due to the characteristic of rock sugar, it does not come in consistent shape and sizes, and hence for the quality not to be compromised, the packaging of the rock sugar must be hand pack by 5 workers that can pack 6 packet every minute (Othman, Z. 2018). Apart from that and in today's technological era, if CYH is not able to improve and move towards the usage of automation, the process of the organization may not be able catch up with the demands and requirements of the market. This is critically important as supply chain serves as a backbone to the company, if they are unable to increase their efficiency in processes like production, they may succumb to cases like loss of sales and additional labour cost, this will affect the overall inventory management of the warehouse.

3.2.3. Lack of Visibility in Inventory Level The nature of CYH’s product is Fast moving consumer goods. Therefore, the fundamental issue that CYH faces is the lack of visibility in inventory level. CYH utilizes a basic warehouse management system (WMS) for production scheduling. However, stock takes are done by doing manual counting of goods packed. In this manner, the management must depend on stock checks done manually by the retailers and check if there are any inventories left before replenishing inventories. Failure to track such imperative data has resulted in the warehouse to only have data of the inventory received but not the current inventory available in its premises. The low-quality inventory data derived from using disparate systems to manage orders and inventory, results in high cost, diminishing in profits and inaccurate customer service. The inability to track the current inventory level due to the laps in information can sway critical business decisions by over selling or over-purchasing of available inventory (GOH, T. 2016).

4. Conclusion To conclude this report on CYH’s supply chain, their business strategy involves both push and pull strategies predominantly catering to B2B and offers multi-channel to retailers for distribution of goods. CYH can capitalize its manufacturing on cost competitive advantage through multiple sourcing and offering consistent high-quality goods at a centralized location. However, it is apparent for CYH to continue as a dominant player within the supply chain, whereby significant systems can be implemented to improve CYH’s internal supply chain efficiency. With the rapid business expansion plans of CYH, it is crucial for the organization to move away from supply chain silo and increase its scalability to match up with the large incoming volume of operations that they are expecting.

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5. References # 99sme.sg. (2019). All stores :: Cheng Yew Heng Candy Factory Pte Ltd - SME Businesses Having Special Deals Singapore | 99% SME. [online] Available at: https://www.99sme.sg/cheng-yew-heng-candyfactory-pte-ltd/ [Accessed 22 Feb. 2019]. A Adhikari, P. (2015). ERRORS AND ACCIDENTS IN THE WORKPLACES. Sigurnost, 57(2), pp.127– 137.

Aggarwal, N. (2017). Third generation grows family business to over S$100m. [online] The Business Times. Available at: https://www.businesstimes.com.sg/hub-projects/enterprise-spotlight/thirdgeneration-grows-family-business-to-over-s100m [Accessed 20 Feb. 2019]

B BiTES. (2016). Boss Hot Seat with John Cheng, Director of Trading & Business Development, Cheng Yew Heng - BiTES. [online] Available at: https://www.bites.com.sg/newsbites/boss-hot-seat-john-chengdirector-trading-business-development-cheng-yew-heng/ [Accessed 18 Feb. 2019].

C Chengsugar.com. (2019). Cheng Yew Heng – Supplier, Manufacturer and trader of Sugar, Flour, Star Brand Rock Sugar, Red / Black Jaggery Sugar, Corn, Rice in Singapore and around the Asia region. [online] Available at: http://chengsugar.com/ [Accessed 22 Feb. 2019].

E Edibasics.co.uk. (2019). What is EDI (Electronic Data Interchange)? | EDI Basics. [online] Available at: https://www.edibasics.co.uk/what-is-edi/ [Accessed 22 Feb. 2019].

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G Gonzalez, A. (2015). The Case for Less Silos, More Intelligence in Supply Chain Management - Talking Logistics with Adrian Gonzalez. [online] Talking Logistics with Adrian Gonzalez. Available at: https://talkinglogistics.com/2015/07/01/the-case-for-less-silos-more-intelligence-in-supply-chainmanagement/ [Accessed 20 Feb. 2019]. GOH, T. (2016). Hitting the sweet spot for change and tradition. [online] The Straits Times. Available at: https://www.straitstimes.com/business/hitting-the-sweet-spot-for-change-and-tradition [Accessed 18 Feb. 2019]. Guide, M. (2017). The Art of Making Rock Sugar. [online] MICHELIN Guide. Available at: https://guide.michelin.com/sg/features/rocksugar/news?fbclid=IwAR296z3BDLNaaKzwgxUmv47OqQ8KtgH4Fe7jUSzT1WfMHL86J4qWw_5994 [Accessed 19 Feb. 2019].

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S SupplyChainBrain. (2012). Eliminating Supply Chain Silos Is Crucial to Improved Visibility and Success. [online] Available at: https://www.supplychainbrain.com/articles/12808-eliminating-supply-chain-silosis-crucial-to-improved-visibility-and-success [Accessed 20 Feb. 2019].

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