Page 57 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes
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Case Study Last Minute Ordering

The Scenario
Members were presented with a case study in which buyers regularly amend daily orders
and sometimes cancel orders altogether.
Context: A farm in Kenya produces fresh produce for a UK retailer. The farm has an annual
contract with the retailer. Produce is flown overnight every night to be on the shelves for
the next day. The farm has thousands of workers whose families rely on the income that is
generated through this work.
Buying Practice: The UK buyer forecasts orders on a weekly basis. However, the daily
requirements are amended throughout the week according to daily sales data, UK weather,
promotional competition and department wastage targets. On average, orders are revised
(up or down) three days a week and the change is faxed through to the supplier by mid-
afternoon. The changes in volume are often around 50% more or less than the forecast.
When demand is sufficiently low, the order is cancelled altogether (this happens
approximately ten times a year).
The Supplier and Worker Scenario: Any changes to the daily order are received at the
grower's pack house in the late afternoon. If the order is increased, underproduction is
addressed by asking workers to do overtime. Women workers rely on company transport
to take them home because it is unsafe to walk and, as buses do not leave until the later
shift is finished; many workers have little choice but to continue working overtime.
Furthermore, supervisors sometimes intimidate the women to stay and help meet the
order. As a result, people who work in the pack house have to work longer hours in cold
conditions to meet the increased order. In addition, the farm manager is unable to negotiate
a higher price for the additional stock, and so does not pay the workers a higher hourly
rate for overtime. If the order is decreased or cancelled, the lost revenue has to be factored
into the suppliers' costs. As a result, the supplier sends workers home early and does not
pay them fully for the hours worked.
Impacts along the Supply Chain

Members discussed the case study and explored the way in which the retailer's ordering
practices might affect working conditions along the supply chain. A number of impacts
were identified, as set out below.
Impacts on Workers: The retailer's practice of changing orders at short notice results in a
number of breaches of the Base Code, including the following:
 Workers experience harsh or inhumane treatment (intimidation to stay and finish
order from supervisors).

 Forced overtime occurs (without buses there is no safe means of leaving the worksite).
 There is no premium for working overtime.
 There is non-payment of wages (when orders are cancelled).
 Working conditions are not safe (longer working in the cold store).

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