The Sultan Center Food Products Business Essay

Spinneys :

"Spinneys" was first formed in Alexandria, Egypt in 1924 by Arthur Rawdon Spinney, an officer in the British army, who identified a need for imported food products. By 1939 Spinneys supplied food to more than 20,000 people in Iraq and during World War II the company catered to all the Allied Forces in North Africa

Today the Spinneys Group Limited is a premium supermarket retailer in the Middle East, and operates hypermarkets and supermarkets in Qatar, Lebanon, Egypt, Jordan and UAE.

PWC Logistics (Agility), the leading provider of comprehensive supply chain solutions in the Middle East they signed with Spinneys a third party-logistics agreement (3PL) services agreement for providing warehousing and distribution services for their retail stores that are located in multiple locations throughout greater Beirut, Tripoli and Sidon, for a period of fourteen years.

The total value of the contract will depend on the volume of products handled by PWC for Spinneys.

By outsourcing their logistics, Spinneys will both lower their supply chain costs and be able to focus more closely on sales and marketing, their core competencies

In the case of this supermarket chain, we will focus on the cold chain and how "Spinneys" treat the frozen food and what are the strategies used in case of any problem.

TSC Sultan:

The Sultan Center Food Products Co. KSC (known as The Sultan Center or TSC) is Kuwait’s largest independent retailer and a leading supplier of supermarket items, perishables, and general merchandise which currently runs 55 stores in nine countries in the Middle East.

TSC’s operations also encompass convenience stores, restaurants and catering, trading, fashion, telecommunications, security and investments. It also operates successful retail stores and restaurants in Oman, Jordan and Bahrain and Lebanon.

The Sultan Center made a major Lebanese acquisition in July 2008 by acquiring one of the biggest supermarkets in Lebanon "Geant Casino" and "Monoprix" for an amount of $ 97M and right now he is operating under different retail chains to cater to all customers’ needs:

Six TSC Plus Centers opened in Achrafieh, Verdun, Jnah, Zouk, Baabda and Hamra where high quality products, exclusive imported assortment, freshness and unprecedented services are available for clientele to Experience the Difference; and one TSC Mega Market in CityMall Dora providing everything under one roof at Always Great Value on each and every shopping trip.

In April 2010, a new shopping concept emerged with the birth of TSC Signature, a refined store in the historical Beirut Souks offering gourmet and premium imported goods as well as basic shopping needs and local merchandise;and embracing hubs serving authentic international cuisines for fine food lovers.

Additional TSC outlets are expected to open in the near future to strengthen the retail company presence in the country and expand its client base.

TSC maintains its own warehousing facilities with state-of-the-industry management system.Each ambient-controlled warehouse facility spans more than 35,000 square meters and accommodates more than 25,000 products. Sophisticated radio frequency equipment allows for scanning directly into the POS system for greater accuracy and efficiency. This enables the company to receive and process approximately 140 containers per month via air, ocean and land.

Treatment of the frozen food throughout the cold chain in the Lebanese grocery stores:

According to the questionnaire survey that is mentioned in the Appendix B, that was conducted to "Sultan TSC" and "Spinneys" as well as the interview survey mentioned in the Appendix A we concluded the following:

"Sultan TSC" and "Spinneys" adopted the same supply chain management as well as a similar cold chain process.

Therefore, we will explain about the frozen process throughout the cold chain in both companies and the benefits from the implementation of traceability system in the supply chain.

The cold chain extends from the raw material supplier through to the consumers’ refrigerator/freezer, and all the steps in between.

The cold chain for both Frozen and chilled products is almost the same; both they must reached the same transfer points by respecting the temperature and the high levels of hygiene at all stages for both.

The only difference is the range of temperature that chilled and frozen food must rigidly maintain.

For the chilled food the range of temperature is between [0oC and +5oC].

For the frozen food the range of temperature is between [-15 oC and -18oC]

Accordingly, you can refer to the sequence of events within the cold chain in "Spinneys" and "Sultan TSC" that is illustrated in the Figure 5.

Step 1: Raw material:

A success cold chain start from the quality of the product, low quality of raw material can affect the whole cycle even if the company is respecting all procedures.

Therefore "Spinneys and "TSC sultan are dealing with the top quality suppliers all over the world for making sure that at the end they are delivery to their customer a high quality of products.

Step 2: manufacture and chilling/Freezing:

Manufacturer to preserve a high quality of foods they must chill or freeze products quickly and adequately after preparation and manufacture.

Step 3: Packaging:

After goods being manufactured, suppliers must packing the goods since both Spinneys and TSC sultan they agreed with their supplier to handle this important issue. Packaging plays a key role in protecting the product from contamination by external sources and from damage during its passage from the food producer to the customer. The choice of packaging is dictated primarily by economic, technical and legislative factors. Also, a well-designed and consumer-appealing package will help to portray an image of high quality and responsible food production to the consumer.

Step 4: cold Store:

After goods being packed at supplier’s warehouse they are transferred into the cold store stores ready to be transferred in the next step into the holding stores.

The cold store is an enclosed chamber or box made of insulated walls, ceiling and floor and fitted with an insulated door. It is kept at a preset temperature by refrigeration machinery.

Step 5: Transportation:

Goods will be transported by vehicles to another point named the holding stores.

The vehicle must be provided with a good refrigerated system that remains operating at all times during transportation to keep the product temperature at the required values. During use it is important to keep doors closed, otherwise large quantities of warm air will enter the cold area.

Step 6: Holding Stores:

Packed goods are transferred to the holding store where supplier/customer arrange the pick-up. It depends on the agreed delivery terms between supplier and "Spinneys/TSC sultan.

However in most cases the delivery terms is on CIF basis which means that the supplier is responsible on delivering goods up to Beirut Port in good conditions without any damage and if it happened, supplier will support charges.

Step7: Transportation

Goods will be loaded into refrigerated containers (Reefers.) in order to ship them by sea up to Beirut port.

Refrigerated container or reefers are insulated, are specially designed to allow temperature controlled air circulation maintained by an attached and independent refrigeration plant.

Step8: Distribution Center:

"Spinneys" and "TSC sultan" they handle the clearance and customs procedure and clear out the goods for sending them to their warehouses into refrigerated trucks.

Step9: Transportation:

Goods will be transported later on from warehouses up to their branches across all Lebanon.

Step 10: Retail Outlet:

Goods are ordered and requested based on the consumption and are stocked in the showroom within a certain temperature condition.

Step11: Consumer handling and regeneration:

Refrigerated foods handled by consumer for ordering new products.

Stocks should be rotated to ensure that the products are sold on a "First in-First out" basis (FIFO).

As first step a Purchase requisition (PR) will be issued by using the ERP system for frozen food items containing a specific number, this number must be traceable.

The requester that issue the PR must take many factors, the yearly consumption and the minimum and maximum quantity in the warehouse that are calculated based on the FIFO method.

After getting the confirmation, the purchase requisition PR will be transferred into Purchase Order (PO) with a new reference number; based on this number they track the order from production till receiving them to the warehouse.

Upon receiving the order by the supplier, they must sent to their customer the order confirmation, that means that they are confirming the Purchase Order.

In the order confirmation as well as all shipping documents the PO number must be mentioned clearing for tracking purposes.

The updated status is added to the order at each stage in the ERP system used in order to be informed the requester about the real status and the estimated arrival date for the requested item.

Upon goods are ready for shipment, supplier must sent to his customer the shipping documents that must container the following:

1-Original Invoice 2- Original Packing List 3-Bill of Lading 4- Certificate of Origin 5- food safety test 6- EUR1 document if they are shipping goods from a European Country.

Starting from this stage, we can track our order based on the received Bill of Lading (B/L) that contain the following information: B/L number and Container number.

The above information are very important, we can access the website related to the liner, each liner or shipping company have a system tracking system which can provide to their customer a real idea about the status of their order, they only need to do is to add the container number or B/L number into this tracking system.

Upon arrival of good to port Beirut, the original shipping documents will be submitted to the clearance agent in order to clear out the goods and deliver them to the nominated warehouses and a store receipt voucher must be issued.

After retrieving goods from the warehouse an issuing voucher must be submitted along with the goods.

Upon the quantity reach the minimum, directly the system request another requisition.

Traceability for the frozen food.

To preserve quality and safety in frozen foods, temperature requirements exist for each major stage of the cold chain.

Accordingly we will explain in the following parts:

How the grocery stores are implementing the traceability system? What tools are using in order to monitor their goods through the cold chain?

Transfer Points:

Particular attention is paid to the transfer of frozen foods, which should be done as soon as possible of the warehouse to vehicle / container, the guard-room, the furniture sale. Often, a transfer of responsibility occurs at the same time as the transfer of frozen foods. It is important to note that:

- Frozen foods are not left to the temperature and humidity for a long period of time. It is recommended to use a temperature controlled area for any external handling of quick frozen foods.

- Procedures are in place for dispatching loads or for immediate storage as soon as they arrived, so as to limit their exposure to moisture, heat and other adverse conditions.

- Ensure that staff adopt such procedures.

- The temperature of frozen foods that are receied or sent are monitored and records of these are kept as long as necessary on legal and business plans.

- Operations such as setting cartons, assembly, palletizing are made in the cold store or in a temperature-controlled area.

C-Food :

History:

The company is a part of the group "The son of Chafik Halawani," which is a Lebanese company. The leading product of C-Food International is "Siblou", that was basically a Lebanese idea that contain a wide variety of products. Established in 1996, "Siblou" was dedicated to providing consumers with a variety range of seafood focusing on the quality ant the best service.

"Siblou" challenges: they are working with a delicate product such as seafood that is considered as success since they are continuously providing to their customers an excellent quality and they are also focusing on the product development and customer satisfaction by providing a large variety of seafood in order to meet the demand of all their consumers despite the difference in the culture or habits.

With extensive experience and researches, Siblou could establish standards and specifications for purchasing and a quality control (QC), which ensures the procurement of fresh products from regions well known for seafood.

The sub-group's brands:

C-Food owns several sub brands and products such as:

"Greens", "Lili Green" for frozen vegetables and fruits.

"Seafood" for shrimp and all kinds of fish.

"Adriana" for products exported from Vietnam and China.

Suppliers of C-Food:

C-Food Company has a international chain of suppliers from the 5 continents, as well was agencies around the world for which they are under their direct supervision for placing orders and taking care of the logistics process.

C-Food Company has a team of distributors in Vietnam, China, India and Poland.

Some countries with which C-food works :

Belgium: for potatoes (fried) frozen artichokes, broccoli.

Egypt: for frozen strawberries.

Turkey and Jordan : for potatoes, chicken and shrimp.

Germany: for fish sticks and burgers.

Brazil: with the company "Sadia" which is the second famous brand in the world.

China for squid and crabs.

India, Vietnam and the Arab countries for shrimp.

Vietnam and Thailand for tuna.

Morocco for sardines.

Packaging and Labeling:

Before shipping the goods from the foreign countries, supplier takes in charge the packaging and labeling. For example, for the chain of Supermarket "Spinneys" in Lebanon, certain criteria must the supplier followed such as specific labels, brand name; all these details must be agreed before placing any order.

Whatever the delivery terms is, the packing must always be made in the country of origin before arranging for the shipment.

"Siblou" products have a specific barcode with a serial number. These numbers are assigned to differentiate the product as well as the brand.

Samples:

European standards are monitored by the company (EU approval code) which is the European Committee for inspection. Then before any contract between suppliers and customers, several samples and pictures are taken of the goods indicating the expiry date of these products. These samples are analyzed by the committee to deduct if they are conforming to the prerequisite standards.

Afterwards, the control is carried out on the quality of these samples to approve the loading while checking the "booking containers" and the "loading report".

Transport:

Through its agencies, C-Food works with international shipping lines as:

CMA, Maesrk, Hapag Lloyd, Hamburg Sud.

Orders for goods are made in several countries (as we talked about various products from European countries). The role of "freight forwarder" is here to gather the containers of goods in one country. For example, the combined shipment between Belgium, Germany and France is made in one country by land transport.

The goods are placed in a cold store (for example: Kuhlhauss in Germany, Daalimpex in Belgium). Finally, the goods are grouped in a single container, transported by sea into refrigerated containers to their final destination: Lebanon.

Traceability of containers is done through the sites of logistics companies whether indicating the bill of lading number or the container number that are already provided by the liner.

The tracking system mainly shows the following information:

The routing taken by vessel, the vessel name, the container number and the quantity of container the ETD( Estimated Time of Delivery) from the port of loading, ETA(estimated arrival date) to the final destination.

Upon the arrival of containers at the port of Beirut, the company works with Mr. Hasan Jaroudi, their authorized clearance customs agent at the customs authority clear out the goods up their cold storage area located in Beirut.

Kindly note that there are special treatments from the Lebanese customs for the refrigerated containers as:

Giving a priority to clear out the goods since products are refrigerated and spending more time in the customs might affect them.

Less Free demurrage [1] time: for regular containers liners are providing them up to 21 days free demurrage. However for refrigerated container the maximum free demurrage is 7 days and after that date C-Food start paying for a container 20 feet around 50$per day and for 40 feed around 100$ per day.

A sample is taken and sent to the laboratory to be tested. A double check of the quality of the goods is also made on site.

The temperature decoder placed in the containers during transport is also studied to analyze the temperature fluctuations during transit. The temperature should be between -22 º C and -16 º C, the ideal temperature is -18 º C.

In case the temperature increased and the cold chain broken, the merchandise is defective. The company will notify the insurance company of the problem which in turn will take a sample to undertake analyzes.

Temperature recorder:

The product temperature must be controlled at the delivery under a reliable procedure. When routine control is performed between the temperatures obtained by two cartons it should not be confused with the product temperature.

Infrared thermometers are easy and quick to use but have the disadvantage of not providing reliable information of the temperature of the product. They give the surface temperature of the packages and are influenced by atmosphere and ambient light. Its use is accompanied by a guide of precautions for the distribution of frozen foods.

Commercial distribution:

Siblou distributes its merchandise to large supermarket chains such as: Spinneys, TSC, the Charcutier Aoun, Abu Khalil, as well as smaller markets and shops.

The Recommended temperatures in supermarkets refrigerators vary between -20 º C and -23 º C for seafood and derivatives of Siblou: shrimp, crispy shrimp, ravioli shrimp, cod fillets, sole fillets, spring rolls, prawns.

The conservations temperatures indicated on the packaging and applied to all Siblou products are:

-4 º C for a period of 24 hours, -6 º C for 4 days and -12 º C for 2 weeks.

Siblou assigns a controller to check in the supermarkets the conditions of the goods and the temperatures in the refrigerators.

Siblou also distributes its products to various:

Hotels: "Movenpick" and "Phoenicia"

Restaurants: Salmontini, DT, Mondo, Roadster.

The profit of "Siblou" :

Their profit is calculated through: the price of containers which reaches $ 5,000, plus a cost of 3,500 Euro for shipping from one country to another, the cost of packaging, the cost of quality, L/C, insurance.

In conclusion, we have shown in this chapter (through the history of these companies and their various suppliers around the world) how the food traceability is made: for logistics company and for importers of frozen and deep frozen foods.

We have shown as well: the methods of packaging and storage of the products, the monitoring during transport, the control of the cold chain and ultimately the commercial distribution.

We demonstrated the strategies adopted by various supermarket chains and by importers of various frozen and chilled products such as Siblou (which distributes to supermarkets) and King Food (which distributes to its Burger King branches).

Through these cases, we deduced the role of these foods in the Lebanese market (what are its market share), while analyzing the means used to transport the goods and the role of these products in the consumption habits of households.

King Food: (Burger King, Applebees’)

History:

«  K Group » is a holding company founded 60 years ago and contain several companies under his name as:

"Kallassi trading company" for refrigerated and dry food.

"Arla Kallassi" for dairy products such as: Dano, Puck, Lurpack.

"Servika" for deposit and storage.

"Darika" a cheese factory.

The group gained in 1999 the international franchises "Burger King" under the name of "King Food sal," and another chain of restaurant was opened "Applebees'" on February 2006.

Nowadays, Burger King has 20 branches throughout the Lebanese territory with two branches under constructions, while Applebees has two branches in Lebanon, and a new branch under construction.

Suppliers of King Food:

Burger King is a franchise that should follow international standards; these standards are applied by king Food suppliers. They follow an Approved Supplier List: ASL which is updated every 3 months.

King Food Company has a direct contact with the international suppliers in United States, Netherlands and the Arab countries, where factories of raw materials are automated, under the BRC (British Retail Consortium) certificate.

Contact is made with the international suppliers one month in advance in order to place the orders. A "Proforma Invoice" of the quantities requested with the delivery date is prepared and sent to the office of "King Food" in order to get the acceptance on the request.

"King food" imports most of his frozen products from of several countries such as:

USA: Pre-cooked chicken.

USA and Middle East: Frozen meat.

Netherlands- McCain: Potato chips.

USA and Middle East: frozen bread.

Transportation:

All products supplied to Lebanon from USA and Netherland were shipped by sea using the services of « forwarders » according to three delivery terms named Incoterms [2] : EXW,CIF,FOB we will describe them later on.

" Forwarders" used the refrigerated containers once they want to arrange the shipment from USA or Netherland.

EXW-Ex-Works: The supplier makes the goods available at its premises. King Food is responsible for uploading and shipping until arrival at King Food premises. This term places the maximum obligation on King Food and minimum obligations on the Supplier.

In case of any damage, it will be the duty of "King Food", therefore along with this delivery terms and for each shipment "King Food" apply an insurance policy a Lebanese insurance company under the clause A [3] .

FOB-Free On Board: The supplier must load the goods on board the vessel nominated by "King Food". Cost and risk are divided when the goods are actually on board of the vessel. The supplier must clear the goods for export.

CIF-Cost Insurance and Freight: the supplier must pay the costs and freight and insurance until the arrival of good to the port of discharge-Beirut, risk is transferred to King Food" once the goods are loaded on the vessel.

Products imported from Arab countries reach Lebanon by land, in refrigerated containers onto trucks. The truck driver has the original shipping documents that contain: Invoice, Packing list, Certificate of Origin documents.

Temperature recorder:

Throughout the shipment, the fluctuations of temperature are shown in the "Temperature recorder", a thermograph which indicates the change of temperature within the containers. These changes are recorded on a tape that is taken upon arrival.

Moreover a sample will be retrieved from the arrived goods in order to be tested in terms of quality.

Distribution:

Upon arrival of the goods up to Beirut Port,and after the clearance procedure goods are taken from the port and transported in "Kallasi" trucks up to "King Food" storage area in Dbayeh-Meten. They are packing goods in a cold store with a termperature between -18ºC and -20ºC.

Accordingly the Traceability system is applied in daily basis.

Once goods received they submit all related information as the production and expiry date into the system for tracking purposes. They adopted the method of "First in First Out, FIFO".

The 20 branches of Burger King make 3 orders per week, while Applebees makes 1 command per week.

The trucks of the company are responsible for the distribution of products according to the lists of commands for each branch.

On the commands "warehouse order form" is indicated:

The number of products, the description of goods, the quantity requested and the required temperature that must be respected.

Burger King Franchise satisfies the needs of his customers by:

Responding quickly to customers and industries needs.

Making continuous traceability on the quality of frozen food.

Maintaining a healthy idea for their own brands.

The purpose of the interview was mainly to collect opinions of managers and experts who have been involved in Traceability management to obtain specific factors affecting success. Based on the interview objectives, the following questions were asked.

Examples of interviewees’ answers:

1. What do you think of the reason why the company implements traceability management?

"Several food safety incidents happened, so the company paid great attention to food safety" (King Food, Spinneys, TSC Sultan).

"To improve the reputation of the enterprise and product brand; the vital goal is to increase the net benefit" (King Food, TSC Sultan).

"First, it is important to improve product quality; second, it shows the company’s commitment to consumers, therefore consumers will understand the product life cycle". (C-FOOD, Spinneys).

"We were looking for improvements in terms of food safety and cost saving towards customer satisfaction". (Spinneys, TSC Sultan).

"To be market leader we have to differentiate from other competitors".( TSC Sultan,C-FOOD,Spinneys,)

2. Has the company’s economic benefit changed after its implementation of traceability management?

"Market share is expanded, annual sales increased 2% (King Food)

"There is not much change" (C-Food).

"The frozen food waste was significantly reduced; After implementing the traceability system, we start with receiving notifications about the expiration date 3 months before, so we increased implemented a marketing promotion thus a large quantity of food waste was reduced".(Spinneys,TSC Sultan).

"Previously the checking was done manually, so we reduced the cost of labor and cost of waste and improved the food safety of our product.(Spinneys,TSC Sultan, King Food)

3. What is the change of product price after the implementation? What dose traceability costs include?

"We didn’t change prices since the savings was much bigger than the cost of implementation. However, the traceability cost includes the system updates, maintenance and training people".(Spinneys, TSC Sultan, C-Food, King Food)

4. What are the difficulties or problems and the causes during the system implementation process?

"Workers have complained about the system, because the large amount of information collection, amount of label painting and the time that they have to sacrifices for training"(Spinneys, TSC Sultan, King Food)

"high cost include label cost and the hardware equipment cost (equipment costs are high since are imported and customized); the operations are increased such as painting labels and other tools; (King Food)

6. What do you think of the Traceability management implementation success?

"Both reputation and net benefits have been improved through the implementation of the system was successful" (Spinneys, TSC Sultan).

"Brands and reputation are improved, frozen food are safety and well evaluated by the consumers that the objective of Traceability system"(King food,C-Food)

"If the traceability system can achieve complete tracking, information can be automatically collected and transmitted to the database, bring the whole industry chain doing a good job, the system implementation is successful" (Spinneys,TSC Sultan).

"First, traceability system is necessary for enterprise that provide benefits to enterprise and workers; second, users can find the information that they need and the information credibility is high; third, through traceability applied, the products are more trusted by consumers"( Spinneys,TSC Sultan).

7. In your opinion, what are the main aspects for the traceability system success?

"Customer satisfaction, and net benefit" (Spinneys, TSC Sultan)

"Evaluation of success mainly have three measures including operation time, benefits to enterprises, and information satisfies users’ need" (King Food)

"Providing an accurate data, easy to use and enterprise benefit increase" (C-Food)

According to the interview we listed the following aspects of success that we concluded after the implementation of Traceability management in the frozen food industries:

Brand and reputation improved (Spinneys, TSC Sultan ).

Companies’ benefits increased (Spinneys, TSC Sultan, C-Food, and King Food).

Food safety enhanced (Spinneys,TSC Sultan )

Products are more trusted by consumers (TSC Sultan, Spinneys , King Food)

Information satisfy users’ need (C-Food)

consumers can simply, quickly and accurately obtain the required information (King Food)

Data accuracy (Spinneys, TSC Sultan)

Information automatically collected and transmitted (King Food)

System user satisfaction (Spinneys, TSC Sultan, C-Food, King Food)

: Questionnaire survey:

To obtain quantitatively perceived benefits of implementing traceability system, a questionnaire with 6 sections and 15 questions was used for the questioned industries.

The first section of the questionnaire we asked about the benefits of traceability management by using the Likert test (from 1 = "very unlikely" to 5 = "very likely").

Moreover we asked about general information related to the traceability system used and their attitude toward improving the current traceability system. From the second until the section six, we asked about their benefits from the traceability system with regard to the market growth, recall products, liability claims, process improvements and labor cost savings.

SPSS ANALYSIS:

We analyzed the data collected from the "likert test" by using the SPSS [4] .16.

The test used to was the Non-Parametric test to deduct the level of importance of the following factors within the implementation of traceability management.

According to the SPSS, we identified that all factors are important for the industries since the mean was over than 2.5.

The results from the SPSS perceived the benefits of traceability regarding the Lebanese frozen food market.

From the observation of table.8 we can see that all companies consider the main benefits for the traceability management is Improving supply chain management as well as reducing the spoilage of product. Other perceived benefits are Reduce Liability claims; Reduce Customer Complaints; Improve product quality, reduce labor cost and Increase the ability to retain existing customer.

Surprisingly, other literature-based benefits of traceability, such as Increase access to overseas and Increase Product price, are considered of minor importance by the conducted industries.

Advanced data collected from the questionnaire survey :

According to the questionnaire we succeed to identify and to extract the estimated saving amount due to the implementation of traceability management.

In the table.9 we will elaborate our hypotheses by focusing into two main issues;

First by finding the relation between the traceability management and the quality of food and second by showing the cost reduction due to the implementation of traceability management, taking into consideration that the system used by the conducted companies was very simple. In another way, if the companies improve their system the saving amount expect to be doubled.

Before going into details we will transfer the percentages that we got in the table.9 into numbers. Therefore in the table.10 we will we will list the estimated saving amount based on the average yearly turnover, after implementing the current traceability system within the four companies then we will describe both tables

From our observations of table.9 and 10 we can identify the following:

There is a positive relationship between the traceability management and company’s benefit; first by the market grow since all frozen food industries informed that their market share was grew because the implementation of traceability systems brings new opportunities to the food market "Spinneys" and "TSC Sultan" was the most two companies that their market share was grew.

Second we can found a remarkable and significant saving amount from the product recall,

That will lead us to say that the main benefit from traceability management is reducing the recall products.

Electronic traceability systems are considered as fast systems compared to the paper-based. It has been shown also that the electronic-based traceability can avoid doubled time for checking which was clearly demonstrated in the table.10.

At the end we can conclude that according to the table 10, the total saving amount for "Spinneys", "TSC Sulltan" and "King food" were the highest percentages above 4.5% comparing to the C-Food that the total amount was only 480 000 000$ or 2.4%.

However C-Food has the highest rate for the business improvement with more that 1% comparing to other industries; more data analysis and findings will be shown in the next chapter.

Kindly note that all conducted companies were very confidential and conservative regarding their numbers provided especially for both products recall and claims liability.

In this chapter we studied how the frozen food industries (Spinneys , TSC Sultan,C-Food and King Food) monitored and implemented the traceability management within their cold chain. Therefore we used two kinds of research method, questionnaire and interview towards extracting the qualitative and quantitative benefits.

FINDINGS

Part. 1: Data Analysis and profitability:

4.1. The Lebanese frozen food Market:

Nowadays families are looking to spend less time while cooking and in the same time getting healthy food. The frozen food respond to this problematic by reducing the time spent for cooking and providing fresh food since it retains vitamin longer time than fresh food which reflect positively on the health of end-users.

4.1.1: PEST [5] Analysis for the Lebanese Frozen food industries:

Political:

The instability of the political situation in Lebanon avoid all international companies from investing their money in Lebanon.

Moreover the demographic position of Lebanese market with a risky region between Israel and Syria do not let this sector to growth.

The lack of control of the Lebanese government and the fact that many distributors and retailers are not following and respecting the international rules of frozen food lead to many problem in the Lebanese food sector; starting by the food safety that lead to contamination and price increase that result also to sales decrease.

Economic:

Economically food prices are increasing; therefore most of distributors are importing frozen food to sell it in a price less than fresh food.

However from the same graph we can deduct a negative ratio in 2010 and 2011 due to scandal of food in the Lebanese market. Therefore grocery supermarkets start modifying frozen food package and providing more promotions to look more attractive.

Therefore the efforts of the Grocery market improved a little bit the sales turnover in the last 2 years (2012-2013).

A real competition appears in the food sector between traders and large manufacturers in terms of offering the lowest price. All brands presented by traders are considered the half of sales in 2009 and the national brands takes the rest of sales. However, the market size allow for traders and manufacturers to gain a reasonable profit.

Social:

A remarkable awareness and social responsibility from a part of Lebanese people result in using frozen food instead of fresh food which reduce the food waste since the life time of frozen food is longer than fresh food.

The frozen food industry responds to the need of customers by focusing on diversified products, attractive packaging with simple and fast method of preparation.

Technological:

The educational situation in Lebanon that is considered developed helped to improve the technology in the food sector.

Moreover some investments in the Lebanese market improve the food sector in terms of technology.

The cold chain must be respected:

The frozen process is chosen in the highest condition and freshness then sealed by quick freezing. To preserve quality and safety of this process, temperature requirements must exist for each major stage of the cold chain. It is recommended that stabilized food temperatures are maintained at –18oC or colder, the procedure restrains the germs liable for spoilage at very low temperatures. Any defect in the process will create big ice crystals, which could spoil the food configuration and cause corrosion in Product Value; in this case product must be rejected. That's why Spinneys and TSC, assign a high cost to control the cold chain products.

The required service:

The supply of frozen food to large communities is an important service because the products must be delivered when and where needed at any moment.

Therefore all facilities that we questioned are equipped by all necessary logistics to deliver their product upon request.

SWOT analysis [6] :

SWOT analysis of King Food (Burger King) and C-Food (Siblou):

Nowadays, the global market of fast food is highly competitive on the Lebanese territory due to the change that occurred on the habits: the daily meals of families are today "frozen food" and "fast food".

King Food (Burger King) SWOT analysis:

Strengths:

Recognized Brand: "Burger King" has a Powerful image in the Lebanese market since it’s a recognizable brand.

Established Market Share: "Burger King" is a market leader in fast food and hold more than 20% shares that are expected to grow which reflects an increase in the profitability.

Geographic Diversification: Burger King operates more than 12,150 restaurants across the United States and in 76 countries across the world. The Burger King brand in Lebanon currently operates 20 restaurants across the country.

Superior Expansion Plan: Around 90% of Burger King Restaurants are owned and operated by self-regulating Franchises, lots of them family-owned units that have been in commerce for decades, Burger King in Lebanon is a franchise system managed by King Food S.A.L.

Weaknesses:

Burger King present Junk foods, which results in a large percentage of childrens and adults over-weight. All restaurants are mostly located in the large cities and less in the village. The image reflects the "American way of life."  

Opportunities:

Burger King sponsoring its major new merchandise launch in years by introducing the Tendercrisp, Premium Chicken Burger and associating the launch with a advertising campaign named "cheat on beef

Threats:

The Economy and political situation: The challenging Lebanese economy and politics continues to hamper the company’s financial strength.

Changing Consumer Eating Habits:The mixture of the economy and improved wellbeing information has predisposed people to eat at domicile and to choose leaner lower calorie foods.

Therefore the sales have been little bit decreased comparing to the last 2 years.

C-Food (Siblou) SWOT analysis:

Strengths:

Recognized Brand: "Siblou" has a powerful image in the Lebanese market since it’s considered as trustful and well know brand.

Established Market Share: "Siblou" is the leader of pre-cooked frozen products and have a yearly increase in profit by 15%.

Geographic Diversification: "Siblou" is currently available in over 27 countries covering the Middle East, Europe & Africa. In each country they are represented by an exclusive agent, very professional in the FMCG distribution.

Superior Growth Plan: "Siblou" is a Lebanese company that has many branches in Arab countries; they plan to expand into further markets in the future aiming a full global coverage, breaking consumer boundaries to satisfy the ever changing culinary needs.

Weaknesses:

"Siblou" does not promote their goods like their competitors do. Muslims who are not used to Siblou products would hesitate to try out their meat/chicken as they are not certain if it is halal or not.

Opportunities:

"Siblou" might improve their sales by producing more advertisements on their goods. They might also distribute their products in new cities and some rural areas. Siblou could try to open new outlet which will deeply enhance their sales.

Threats:

The Economy and political situation: The challenging Lebanese economy and politics continues to hamper the company’s financial strength .

the sales for "Siblou" have been little bit decreased comparing to the last 2 years since a part of people are more looking to organic and fresh food instead of frozen food.

The competitive Profile Matrix (CPM) [7] :

According to the questionnaire and Interview we concluded the following Critical Success Factors (CSF) and we placed them based on their level of importance from the high to the less important.

CSF 1: Top management support.

Top management commitment and support referred to the need for management to anticipate any risk that might be encountered. Since the primary responsibility of top management is to provide adequate resources for building a successful system, the support of management will ensure the effectiveness of traceability system.

Accordingly the top management is an important factor that’s why we weighted it 0.2 and all companies got a score of 3"minor strength".

CSF 2: Supply chain management (Inventory, warehousing, distribution)

For having an efficient traceability the initial company infrastructure must be available which means that the cold chain must be respected and specially the logistics part.

Good Inventory management.

Efficient distribution system.

Good Warehouse management.

The success of traceability comes within the supply chain and how these companies treat the traceability management; thus the weight was 0.18. The supply chain for both "Spinneys" and "TSC Sultan" was relatively better than "C-Food" and "King Food".

CSF 3: Business plan and vision.

One of the essential company’s key factor is maintaining a clear vision and plan for the upcoming years. The weight provided was 0.15.

We found out that C-Food has the highest score with the planning and in the upcoming years their market share will definitely increase.

CSF 4: Communication between upstream and downstream

A strong communication throughout the various stages of the implementation process is essential for allowing employees to understand what is going on, why changes are necessary, and how it will benefit the organization. For successful Traceability system, the upstream and downstream enterprises should communicate in time and share information based on the information agreement. The weight provided is 0.13.

Accordingly we find out that "Spinneys" and "C-Food" have a weak communication system with a score "1".

In the other hand the communication within "king Food" is good with a score of "3".

CSF 5: IT system and vendor support.

The IT system used within the supply chain can reflect positively or negatively according to the traceability management as well as the benefits according to its performance.

The conducted frozen food industries all own a traceability system but it differ from one company to the other. Moreover all food companies purchase Traceability system packages from vendors and use outside consultancy service, it is important to get the vendor support.

In general, management must make sure that the software vendor provides continuous support throughout the implementation.

Accordingly "Spinneys" and "TSC Sultan" are using a bare code system along with the papers based but they frequently get free updates from the vendors. Conversely C-Food is not efficient at all but they have a plan to change it within the upcoming years.

The weight provided is 0.12.

CSF 6: Training staff

Getting an efficient System is not enough at all; therefore the part "staff training" is very important for getting better results.

The weight provided for this CSF is 0.10, and we found that C-Food has a weak training strategy in contrary "King Food" use an efficient strategy for training their staff.

CSF 7: Education

Some employees have a low education, which is difficult to understand new knowledge and to use high-tech equipment.

Accordingly the education status for employees is very important for the traceability management. The weight for this CSF is 0.08.

We found that both "Spinneys" and "TSC Sultan" have a good level of educated employees. In my opinion, they are trying to improve their weakness point for not having a training strategy by employing a well educated staff.

CSF 8: Financial Statement.

The financial phase is also important for having an efficient traceability management; we weighted 0.04 since all conducted companies are financially good.

Based on the "CPM analysis" the findings supported our hypothesis as well as our research problematic.

Accordingly we concluded that the traceability management is a key factor for the frozen food industries and it’s mandatory to prevent problems and to reduce costs as well as to improve the food safety.

Based on our analysis we found that companies that have a direct contact with customers B2C (business to customer) are more affected by the traceability management.

Therefore, C-Food is less affected by the traceability system since there are dealing B2B (business to business).

However in all cases all companies that are implementing the traceability management within their supply chain are procuring a lot of money.

The new vision and plan of all companies is to invest more in this sector, since they are now aware about the importance of the traceability management.

The challenges of the food industry in Lebanon:

In a fragile economic context like Lebanon, what really concerns customers is the price. In the grocery markets as "TSC Sultan" and "Spinneys" the national frozen food are facing a big competition from other international products in terms of price, example of frozen food brand: "Siblou", "Hawa Chiken", "Shuman", "Tanmia" and others, which reflect a tough competition. It was then that the company C-food with its leading brand "Siblou" knew how to manipulate the Lebanese market, to become the most brand used by all ages groups.

The effectiveness and efficiency of the supply chain:

Supply chain should be efficient and effective. In this case, efficient means to minimize resource use to accomplish specific outcomes; and effective, in terms of designing distribution channels.

Efficiency is measured by delivery performance, product quality, backorders and inventory level, whereas effectiveness is measured by service quality and the service needs. The implementation of supply chain requires integration of processes from sourcing to manufacturing and to distribution across the supply chain.

Therefore these importers knew how to manage the relationship with their suppliers and to develop a significant value throughout the supply chain. Increased collaboration of these groups with their suppliers is an opportunity that can increase responsiveness to the market and therefore the overall performance of all players in the supply chain.

The purpose of major distributors as "C-food" and "King Food" is to monitor and to control the cold chain by importing and distributing their own products using the services of forwarders.

For example C-Food is sourcing a part from their frozen products from the International suppliers and shipping them by using an effective shipping method with agreed liners in order to store them into frozen warehouses by implementing the international norm for the cold chain.

Finally, for successful transportation and supply chain oriented ;The questioned companies are implementing various strategies: starting by the customer oriented logistics network , where the company are more looking to the benefit of customer even if it will cost them a little bit more in order to create loyal customers and considering them as partnership.

Profitability of implementing the traceability management:

Compliance with regulatory or industry requirements.

According to the LIBNOR [8] ,the norm ISO 22000" FOOD SAFETY MANAGEMENT" is not considered as a Lebanese standard which means that it is not mandatory for all Lebanese frozen food industries to implement this standard as well as all subsidiaries specially the ISO 22005:2007 that focuses on traceability in the feed and food chain.

However and according to the ISO [9] , the norm ISO22005-2007 is mandatory and it’s implemented in more than 50 countries all over the world.

The importance of obliging all food industries and specially the frozen food industries to apply this norm is to trace the product and to have an expectation that, in the event of an incident, suppliers can execute a recall for their implicated products.

Limiting recall scope.

If the Lebanese frozen food industries implement the traceability it will allow them to have greater precision in the identification and withdrawal of product in case of a recall or withdrawal of product thus reducing costs and demonstrating control of product.

The cost of recall can be significant if they are not implementing the traceability management;

In 2011 the Lebanese frozen food market faced a serious contamination scandal that affected many industries. Due to this scandal many small industries were closed and big losses affected many large companies.

According to the minister of industries, losses due to recall products were around 100 million dollars directly and indirectly.

Globally, the company recall by Coca-Cola in 1998 cost the business $66 million directly, with indirect costs in addition. "The deprived treatment of a severe incident within a corporate can cause irreversible harm to the business, to the product or even the industry, and definitely to the reputation of those in key positions".

Within the industry, traceability is recognized as a key system with regards to incidents and alerts. Whereas traceability can seek to supervise systems in place to decrease the risk of problems, it also equips frozen food industry in dealing with any incident.

Accordingly the traceability system can reduce the food waste which means it can alert the management in case of expiry date.

Taking an example from "TSC SULTAN":

"TSC Sultan" is implementing a traceability management system dedicated for food which is divided into two main parts: fresh food and frozen food.

Upon the importation of fresh or frozen food, all data related to these products will be saved on the system. The required information is:

Gender of product, destination, supplier name, date of receiving the product and its expiry date. For each gender this information will be saved as well as other related data like the temperature for the frozen food.

These data are checked and monitored in daily basis for fresh food and in weekly basis for frozen food. Based on these data the management can use many marketing strategies towards reducing the cost by minimizing the food waste:

Product Promotion: offering another product when you purchase this item.(i.e: if you buy 1 kilo of tomato you will get another 1 kilo of tomato).

Price Promotion: discounted prices (i.e: frozen fish 1 kilo for a price of 30$ instead of 45$)

Mixed promotion: when customers purchase a number of volume from this item they will get an additional discount.

The above strategies as well others are used before the expiration date.

As per the operation manager of "TSC Sultan" this task has an important profit to the organization for around 170 000$ per month.

Moreover from our research methodologies we found that the recall plan is the most sector affected once the company implement an efficient traceability management.

According to the table.10 we conclude that the yearly saving amount for all conducted companies due to reducing the recall product was around 2 350 000$ which represent 1.5% from the yearly turnover.

Business Improvement.

According to our researches we found that the implementation of traceability management improve the Business; starting by reducing the unnecessary inventory cost, then by the reduction of product spoilage and it also improve both the process and the product quality.

Based on the table10 we found that the saving from business improvement for all companies conducted was around 1 237 400$ which represent 0.825 from the yearly turnover.

Moreover the traceability management allows the companies to identify the problems within a short time frame for fixing it before affecting other factors.

According to the purchasing manager of "King Food", due to the traceability system they easily have been notified about the expiry date of some frozen food located in their warehouses before using them.

While without the implemented system they will face more losses in terms of customers, market share and market reputation.

However and based on the SPSS analysis we found out that all variables from the table.8 are important for the companies specially these that are more related to the quality of product.

Food safety support:

Food safety programs can be enhanced when sources of contamination as unsafe handling, can be quickly and effectively identified and addressed. The traceability management can be a good support for all frozen food industries by providing a good support.

This strategy is used by "King Food" which reflected positively on their customers by providing a trustful product.

Therefore the percentage of customers was increased in the last 3 years for more than 8%.

At the end, we noticed about the profitability of the supply chain that was achieved through the market study by highlighting on the preferences of the power of purchasing and the customers power. The key to profitability lies in the proper management of traceability and transport, based on the correct distribution for the grocery market and brands of frozen products on the Lebanese territory. The success of this distribution is based on the respond of customers, who are now habituated to the use of fast food.

Moreover, due to the table.10 we deducted that the total saving amount after reducing claims is 2 050 000$ which represent 1.36% from the total turnover.

Reduce labor cost:

Based on the questionnaire we find that due to the implementation of traceability management, companies will reduce their labor cost since it will not need to waste time on double checking. The total saving amount for the conducted companies was around 92 5000$ which represent 0.61% from the total turnover.

Costs of implementation of traceability systems

The cost of implementation of the traceability systems is expected to change a lot among company and sectors depending on the kind of technology chosen, the quantity of information mandatory to be stored and the intricacy of the food chain.

For example for large grocery market as "TSC Sultan" and Spinneys they have more advantage to increase the internal traceability.

However for small producers as "Minimarket" it will be more expensive for them and might be considered as only more paperwork.

It is understandable that traceability happen at a price. But the expenses of not adopting it or having inefficient systems in place could be severe for consumers and industries.

The main important cost at traceability is training of staff and management.

Essentially, it is a cost of implementation, but it also could be an operation cost when, for example, upgrading new traceability software, adding new software or hiring a new staff. The cost of ‘External consultants’ is important for companies that do not have specialized and expertise personnel within the company. The external consultants always deal with the implementation of the traceability system, understanding and complying with traceability, labeling and hygiene regulations and assistance for certification and audits with tasks after implementation. The cost of ‘Materials’ is aligned with using pallets, boxes or labels required to conduct physical handling of traceability. For example, a high level of accuracy recommends using different pallets and/or boxes as well as unique identification through labels in order to keep the lots separated. Finally, ‘Certification and audit’ costs are associated with the implementation of traceability certification standards by managers.

According to the questionnaire we asked to "Spinneys", they informed us that the cost of implementing an advanced and effective traceability system is around 2 million dollars. However the ROI (return on investment) is around 1.3 years since the monthly profit is around 128 000$.

Outcome of studies in the US demonstrate important loss in company worth (and shareholder losses) when companies are concerned in a recall concerning serious food safety hazards. Where fewer severe hazards are involved e.g. mislabeling, there was no proof of an implication for stock value. Decisions relating to the implementation of traceability systems are therefore often made with reference to business jeopardy and to protect brand value.

The probability of an incident happening and its consequences may be assessed using a risk matrix, e.g. Figure 5.

The aim of the thesis:

Through our research the goal was to reveal the key factors for the implementation of traceability management with the Lebanese frozen food throughout an efficient and effective supply chain management.

According to the information that was collected from several sources, we deduced that Distributors, Franchises, retailers/Wholesalers adopt the same strategy in the supply chain of transporting their raw materials of frozen food. They are outsourcing this service to a third party whether are liners as "MSC" or Forwarders as "Expeditors" to transport their goods.

Why implementing the traceability management throughout the cold chain?

The consumption habits changed since consumers are eating more frozen and fast food. Thus the cold chain is considered more complex and more challenging comparing to the supply chain. The complexity and time factors are more critical for this kind of food comparing to other products. Therefore it’s mandatory to apply efficient and effective standard for monitoring the cold chain.

Our detailed research, illustrate how the frozen food industries implement their traceability management in order to satisfy consumers need. Taking into consideration the profit and the market share gained, to preserve their reputation and market power.

The main results:

According to all methodologies of researches, we can conclude that the main purpose from the implementation of traceability management in the Lebanese frozen food industries was to reduce cost and to improve the food quality and safety.

In Lebanon, there is no regulation and rule that oblige companies for adapting and implementing a traceability system.

Therefore the implementation of such standards is not mandatory by the government but is a must to fulfill the market need by presenting good quality with an affordable price.

However, due to our observations, the implementation of traceability management is considered an expensive matter so it will be limited within companies that are financially good.

Based on the above explanation, the answer to the research question is that all questioned industries (Spinneys, TSC Sultan, C-Food and King Food) are implementing the traceability management and they are considering this implementation as an essential key factor for the company profitability.

Moreover, I suggest that in the future the Lebanese government give more consideration to the food safety management and particularly the traceability management in food industries. I am sure that after obliging industries for implementing the traceability management, the food quality will be improved.

Learning acquired:

According to our researches and studies it’s obvious that the main goal for all industries is making much more profit and gaining more dollars. As well as to fulfill their customers need by implementing a modern traceability management within the cold chain which can guaranty a big profit and in the same time improves the food safety.

Personally, the traceability management implemented within these companies allowed me to apply strategies learned, to monitor the cold chain and to maintain a certain level of food safety. The frozen food industries have different dimensions (from large to small companies). Their mission is not only the profits and gains in the market share but also a positive image for customer satisfaction.

Through our discussions with the interviewees, we understood how the implementation for an effective and efficient traceability management within a cold chain can reflect positively on the safety of food and increase the company profits.

The difficulties and obstacles encountered in my research were spending a large period of time searching through the web in order to collect all related data for the theoretical part as well as reading many books for the same purpose towards asking all the needed questions to our interviewees.

Research Limitations and Extension of the Research:

One of the limitations of the study is the small sample size used in the interviews and surveys. This is due to difficulties in communicating with business managers. Another reason is that food traceability is a sensitive issue, so business managers were reticent in revealing company secrets and problems. Factors affecting traceability system are dynamic and complex, thus any attempt to apply the findings in different context should be cautious and fully aware of the limitations.

Traceability system is not a short-term project lasting only two or three months, but a long-term program which may last for one or several years.

In future researches, more stakeholders and producers should be involved in data collection through interviews or case studies. A larger scale of questionnaire, surveys could be administrated to enhance the findings.

The implementation of traceability management is a very expensive procedure and takes time. If in the future, the Lebanese government obliges all food companies to adopt the traceability management, what will be the economical and financial impact on SME’s industries?

Conclusion:

This research acknowledges that much researches has been carried out on the supply chain management with the Lebanese frozen food industries but little researches have focused on the implementation of traceability management in the frozen food industries and its benefits. Therefore this research provides a better understanding of the status of traceability management and its benefits, both qualitative and quantitative.

In the first chapter an extensive literature review was conducted to establish initial understanding about the supply chain, the cold chain and the efficient and effective traceability management throughout the cold chain.

In the second chapter we carried out a semi-structured interview with four managers to explain us more about company general information, the supply chain management used and the traceability system that are adopted by the frozen food industries (Spinneys, TSC Sultan, C-Food and King Food). Moreover, a questionnaire was designed to collect primary data of critical success factor and the benefits of traceability management. Accordingly we generated a cost saving table where we clearly identified the savings for each company. For analyzing the companies benefits we used the SPSS16.

In the third chapter we analyzed the critical success factors for an effective traceability management within the cold chain. We analyzed also the data collected from the SPSS: according to the Non-Parametric test we found that all variables that we asked about are important for the companies and are considered as a real benefit as well as an additional support to our findings. Moreover many tests analysis were made as PEST analysis for the Lebanon food market and SWOT analysis for the two companies: C-Food and King Food.

The findings offer practical evidence in support of the benefits of traceability management within Lebanese frozen food industries which are: market growth, savings related to product recalls, savings associated with liability issues, savings from process improvements and savings from labor costs.

Furthermore we found that distributors do not consider system improvement as a primary need since most of their end users are companies, while retailers and franchises really count on such traceability system and tend to improve their current system in the future.

This provides a partial explanation of why the saving amount for "Spinneys", "TSC Sultan" and " King Food" were much higher than "C-Food".

In the fourth chapter, I demonstrated the purpose of my subject in the main results part. Then I showed the learning acquired throughout the researche. The study extension was the economic and financial impact on SME’s industries in case the Lebanese government obliges all food companies to implement the traceability management.

In conclusion, traceability management is considered as a contingency plan for frozen food industries they might reduce risks but they cannot annul them since risks within frozen food industries will always be available.

However what companies can do is to reduce that risk which will result an improvement of food quality and cost reduction for most of companies that will implement this system.