Heineken Exports, Essay Example

Heineken is a Dutch beer brewing company in the food and beverage industry. The company specializes in their brand name beer which is popular throughout the world. The concept of transporting this commodity is from their brewery in the Netherlands to a Walmart store in Oklahoma City in the United States. This process would require planning as the commodity is being shipped overseas. This type of transportation would require the process of maritime transportation. (BDP, BDP International: Heineken)

Sea transport or maritime transportation is the action to carry people (passengers) or things (loads solid, liquid or gaseous) by sea from a geographic point to another on a ship. The maritime transport, at the global level, is the most used mode for international trade. It is this method that supports greater movement of goods, both in container, such as dry or liquid bulks. (BDP, BDP International: Export Logistics)

Taking into account that the planet Earth is covered by water in its two-thirds, the man has looked for ways of traveling on the water. As the water has connected various parts of the globe, the ships can sail to each continent while transporting commodities such as Heineken’s beer. (BDP, BDP International: Export Logistics)

The transport of passengers by sea has lost much of its significance due to the development of commercial aviation. There remains significantly only in two areas: the short passages (small distances between islands or two banks of a river) and the tourist cruises. (Trucco)

Shipping is by its very nature international, although there is cabotage along the coasts of a country. Large capacity transporter ships can carry large masses of bulk or containers. The large oil tankers called ULCC (Ultra Large Crude Carrier) have a capacity of more than 500,000 tons. The current largest container ships have a capacity of up to 165,000 tons. (Trucco)

International scope is the best way to move large volumes of Heineken goods between two points away from geographically. In addition, the development of motorways of the sea and the “short sea shipping” allows the combination of maritime transport with other means of transport. (BDP, BDP International: Export Logistics)

Flexibility and versatility: the flexibility due to the possibility of using ships from small sizes (100 tons); versatility because they have built ships of various sizes and adapted to all types of loads; in addition to the traditional carriers, there are container ships, tankers, cargo rolling stock, for refrigerated cargo, bulk solids. (Trucco)

The fleet of vessels of a country or city and/or “merchant navy” is the set of vessels crewed by Merchant Marine duly trained, dedicated to the transport of passengers or goods complying with the requirements of the International Maritime Organization. It is important for both Heineken, the supplier, and Walmart, the retailers, to abide by these requirements in the import/export supply chain management process. (Seago)

There are vessels of many types, suitable for different types of workloads. The majority of merchant ships can be included various categories. Bulk carriers for solid cargos carry large volumes of commodities. The accesses to the bodegas are designed to facilitate the loading and unloading by buckets or sleeves. They can be recognized by hatches in the form of housing which covered practically the entire main deck. (Seago)

Container Ships are cargo ships that carry all of your cargo in containers. They are part of the intermodal transport that moved the majority of the world dry cargo. The majority of these ships propelled by a diesel engine, with crews of 10 to 30 people. (Trucco)

Container ships are the most versatile and have evolved rapidly. Since the majority of goods can be transported in containers of 10, 20 and 40 tons; being 20 tons the most used. These containers can also be cooled, adapted for the transport of liquids, transport vehicles; practically everything can be transported in containers, in this case, the loads of Heineken beer products. (Trucco)

Tankers are vessels for liquid loads. If transporting crude oil, oil tankers are called; they can be designed for liquefied gases, are called gassers; for chemicals, are called chemical tankers. Reefers are used to transport perishable goods, that require a temperature-controlled atmosphere such as fruits, vegetables, meats, fish, dairy products and other foods. Cargo ships for rolling stock are capable of transporting any platform with wheels, thanks to the access ramp. Coastal ship or boat of cabotage has a helmet that allows you to navigate in shallow water near the coast where there are reefs or other pitfalls. (Seago)

Ferry are RORO vessels of the type , dedicated to the transport of passengers and their vehicles; are part of public transport in cities surrounded by water, such as Venice. Cruise ships for the transport of passengers by pleasure, for tourism and leisure. The shipping can be arranged in two different regimes, depending on the volume of goods to be transported free navigation or shipping in regime of chartering or tramp and liner shipping or liner. (Trucco)

The transport in regime of chartering deals with the traffic of large volumes of goods as solid bulks (cereals, minerals etc.), liquid bulk commodities (oil etc.), industrial products that are transported in a large number of units (such as cars or manufacturing plants complete). The chartering deals in this case will surround the Heineken beer bulks. (BDP, BDP International: Export Logistics)

The contracts for the exploitation of ships more frequent are: chartering bareboat, voyage charter and chartering by time. The contract is made concrete in a document called a “charter party”. In a charter party, charterer agree, among other things, the time of iron, which is the time that the boat must remain in dedicated port for loading and unloading operations. (Trucco)

The regular line is suitable for the traffic of general cargo and containerized goods that tend to be of greater value than the views in the previous paragraph (charters) as industrial products and consumer goods. The main advantage of the regular line scales is to provide frequent, keep rates stable and ensure the duration of the long-term service. When you sign up for the shipping you must know which operations and charges are included in the freight. The “terms of line” or liner terms are the terms and conditions, set by the line, in which the ship of line takes in charge of the goods for transport. Cutting edge, free in liner out, the load on the source port is provided by the goods (that is, the charger) and unloading at the port of destination by the ship of the line. In the operations of international sale often the transport of the goods is carried out by sea. A contract for the international sale of goods includes, among others, the price and the mode of transport. (Trucco) (BDP, BDP International: Export Logistics)

Another important invention is the moto ski, that is the result of the search of the human being to create appliances for your fun, is also used as a means of rescue to persons with a water accident already that are fast and each time a little larger for these uses. (Trucco)

Within the last advances of the man in means of transport aquatic, we find ourselves with the yachts that are small boats intended for the use of a small group of people, are equipped with the most current technological advances and can surf the web on the high seas. (Trucco)

The Netherlands, where the Heineken beer brewery is operated, is located in Eastern Europe; off the cost of the Atlantic Ocean just East of Great Britain. In order to ship the Heineken commodities to the US, the maritime transportation ships would need to sail across the Atlantic Ocean. The most ideal destination for the maritime cargo ships would be in New York where many commercial shipping ports are located. Once the Heineken commodities reach New York shipping import docks, they will then need a process of transportation to their final destination at the Walmart in Oklahoma City. This transportation process will of course need to be executed via ground transportation as it is the method that can carry the greater amount of product versus air transport and more importantly, is cost effective. Considering that Walmart already has a state of the art ground transportation system for their inventory, this would not be a problem should they make a reasonable deal with Heineken to import beer commodities. (BDP, BDP International: Export Logistics)

Every type of business, including Heineken and Walmart, has some form of inventory. Inventory is a non-liquid asset which is usually used in sales for the turnover of revenue. Examples of inventory may be food items in a grocery store, computers for sale in a tech store, or automobiles being sold by a car dealer. These inventories however, are finished goods. They came from a work-in-process, which started out as raw materials from a manufacturer. (Sunil Chopra) Not all inventories are intended for sales revenue though. Businesses may keep inventory of general office equipment used by their employees. Not all inventories are physical either. Customers may be considered inventory while they are waiting in line at a retail store as they represent a sale. There is also virtual or information inventory. A writer may have many enterprise writings on their computer waiting to be published; such documents may be considered information inventory. However, this is not the case with the Heineken-Oklahoma City plan as the Heineken beer products are tangible. (BDP, BDP International: Import Logistics)

Being low on inventory is never good for business as it causes the loss of revenue and opportunity. In contrast, an overflow of inventory can hurt a business just as bad. Most inventories may eventually become obsolete if not sold or used. Heineken’s beer may spoil or expire if not maintained appropriately in the inventory process. (BDP, BDP International: Import Logistics)For such reasons of obsolescence, inventory management is required to forecast the amount of inventory needed. (Investopedia)

The amount of inventory needed all depends on what industry a business is in. So, it would be wise for a business to operate in an industry where given inventory is in high demand. The retail industry is constantly in high demand, especially for a reputable company such as Walmart. Walmart is a chain of retail outlets throughout the world that sell basic living and home products. They retail for hundreds of manufacturers of food, utilities, clothing, pharmaceuticals, among various other things. The plan is to add Heineken beer to that list of products to the Walmart in Oklahoma City. Walmart has been striving for over fifty years because the retail industry is a secure environment for business. (BDP, BDP International: Import Logistics)

The foundation of Walmart’s success in inventory management traces back to when it was first founded by Sam Walton. Part of the strategic business module was to keep sales prices at the bare minimum. The reason for such a distinct yet innovative strategy was to maintain a cost effective scale to volume ratio. Although other competitors in the retail industry had more ample profit margins at the time, Walton knew his sales volume would balance it out. (Mower)The sales volumes would eventually allow for the economies of scale theorem, giving Walmart a competitive market advantage in the long run. This inventory management strategy enabled Walmart to reinvent the concept of supply chains in the retail industry. Therefore, many of their foreign imports are from overseas and this is where maritime transportation becomes useful. This is especially the case to add Heineken beer to the Oklahoma City Walmart outlet. It is also important to consider operating costs in this plan. (Alliance)

Walton strategized in his business module was also minimizing operating costs. Even after the groundbreaking success of Walton’s business module, Walmart has maintained the same inventory strategy it started with. The basis of maintaining minimal prices on a grand scale while keeping the operating costs limited proved for a solid method of managing inventory more accurately than any other entity in the retail market. (Rosanna) Being able to offer sales lower than industry competitors is an effect of such massive sales volumes deriving from a global operation and never ending sources of consumers. Walmart’s ubiquity has allowed the business to obtain a critical market share by being able to sell such a diverse product mix almost anywhere in the world. (Hyde)

Effective inventory management governs for the most accurate inventory, for inventory management to know exactly what they need and when. Walmart’s supply chain management system utilizes information technology to keep track of their inventory. This is done by tagging all of their products with barcodes using radio frequency identification technology or RFID. Walmart helped pave the way for managing inventory through electronic information, which could then be conveyed to the data base for the inventory managers to analyze. Utilizing such technology in the process of the maritime transportation from the Netherlands would especially be useful in maintaining accurate inventory of the Heineken imports. (BDP, BDP International: Import Logistics)

An additional strategy that Walmart executed was dealing with their manufacturers directly. (BDP, BDP International: Import Logistics)Walmart should certainly deal with Heineken directly in planning the imports from the Netherlands. The responsibility of inventory management was directed to the suppliers, a strategy that called for an inventory system managed by the vendors. This relationship with inventory management and vendors made for a more stable processing of inventory and even helped reduce accounting errors. (Malini Natarajarathinam) As a result of such cost effective processing, the right amount of products was always available to customers. (Waller)

What makes this electronic information of inventory so unique is the real-time relay of the information. Data is recorded at the point-of-sales and then instantly relayed to the primary inventory data base. This sales information, along with already existing warehouse inventory information, is sent to the suppliers. The suppliers use this information to calculate when more products within the product mix need to be shipped. All of this information is transmitted back and forth between all parties of the supply chain through Walmart’s private satellite system. Considering that the Heineken beer product is only going to Oklahoma City. (Bacheldor)

Walmart also makes use of a distribution network as part of their supply chain. This process is done by positioning their distribution centers in close driving range of the retail stores. The transportation trucks under-go a cross-docking process upon arrival at the warehouses. (Soni) In this process, finished products are taken from the truck coming from the supplier and immediately packed in a store-bound truck. This method is useful because it does not require that the products spend time and take up floor space in the warehouse. This entire process both decreases costs for inventory storage and decreases transportation costs. Another mechanism of this supply chain is how Walmart uses their own truck drivers for transportation of materials. From the time that the Heineken beer products arrive at the import docks in New York, the Walmart supply chain trucks will be ready for loading and shipment to Oklahoma City. (Morakhia) (Seago)

Being the number one supplier-retailer for most of general consumer goods, Walmart holds significant control over nearly every part of the consumer goods industries. By maintaining to the strategic business module of keeping low prices, Walmart continuously corners their suppliers to reduce their prices. When the Oklahoma City Walmart finalizes their deal with the Heineken Brewery, they will most likely purchase the beer products at reduced wholesale prices. (BDP, BDP International: Heineken) This pressure to keep cutting prices has led to changes in regards to the manufacture inputs and outputs. (Dozier)

These operations within Walmart’s inventory management put emphasis on the planning for demand and forecasting for future orders. The forecasts predict the consumer demand for specific products which is based off of historical data, revenue drivers, and fluctuations in industry trends among competitors. Planning for product demands is used to formulate forecasts more accurately, which is a significant factor in effective inventory management. These forecasts are then compared against existing levels of inventory to help assure that the warehouses have the right amount of inventory to satisfy the demand. The Oklahoma City Walmart must know exactly how much they are purchasing from the Heineken Brewery based on their forecasted sales of the product. (Diamond) The flow of the product mix from the manufacturer, to the retail outlets, and to the final destination of the customer, is the basic function of distribution in the supply chain. Often products undergo batching through the supply chain until they are finally stored on the shelves as finished goods. (Lu)

Inventories are valued at the lower-of-cost-or-market (LCM), which is computed using the first-in first-out (FIFO) method of accounting. Walmart values inventory at the LCM because markdowns are recorded as reductions of retail value inventory. (Gokarn)

Despite Walmart’s remarkable inventory management system, even they inevitably suffer losses due to overlooked flaws in the system. In April 2014, executive officers of Walmart came forward about having issues with their inventory managements system. Out of stock merchandise cost the company nearly $3 billion USD in sales, ironically while their inventory increased at a higher rate than sales. (Rosenblum) The problem was in the RFID system. RFID is read with a proximity scanner. Unlike barcode scanning, RFID is not usually or even required to be seen by the naked eye. This caused it to be overlooked in certain inventory products where RFID was hard to scan through metals and liquids. It is important that this inventory flaw does not occur in the Heineken import plan. However, considering that the plan is based on only the Oklahoma City Walmart, it is unlikely that this would be a problem. (BDP, BDP International: Heineken)Currently there is speculation if Walmart should hire more payroll employees in the warehouses to scan barcodes manually to alleviate such inventory errors. (Souza)

Walmart’s inventory management has minimal impact towards the environment. With distribution centers being closer to the retail outlets, it leaves less of a carbon footprint from truck transportation. In inventory management however, the primary impact that inventory has on the environment is obsolescence. If Walmart’s inventory management flaws cause products to go obsolete, then this is not only a cost for them, but a cost on the environment due to the pointless manufacturing of these products. Such materials and energy used to manufacture these products could have been used elsewhere more effectively such as other retailers that Heineken might have done business with. (BDP, BDP International: Heineken)

Because Walmart’s inventory management system allows and even pursues the lowest possible prices for customers, it makes a significant beneficial impact on the social environment. The recent RFID flaws in the inventory management system however, have cost Walmart billions of dollars. These problems must be avoided in the Heineken plan with the Oklahoma City Walmart. (Dudley) Products were unknowingly stored in warehouses while the shelves were out of stock for customers. This also creates an economic impact on the business. This situation increased inventory holding costs while causing the perception of inadequate customer service by not providing the customers their economic demands. (Handfield)

The Heineken beer products can be strong inventory assets, and if they are not sold, they become a loss due to obsolescence. On the other hand, not having enough of it will drive customers elsewhere where they can get the beer product. The cost of inventory itself is irrelevant, because if it is not sold, it will remain a cost anyways. The relevant factor is the cost of the inventory that is sold or cost of goods sold (COGS). (Salami)When the inventory or product actually is sold, the cost can then be deducted from the sales revenue to calculate profits (excluding applicable taxes based on jurisdiction). Walmart’s physical inventory being overlooked extends to the inaccuracy of information inventory in their database. Because such valuable information is left out, it leads to decline in customers when they are regarded as inventory. The customers become dis-satisfied with the out of stock merchandise and leave the store, which counts a customer inventory loss. (Gilmore)

No inventory management system will be one-hundred percent accurate. There are both advantages and disadvantages of financing and holding inventory, including risk factors. There are even other external costs to consider such as management costs and the cost of possible theft. However, in order for a business to be as successful as Walmart, it is imperative to compute inventory requirements as accurately as possible. Walmart’s inventory management system stands as the benchmark and the gold standard for other competitors in the retail industry. If the Heineken imports show to be successful for the Oklahoma City Walmart plans, then it is likely that the same plan will be integrated into other Walmart outlets. (BDP, BDP International: Heineken)

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