UPLA

PERUVIAN UNIVERSITY LOS ANDES

“Year of Productive Diversification and Strengthening Education”

PRIVATE UNIVERSITY
“PERUVIAN THE ANDES”

ISSUE:

COFFEE SUPPLY CHAIN

SUBJECT : LOGISTICS DEPARTMENT

TEACHER : SANTIVAÑEZ, Jessica

MEMBERS : CABREJOS MARTÍNEZ, Fiorella

CHAVEZ POMA, Diego

CORDOVA TRUJILLO, Franz

DE LA CRUZ URRUCHI, Santiago

GAMBOA BERMUDO, Ruth

CYCLE : SIXTH

CLASSROOM : A3 – 507

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HUANCAYO – 2015

Coffee should be black as

hell, hot as hell, pure
like an angel and sweet like
love.

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INDEX

INTRODUCTION
1. CUSTOMER SERVICE LEVEL.......................................................................................8
1.1. Product quality.........................................................................................................8
1.2. Functionality.............................................................................................................8
1.3. Warranty....................................................................................................................9
1.4. After sales service.................................................................................................10
2. LOGISTICS SERVICE LEVEL......................................................................................10
2.1. Type of transport used.........................................................................................10
2.2. Speed: Location of warehouses........................................................................12
2.2.1. STOCK LOCATION.............................................................................................12
3. PURCHASE MANAGEMENT........................................................................................13
3.1. Activities that make purchases..........................................................................13
3.3. Supplier selection model.....................................................................................14
3.4. Purchase method...................................................................................................15
3.5. Is there supplier development?.........................................................................15
4. INVENTORY MANAGEMENT AND JUSTIFY............................................................16
4.1. Demand type...........................................................................................................16
4.2. Determine the inventory model to use.............................................................16
5. WAREHOUSE MANAGEMENT....................................................................................18
5.1. Why do you need to store?.................................................................................18
5.2. Storage cycle..........................................................................................................19
5.3. Handling equipment..............................................................................................21
6. PHYSICAL DISTRIBUTION..........................................................................................22
6.1. Distribution channels...........................................................................................22
7. IS THERE REVERSE LOGISTICS?.............................................................................24
The company HIGHLAND COFFEE SAC You are not yet developing reverse logistics.
They tell us that it generates a very high cost but if the packaging used in their products
is mostly paper-based and does not contain polluting plastics because to export there
are many regulations, one of the requirements is to comply with environmental
responsibilities.........................................................................................................................25
Work is also being done for social, environmental and economic responsibility............25
- Environmental : The crops are being worked with organic fertilizers such as
animal waste (biofertilizers), sawdust and among others. Reforestation of areas
exploited by irresponsible agriculture to conserve biodiversity, development of coffee
plant nurseries.........................................................................................................................25

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- Economic : Support for small farmers, financing, cash advance so that they can
cultivate their coffee plots well. Payment is made in coffee beans at harvest time........25
As for the quality of the product (Arabic coffee), there is only 0.01% that is deficient
because before being packaged it goes through strict quality control, to be exported to
a competitive market such as in developed countries........................................................25
8. FOR ITEMS III, IV, V AND VI. FORMULA DESIRED SITUATIONS FOR EACH
ONE THROUGH INDICATORS............................................................................................25
 ITEMS III purchasing management...........................................................................25
Supplier selection: The procedure contributes to improving organizational
performance through an effective selection of suppliers that facilitates increasing
benefits throughout the entire supply chain. It enables the combination of qualitative
and quantitative criteria, allowing a greater variety of criteria for the analysis and
selection of suppliers. EOQ process.....................................................................................25
 ITEMS IV inventory management: The costs of not maintaining inventory are
mainly related to loss . The Period Model is a fixed-time inventory planning system in
which the inventory policy is to order organic coffee (raw material) at certain designated
times. ABC...............................................................................................................................26
Supplies Amount Unit price) Total price % Total Value of Each Product.....................26
Toaster 2 S/ 980.00 S/ 1960.00 % 11.97 b.....................................................................26
Dryer 2 S/ 7117.00 S/14234.00 % 86.93 TO.................................................................26
Sealer 6 S/ 30.00 S/ 180.00 % 1.10 c............................................................................26
TOTAL 10 S/ 8127.00 S/16374.00 % 100.00................................................................26
The optimal and desired number of storage items you should have is 2 units of wrap
sealer........................................................................................................................................26
9. INTEGRATION TO THE SCM (SUPPLY CHAIN MANAGEMENT)........................26

INTRODUCTION

According to the commercial manager of CHANCHAMAYO HIGHLAND

COFFEE SAC, he said: "A coffee is considered special when it is perceived and
valued by consumers for some characteristic that differentiates it from
conventional coffees, for which they are willing to pay a higher price. For that
coffee to be truly special, the higher value that consumers are willing to pay
must represent a benefit for the producer.”

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Currently, Peru has 85 thousand hectares of certified specialty coffees.

Specialty coffees allow roasters to choose Arabica coffee, characterized by
exceptional quality in the cup and because they have almost no defects (they
have an excellent flavor and aroma, good acidity, good body and balance).

Specialty coffees constitute the alternative that guarantees the sustainability of

the business of this product, due to the added value generated by its
differentiation in the most demanding markets.

The demand for this product fluctuates mostly towards men, predominating in
the age group of 35 to 49 years who consume it most frequently. Regarding the
consumer's reasons for starting consumption, he mainly indicates that it is a
habit. or tradition, followed by the influence of others. Likewise, it is evident that
investments in promoting consumption have increased significantly, encouraged
by the growing demand for high-quality coffee.

Using this flagship product (Arabic coffee), with the support of the Highland
Coffee company, dedicated to the production and sale of coffee, and agro-
industrial products. This work shows the design of a logistics system, analyzing
the lack of control in the acquisition and consumption of production materials,
the lack of organization of personnel generating duplication of work, the lack of
an adequate storage area, among others, represent in various degrees the
essence of the company's problems in the logistics area.

Recently arrived in the field of management techniques, logistics is applied

even more than the others, even a sector in which the functions to be performed
are planned and administered from different decision centers without, very
often, seeking between them no real coordination.

We reserve the name logistics system to designate the set of means applied
that ensure the adequate output of material flows, from suppliers to final
consumers.

CHANCHAMAYO HIGHLAND COFFEE

It is a private company with a closed corporation, which has a Processing Plant

located in the district of La Merced, Province of Chanchamayo, Junín Region -
Peru.
It works directly with 22 producer organizations, which total 2,300 producers
who have obtained organic certification under fair trade conditions. The
company has a processing plant located in the city of La Merced, province of
Chanchamayo (Junín region), Peru.
Chanchamayo Highland Coffee currently exports 200 varieties of products, such
as coffee, cocoa, sachainchi (mountain peanuts), banana chips, dried and
candied fruits and exotic liquors to France, Sweden, Finland, Denmark and
Italy.

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The company's agricultural production and its processing plant are certified
organic as per BCS OEKO-Germany Protocol Guarantees, allowing it to carry
the European Union Organic Agriculture and USDA Organic labels for the sale
of its products, that are produced in an environmentally friendly manner and the
payment of a fair price that covers production costs and allows a profit margin
for its producers.
The company also promotes tourism through the Expo tur Sierra-Selva Central
(Central Mountain and Jungle), an event that takes place each year in the
capital city of Lima, Peru. At the event, the company has presented shows such
as the largest pineapple, the largest coffee beer maker, and the largest fruit
salad in the world, which has helped it win three Guinness World Records and
distribute 24,000 servings of Free fruit for those who participated.

GENERAL DATA:

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Headline José Jorge Durand

Business name: AGRARIAN COFFEE COMPANY

CHANCHAMAYO HIGHLAND
COFFEE SA

Tradename CHYO. HIGHLAND COFFEE SAC

R.U.C. 20486021773

Condition HAS BEEN

Start of activities: 13/01/2003

Address: Lime. Calle 7 de Junio mza. M lot.

1st urb. San Carlos (2 cdra. of the
ce our Mrs. De La Merced) Junín -
Chanchamayo - Chanchamayo

Foreign trade activity EXPORTER

Commercial business Production and sale of coffee and

agro-industrial products.

Phone 532124

HIGLAND COFFEE ORGANIZATION CHART

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Source: Chanchamayo Highland Coffee

MISSION
Differentiate the quality of our products at a national and international level, with
Organic and Fair Trade Certification, positioning ourselves in prestigious and
high-quality markets with socially and environmentally responsible management

VISION
We are an agro-industrial company that produces products based on natural
and exotic fruits through the “Organic Certification Program for Fair Trade”
using HACCP technology for the local and international market. Providing the
best service to farmers from the different Producer Associations and tourists,
promoting a self-sustainable social base in harmony with the environment,
respecting the ancient cultural heritage of our Andean and Amazonian peoples
to achieve the development of our Homeland.

GOALS
⁻ Promote and defend the interests of coffee producers in the Central Region
at all levels.
⁻ Maintain our policy of sustainable development of coffee and other activities
⁻ Promote and provide services to coffee producers to increase coffee
production and productivity, as well as the cultural development of coffee-
growing families.
⁻ Promote the development of the Junín region of edible products and
contribute to the free exercise of the rights and duties of citizens.

1. CUSTOMER SERVICE LEVEL

1.1. Product quality
Thanks to the strict quality control during the harvest and process, it
guarantees standard quality, which allows for high uniformity in color and a
pleasant flavor, excellent aroma, good body and fine acidity in the cup.
The company's agricultural production and its processing plant are
organically certified by BCS OEKO-Germany Protocol Assurances, which
allows it to carry the European Union organic agriculture and USDA
organic labels for the sale of its products, which They are produced in an
environmentally friendly manner and pay a fair price that covers
production costs and allows a profit margin for their producers.
The application of international technical standards both in its production
and in its business and commercial organization, Chanchamayo Highland
Coffee has managed to give its products high quality standards, which has

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helped them enter important first world markets, especially the United
States of America. North America and the European Union.
This coffee comes from crops located between 1,300 and 2,000 meters
above sea level and is sold in aluminum bags of 100 and 250 gr and in
cardboard boxes of 100 and 250 gr.
Arabica coffee, popular for its high quality, also for its main compound for
which it is so well known is caffeine, a stimulant of the nervous system that
reduces fatigue and makes us feel more energetic and its exquisite
texture, is due to the good agricultural practice carried out by Highland
Coffee suppliers, to then process the coffee and direct it to sale.
The current challenge of this company is to meet the requirement of the
German market, to achieve DEMETER certification, that is, to achieve
biodynamic agriculture under cosmic influence, which means that the
farmer will have to prepare his own micronutrients for the production of the
fertilizer, as well as how to govern the entire production process to the
different seasons of the moon.

1.2. Functionality
⁻ coffee shakes
⁻ Coffee filters
⁻ Fruppes
⁻ Cappuccino
⁻ Coffee express
⁻ Espresso macchiato
⁻ Espresso with panna
⁻ Coffee latte
⁻ Flat White coffee
⁻ Brief coffee
⁻ mocha coffee
⁻ American coffee
⁻ chateu coffee
⁻ Therapeutic coffee, natural energy
⁻ Irish Coffee
⁻ Velvet coffee
⁻ Exotic liquors and aphrodisiacs
⁻ Coffee flavored beer.
⁻ Pastry and ice cream parlor
⁻ Organic fertilizer
⁻ Incense and natural coffee air fresheners
⁻ Coffee masks
⁻ Coffee dyes for paper or fabric crafts
⁻ Coffee Fridge Deodorizer

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⁻ Reduce cellulite with coffee

⁻ Filler to decorate the vases with coffee
⁻ Homemade coffee tanner

1.1. Warranty
Modern consumers are demanding, they want to have the necessary
guarantees not only about the quality of the products they consume, but
also about their authenticity.
Highland Coffee is a company that works directly with 22 producer
organizations, which total 2,300 producers who have obtained organic
certification under fair trade conditions. The company has a processing
plant located in the city of La Merced, province of Chanchamayo (Junín
region), Peru.

Chanchamayo Highland Coffee currently exports 200 varieties of products,

such as coffee, cocoa, sachainchi (mountain peanuts), banana chips,
dried and candied fruits and exotic liquors to France, Sweden, Finland,
Denmark and Italy.

Regarding Arabica coffee, each farmer who is within the program has to
comply with standards for organic certification from seed, planting, cultural
work during the growth stage and harvest. Then, a quality control of raw
material input is carried out with a high index sampling to prevent the
product from entering with contaminating vectors or pathogens that are
putrefaction agents of the raw material.

1.1. After sales service

⁻ Coffee tasting, and its varieties. To this, highlighting that their sales
agents explain the varieties, and know everything about coffee.
⁻ Videos of the Chanchamayo district in which you learn about the coffee
capital.
⁻ Flyer about organic and biodynamic agriculture under cosmic influence.
⁻ Bags made from jute for the products to be sold.
⁻ A pack of diverse products at an affordable price.
⁻ Order service by e-mail, social networks (Facebook, Twitter)
⁻ Support requests for donations to the community.
⁻ Provides nutritional information for the product.

2. LOGISTICS SERVICE LEVEL

1.1. Type of transport used
⁻ The manager José Jorge Durand, in the company of an Eng.
Agronomist go to a coffee collection (there are 22 collections with
Highland Coffee), to carry out the respective quality control of the entry

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of raw material, this with a high index sampling to prevent the product
from entering with contaminating vectors or pathogens that are agents.
of putrefaction of the raw material. In this case, for the purposes of
logistical work, it is Sanchirio Palomar – San Luis de Shuaro,
Chanchamayo. This town center houses the Eko - Palomar Agrarian
Coffee Cooperative that produces coffee, where it has 40 thousand
hectares and where 6,000 coffee-growing families live, they have been
working with 100% organic products. For their journey they have a
Toyota Hilux (see figure 1), then after the production process to
transport the coffee bags to the same processing plant, they use a
Mitsubishi Fuso Fighter Mignon truck (see figure 2) it also has forklifts,
boats, and finally when the products in larger quantities are ready for
export, they transport them to Lima in trailers (outsourced service) –
Volvo Series 500 (see figure 3).

Figure 1. inspection trip Figure 2. Harvest transport

Transportation costs per trip for stockpiling (farms – Highland

Coffee warehouse)

TRANSPORTATION AND AMOUNT COSTS S/

STORAGE OF ORGANIC
COFFEE

 Driver 1 person s/ 35

 Fuel 5 gallons of oil S/50

(S/10)

 Depreciation Quantitative s/ 20
(mobility)

 Loading and 2 times s/ 20

unloading

TOTAL s/ 125

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Highland Coffee LA MERCED warehouse transportation service –

Callao LIMA warehouse
In this section, the type of transportation used is by land, logistics
corridors in trailers with a capacity of 30 tons that are loaded not only
ARABICO coffee, but also other varieties of products for export from the
Highland Coffee company, this allows us to carry in large quantities at a
more expensive cost.

The transport company AYSANOA SAC provides us with transportation

service as a (third party) the freight cost per trip for each trailer is S/
3000. 00

It is worth mentioning that the cost of loading and unloading is assumed

by the transport company.

Figure 3. Transportation in large quantities

1.2. Speed: Location of warehouses

The areas designated for the warehouse are predefined, therefore it is
necessary to adapt them so that they satisfy the storage function.

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PRODUCTION
SALES AREA AREA

STORE

d c

b T
A

IN WAREHOUSE A: Bags of coffee, selected by variety.

IN WAREHOUSE B: Storage of a variety of fruits.
IN WAREHOUSE C: Tools, materials (sacks, raffia, plastic bags, scales,
rakes).
IN WAREHOUSE D: Various products in stock.
IN WAREHOUSE E: Cleaning and hygiene materials.

2.2.1. STOCK LOCATION

Storing the necessary long-lasting products and materials brings with it the
existence of knowing at any time where each of the stored long-lasting
products is located. Therefore, it is part of the warehouse organization to
determine where each product should be placed and the place where it is
placed must be easily and quickly located. This requires that a location system
be established for each entity that allows anyone to find the product or
material they want.

It can be said that by developing a location system, the memory of the staff is
dispensed with and the quick finding of the products or materials in stock is
facilitated, since there is a place for each one.

It is necessary to distribute the storage area; The shelves and free spaces that
must exist are determined according to the amount of products or materials
that must be stored on them; On each shelf, the lockers they will have are
determined; The free spaces will be marked in the same way. Once the

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distribution is done, the symbolization system to be used will be chosen,

alphabetical, numerical, or both.

The stored products or materials will be noted in the work order with the date
of entry as soon as they are disappointed by the person responsible.

The location system has the following advantages:

- Facilitates and lightens attention

- It does not make those who work in the warehouse essential to find the
products or materials

- Facilitates and improves the control of products and their ordering

- Allows you to plan inventories, streamline their preparation and perform better
execution

3. PURCHASE MANAGEMENT
1.3. Activities that make purchases

The purchasing department's main function is to supply, in charge of making

purchases. Raw materials (organic coffee) and equipment necessary for the
production area, items for administrative areas, uniforms for sales and safety
implements for production workers and other ingredients for the production
of the product.

The purchasing staff is the person in charge of receiving the requirements of

internal customers and evaluating quantities if the materials to be purchased
are viable and necessary using an analysis capacity, purchasing criteria and
finally preparing purchase orders, preparation, issuance, submergence
shipment of purchase orders.

Another essential factor in the functions of the purchasing agent is to see the
payment methods to suppliers and with them enter into a negotiation on
delivery methods.

1.4. Purchasing Process

The purchasing processes are carried out in accordance with the
company's policies. Buy the appropriate, estimated quantity of organic
coffee to avoid production equipment downtime. Therefore, the logistics
area is in charge of supplying through purchases.

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Reception of Request to Preparation of

requirements (associations, purchase
farmer) order

Payment to
agricultural
suppliers
(Invoice,
purchase
settlement)
1.5. Supplier selection model

a) Coffee suppliers (farmers). They are carried out through contests

called “THE BEST COFFEE PRODUCER” in this activity hundreds of
farmers participate and show their best coffee beans from which the
first 25 coffee beans are selected to supply us for the next 5 years. In
this way, ensure that the company has the best suppliers to supply the
best grains. Grain quality, coffee variety, crop land, cultivation
methods and among others are rated.

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Figure 4. Farmer harvesting Arabica coffee.

b) Supplier of administrative and other items. Quotes are made to

suppliers to proceed with purchase orders considering a strict
analysis, comparison of prices and costs per item. (Santísima Trinidad
SAC bookstore)

c) Wrapping and box supplier. Quotes were developed to a list of

suppliers estimating costs, discounted prices for large volumes for
ordering 10,000 wrappers and 840 quarterly boxes. for which a
contract has been entered into setting the price, delivery date and
payment method.

Flat bottom type polyethylene wrappers to provide a better packaging

option. Company Allviz SAC

1.6. Purchase method

60% of the coffee that enters comes from purchases from small 25 farmers
and associations in the area. Purchases are made in large annual quantities.
Because coffee production is temporary, the threshing system is carried out.

Other essential factors that have been considered within purchasing

management in 2015 were climate changes, the El Niño phenomenon and
coffee diseases such as rust, chicken eye, among others. He made

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purchases in larger quantities as a way of preventing raw materials and thus

guaranteeing production in the company's plant and supplying our markets.

Regarding the purchases of administrative items, supplies for product

production, safety implements and others, orders are placed analyzing price
advantages.

1.7. Is there supplier development?

As a MICRO COMPANY there is a development of suppliers although it is

not very advanced and applying today's technology or this globalized world.

The selection and identification of potential suppliers in terms of coffee beans

must have the capacity to meet our demands in the required quantities with
the requested quality standards. If the capacities and competencies of the
farmer and associations are insufficient to satisfy our demands, we provide
support to improve their crops by giving them training with agronomists,
organic fertilizers, remedies against diseases, tools, new coffee plants
among others in such a way. ensure each year's crops.

Figure 5. Technical engineers providing new treatments for the care and improvement of
coffee quality.

4. INVENTORY MANAGEMENT AND JUSTIFY

1.1. Demand type

1.2. Determine the inventory model to use

SUPPLIES

Supplies Amount Unit price) Total price % Total

Value of
Each
Product

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Toaster 2 S/ 980.00 S/ 1960.00 % 11.97 b

Dryer 2 S/ 7117.00 S/14234.00 % 86.93 TO

Sealer 6 S/ 30.00 S/ 180.00 % 1.10 c

TOTAL 10 S/ 8127.00 S/16374.00 % 100.00

EOQ WITH QUANTITY DISCOUNT

Lot Size (Units) Discount (%) Product Value (S/Unit)

0 to 999 0% S/ 12.00

1000 to 1999 4% S/ 10.50

2000 or more 5% S/ 10.00

To respond to this situation, it is proposed to follow the following steps:

STEP 1: Determine the optimal order size (Q*) for each price level or break.

D= S/ 13440.00

S= S/ 49.00

I= S/ 0.20

C= S/ 12.00 S/ 10.50 S/ 10.00

Q1 = 548.800 = 740,810 (un/pedido) 700

Q2 = 627.200 = 791,960 (un/pedido) 1000
Q3 = 658.560 = 811,517 (un/pedido) 2000

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S preparation cost for each order order 142.783

I % unit price 136.023

Cost section 1 = 163.058 SUNS

Cost section 2 = 142.829 SUNS

Cost section 3 = 136.729 SUNS

Conclusion: That the optimal order size that minimizes total costs is 1000 60
kg bags, with a total annual cost of S/ 136,729

Economic Order Quantity:

√
2 ( 13440 )( 49 )
( 0.20 ) ( 12 ) =¿ ¿740.81
❑
Q∗¿
¿

5. WAREHOUSE MANAGEMENT
5.1. Why do you need to store?

It can be seen that the company does not have a logistics area, therefore
adequate administration of materials, this situation causes losses and losses,
last minute purchases, little streamlining in production, poor hygiene in the
warehouse.
The administration is in certain circumstances on the margins of the situation,
it is silently in charge of complying with the payment to suppliers, without
controlling the warehouse logistics.
The administrator of Chanchamayo Highland Coffee, responsible for the
proper use of raw materials, due to his multiple functions, neglects the control
used in the warehouse.

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Maintain adequate organization of the products and supplies used in the

process at the lowest possible cost. It implies that the company's warehouse
system exists a defined area of products, whether in raw and finished
materials, preparation use materials, properly located on shelves and
cabinets and a refrigerator and freezer through which the staff has access.
your arrangement of the ingredients.
The administrative assistant, who is in charge of the warehouse and dispatch
of ingredients for preparations, controls entry and exit.
Within the company, the dispatch of ingredients and products is carried out
as follows:
⁻ The coffee is delivered to the production manager, who does a second
check (because the commercial manager has already done the first
check), all of this to verify the entry conditions of the raw material.
⁻ The other tools or production materials are also delivered according to
which area they are in.

The main objective of storage is to safeguard, custody, and control the

supply of raw materials such as (organic coffee) among others. Therefore, it
is one of the most important parts for the operation and production to
guarantee the economic activity of the Highland Coffee company.

We basically store coffee beans in a single large batch because coffee

harvests are seasonal, annual. It is one of the most important activities
carried out by warehouse personnel, the essential tasks for their
conservation. The climatic conditions of the different physical spaces, coffee-
growing areas, such as temperature, relative humidity of the environment and
the place, are strictly controlled. In a coffee warehouse, called a silo, a box
and even in the same bag, different degrees of temperature and humidity are
created and this is where ventilation comes to play a fundamental role.

Perfectly dried coffee is preserved very well for months in cool environments
with maximum temperatures of 20°C and relative humidity around 65%. The
humidity of coffee stored in these conditions remains between 10% and 12%
for a year. LA MERCED is a city that has the appropriate conditions for
storing coffee beans at 20° and at night up to 24°.

Consequently, the organization of the warehouse is not properly determined,

pouring for each product and articles only the storage of coffee and the place
where a location system is developed, it is doing away with the memory of
the staff and the quick finding of the products or materials is facilitated. in
stock, since there is a place for each of the stored materials such as cleaning
supplies, administrative items, supplies, among others.

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Figure 6. Highland Coffee warehouse and its organic coffee trite system

1.1. Storage cycle

ANALYSIS OF THE STORAGE SYSTEM OF COMPANY H
IGHLAND COFFEE SAC THE MERCY. The warehouse staff carries out a
stock review that checks with the receipt of the merchandise to proceed to
make an order request which will be reviewed and the request will be
verified, if they are satisfied.

The storage cycle: Once the product is received, the loaders begin to lower
the product to the warehouse and it is stored in the corresponding place. For
this, the warehouseman gives his signature to verify the products once they
are received and stored in the warehouse. Finally, there is the System
Information Charge: by Mr. Juan Samanamud Larico, the warehouse where
the guides received are entered into the warehouse system to be verified.
They begin to store and take out products and every weekend they are in
charge of organizing what is wrong in their place. For the dispatch of the
products, it is verified in an orderly manner, where they have classified all the
products with their destination route.

⁻ Receive the coffee bags and give them your approval, through a check
⁻ Classify them
⁻ Locate and save them, that is, store them
⁻ Take care of its maintenance, avoiding its deterioration or loss.
⁻ Deliver it when requested.
⁻ Control stocks.
⁻ Request replacement to maintain a certain amount.

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Final Storage
disposition

Stock
control Delivery

1.2. Handling equipment

The handling equipment we have is very essential within the handling
operations in the warehouse in order to reduce storage costs and have
less labor for more efficient handling.
To store products, a series of equipment is required to minimize handling
and storage times. They are the various types (static, with movement)

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that we have. Also considering the different storage techniques to

optimize the operation.

EQUIPMENT WITH MOTION. They allow us continuous transportation of

coffee beans, flexible movements within the warehouse, which we call
internal transportation.

Pallets Wheelbarrows

Wagons plastic and cloth sacks

EQUIPMENT WITH MOVEMENT AND TRANSFER. They move from one

place to another in the warehouse while transporting raw materials,
supplies, among other items.

MANUAL PALLET TRANSPORT : Movement and lifting require the

strength of a person. Easy handling and maintenance.

BELT CONVEYOR BELT . It consists of a rubber band that is placed on

a continuous bed of rollers. It is widely used for transporting coffee.

6. PHYSICAL DISTRIBUTION

1.1. Distribution channels

Arabic Coffee will adapt very quickly to the market, since in the city of
Toronto the minimum temperature is -10ºC, it is also one of the financial

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cities in the world, therefore due to the number of people, with the product
that we will offer which is of quality and exquisite flavor, it will have great
acceptance from the public.
The concept of availability means that our consumer finds the product at
the desired time and quantity. Regarding ARABIC COFFEE
Having the crop in Chanchamayo, Our company will be in charge of
having the requested number with an increase of 10% within the period of
1 year and the variability of demand will be seen to increase or decrease
the quantity of the product towards the sales points. so that the customer
can find the Café when they need it; and thus establish trust in the
product.

Port of
Highland Points of sale
Callao Arabica Wholesaler
coffee main (supermarket
warehou coffee export s/retailer
warehouse s/stores)
se

Better
positioning Customer
Greater sales and s
preference

Source: self made

ARABIC COFFEE EXPORT STRUCTURE (CANADA)
EXCHANGE RATE 3. 37

Products ORGANIC TOTAL IN TOTAL IN SOLS

$

Description ARABIC COFFEE

No. from 1
exportation

FOB (free on 500 50000 50000

board)

Quantity units) 100 100 100

BOB (total) 5000

FACTOR 1

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BOB/ soles 140,350.00 50000 140350

Unit Soles 1403,5 50000 140350

Soles insurance / 185. 35 55 185. 35

total order

Freight soles / 1954.6 580 1954.6

total shipped

Approved soles 2190. 5 650 2190. 5

Download 1685 500

soles/totals
received

Transport in soles 460 460 1550.2

Ag. Customs in 7000 700

soles

Soles/ totals sent 9649. 94

TOTAL COST (100 164,878. 89

UND)

PROFIT MARGER 30000.00

20%

INTERNATIONA 194,878. 89
L SALES PRICE

Unitary PVI $ 1800

Source: own research

COMMERCIALIZATION

There are 2 stages:

2. DIRECT SALES

This type of marketing is carried out with legal entities and foreign
importing companies, which uses the following procedure:

A. NATIONAL SALES
The following documentation is carried out:
⁻ Referral guide.

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⁻ Transport guide.
⁻ Bill
⁻ Health records.
⁻ National analysis registry by product.
⁻ Proof of Organic Product Certification.
⁻ Product input declaration.

b. FOREIGN SALES
The following documentation is carried out:
⁻ Referral guide.
⁻ Transport guide
⁻ Bill
⁻ Health records.
⁻ International analysis record by product.
⁻ Product input declaration.
⁻ Certificate of origin.
⁻ Proof of Buil Loding.
⁻ Packing List
⁻ Transaction Certificate

2. INDIRECT SALES

This type of sale is the marketing of products within the plant with natural
intermediaries who send the products to small and medium-scale markets.

7. IS THERE REVERSE LOGISTICS?

The company HIGHLAND COFFEE SAC You are not yet developing reverse
logistics. They tell us that it generates a very high cost but if the packaging
used in their products is mostly paper-based and does not contain polluting
plastics because to export there are many regulations, one of the
requirements is to comply with environmental responsibilities.
Work is also being done for social, environmental and economic
responsibility.
- Environmental : The crops are being worked with organic fertilizers such as
animal waste (biofertilizers), sawdust and among others. Reforestation of
areas exploited by irresponsible agriculture to conserve biodiversity,
development of coffee plant nurseries.
- Economic : Support for small farmers, financing, cash advance so that they
can cultivate their coffee plots well. Payment is made in coffee beans at
harvest time.

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As for the quality of the product (Arabic coffee), there is only 0.01% that is
deficient because before being packaged it goes through strict quality control,
to be exported to a competitive market such as in developed countries.

8. FOR ITEMS III, IV, V AND VI. FORMULA DESIRED SITUATIONS FOR
EACH ONE THROUGH INDICATORS.

 ITEMS III purchasing management.

Supplier selection: The procedure contributes to improving
organizational performance through an effective selection of suppliers
that facilitates increasing benefits throughout the entire supply chain. It
enables the combination of qualitative and quantitative criteria, allowing a
greater variety of criteria for the analysis and selection of suppliers. EOQ
process

Cost section 1 = 163.058 SUNS

Cost section 2 = 142.829 SUNS

Cost section 3 = 136.729 SUNS

The optimal, desired order size that minimizes total costs is 1000 60 kg
bags, with a total annual cost of S/ 136,729

 ITEMS IV inventory management: The costs of not maintaining

inventory are mainly related to loss . The Period Model is a fixed-time
inventory planning system in which the inventory policy is to order
organic coffee (raw material) at certain designated times. ABC.

Supplies Amount Unit price) Total price % Total Value

of Each Product
Toaster 2 S/ 980.00 S/ 1960.00 % 11.97 b
Dryer 2 S/ 7117.00 S/14234.00 % 86.93 TO
Sealer6 S/ 30.00 S/ 180.00 % 1.10 c
TOTAL 10 S/ 8127.00 S/16374.00 % 100.00

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The optimal and desired number of storage items you should have is 2
units of wrap sealer.

9. INTEGRATION TO THE SCM (SUPPLY CHAIN MANAGEMENT)

HIGHLAND COFFEE

ORGANIC INPUTS

RAW MATERIAL TRANSFORMATION COMMERCIALIZATION

ORGANICALLY NATIONAL,
ASSOCIATIONS OF CERTIFIED INTERNATIONAL AND
ORGANIC PRODUCERS INDUSTRIALIZATION EUROPEAN
PROCESS

BCS OKO Garantie CERTIFIER

The Company's Production Process

I. RAW MATERIAL
The collection of raw materials is from the 18 associations of organic
producers that are within the Organic Certification Program, which comply
with the following process.

1. ORGANIC AGRICULTURAL PRODUCTION

Each farmer who is within the program has to comply with standards for
organic certification from seed, sowing, cultural work during the growth
stage and harvest.

2. ORGANIC TREATMENT IN PRE HARVEST

During the growth stage there are pests and diseases that can attack
crops, which is why treatments are carried out with biofertilizers, pruning,

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traps and live fences, inspections from seedling to seedling, to prevent

them from being rejected during the harvest stage. the raw material.

3. ORGANIC POST HARVEST TREATMENT

A quality control of raw material entry is carried out with a high index
sampling to prevent the product from entering with contaminating vectors
or pathogens that are putrefaction agents of the raw material.

II. TRANSFORMATION
Once the raw material passes the raw material quality entry control, it
undergoes a transformation process that is simplified in the following flow
chart.

RAW MATERIAL RECEIVERS QA

WITH ESTABLISHED
PARAMETERS
SELECTION

WASHED

HEAVY AND CUT

 DEBEATED
CONDITIONING  PULPED
1  CRUSHED

CONDITIONING PRODUCT FORMULATION

2 WITH ESTABLISHED
PARAMETERS

HEAT TREATMENT THERMAL CONTROL BY

PROCESS STAGE ACCORDING
TO PRODUCT
PACKAGING AND LABELING

STORAGE

VALUE CHAIN

Destination
Product Promotion Logistics Services post-sale
services
creation Internal
activities
Primary

 Arabica  Consumer  Reception  Visitor  Database

coffee advertising and centers and  Tracking of the
packets.
 Consumer transportatio tours, origin client.
n services itineraries and

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 Routes and fairs  Entry and tour.  Industry

circuits of  relationship exit  Gastronomy feedback.
the farm. with the formalities of  Coffee tasting.
communicatio  Security Chanchamay
 Jute bags for
n media o
 purchasing
 Relationship  Information coffee.
with on collecting
 Email services
intermediaries farms.
and social
.  Tour of a networks.
coffee farm.
 Social services.
 Product pack.

Destination  Public transport  Destination planning.  Public – private

and  Infrastructure: electricity,  relationship.
infrastructure
water, signage, surveillance  Institutional
planning coordination.
cameras.

Management
 Raise awareness among  Improvement of the  Creation of jobs.
Support activities

the population. skills and knowledge of  Form more

of human
resources  Friendly attitude towards workers.
alliances with
suppliers and customers. farmers.

Resource
 Improvement and  Taking advantage of  Quality systems.
enhancement of resources. new markets and
and product
development  Environmental segments.
improvement.

Technology  Telephone networks and  Market research.  Information

and internet connection. reservation
information systems.
 Audio conference system
systems

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CONCLUSIONS

- The company HIGHLAND COFFEE SAC It has developed supply chains,

the inventory system and work with suppliers for mutual growth

⁻ Peru has a climate and geography that are quite favorable for producing large
quantities of coffee. In addition, coffee experts rate it as a quality coffee.
Canadian businessmen import large quantities of green coffee beans from
Peru. With an import value of more than CAD$27 million, Peru qualifies as one
of the largest suppliers of green coffee to Canada. Coffee experts mentioned
that in addition to quality coffee, Peruvians are renowned for organic
agriculture.

⁻ On the other hand, there are deficiencies in the warehouse of raw materials
and auxiliary products of the Highland Coffee company. It presents a problem
in the lack of available space, which is not simply due to the dimensions of the
current warehouse, but the real deficiency is the location and the space
assigned for each product as well as the facilities that this warehouse has.

⁻ We suggest that you begin to manage the materials through their codes and
instruct everyone who has contact with them, mainly the warehouse manager,
explaining to them that the use of the codes will bring them benefits such as
saving time when requiring the products.

⁻ It is recommended that the warehouse have a computer connected to the

company's system where entries and exits are recorded as they occur and not
in the way that has been done until now, since what they do is let them
movements accumulate and record them once a month with the same date.
Having a record with the exact days on which the movements are carried out,
a better analysis of the flow of materials can be made.

⁻ Among the main functions of the company is production and to achieve

effective management it is advisable that those responsible for said
management develop a work plan since it is about achieving the best use of
the means available for tasks related to purchasing, storage, stock of raw
materials, the level of safety stock among others, these means use
administrative and technical preparation of the work.

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RECOMMENDATIONS FOR IMPROVEMENT LOGISTICS MANAGEMENT

We have been able to observe critical and weak points, which is why we
make critical and constructive recommendations to our academic
perspectives regarding the logistics area of the Highland Coffee company.

TYPES OF TRANSPORTATION THAT SHOULD BE USED

In recent years, the movement of coffee has increased in number of exports

and local consumption. Therefore, it is recommended to have your own
means of transportation to reduce transportation costs. This can allow an
increase in cargo of almost 17% and represents a saving in freight of almost
15% for each trip.

Own transportation avoids most problems related to cargo such as

breakages, damages, among others. There are no sack odors or weight loss
due to handling, and quality preservation is usually better. When correct
liners and procedures are used and the coffee is transported at the correct
moisture level there are far fewer complaints with bulk coffee than with coffee
transported in packaging and ensures on-time delivery to meet demand.

WAREHOUSE LOCATION

I don't know if a design analysis has been done on the spaces for optimal,
adequate storage and location.
•Weber's graphic method. Method that will solve the location of the
warehouses of a distribution network, so that the sum of transportation costs
is achieved to achieve effective and efficient storage.

For a distribution designed to thresh coffee bags, you must have very well
studied what its length, width and height should be. Among the aspects to
take into account:
•The number of plants
•The geometry of the plant
•Soil
•The columns
•The lighting
•The ramps
•Safety

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The shelves
Shelving is recommended for administrative and other items; they are
generally metal, made up of racks, beams and other elements that are part of
the solutions provided to the types of products and the available spaces.

PURCHASE MANAGEMENT

The Highland Coffee purchasing agent must be an orderly, proactive planner

for the efficient operation of the investment.
The purchasing department has to ensure the receipt of adequate materials
and organic coffee in the required quantity, in order to transform and be able
to make timely deliveries of the finished product to local and export
customers. Do not fall into storage costs that are made up of interest on
investment, obsolescence and space costs.

The purchases made can be controllable by the purchasing department,

because these can be increased or decreased, depending on the skill of the
buyer. The purchasing department is in a position to introduce new materials
to replace others, which can result in lower prices for the final product,
without having to sacrifice its quality.
The purchasing management process should be applied through planning,
organization, execution and control. It focuses on the cost of inventory and
transportation, the availability of supplies and the quality of suppliers.
Sales forecast.

Technique used in sales planning based on experiences from previous

years, which serves e basis for the development of plans and programs in all
areas of the companies.
To prepare a sales forecast, Highland Coffee must take into account the
following factors:
- Type of coffee.
- Sales statistics from previous years.
- Type of market to which the product is directed.
- Direct or indirect competition.
- Coffee quality (Arabic).
- Price.
- Inflation.

Once the sales forecast is prepared and the warehouse manager performs
inventory control, he or she should schedule the quantities of coffee beans,

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materials or items to be purchased, as well as the time in which they must be

supplied to the warehouses, The general objectives are set by the
purchasing department.

The general objectives that the purchasing department should have.

• Establish norms and policies, in accordance with the conditions and
needs of the Highland Coffee company.
• Search and acquire at the right price, in the necessary quantity, with the
best quality, controlled product, within the shortest possible time, with
assured purchasing capacity and availability, and with honest fulfillment.
• Develop and manage purchases.
• Establish well-vetted suppliers.
• Be informed of technological changes.

 Maintain inventories at the lowest possible level, but sufficient to

satisfactorily fuel production needs.
 Find and develop supply sources.
 Locate new materials and products.
 Ensure good service from suppliers, including fast delivery and
adequate quality of coffee beans.
 Implement purchasing policies that benefit the company.
 Develop optimal procedures and controls.
 Gather information and make an assessment on current and potential
suppliers.
 Cooperate with other company departments (sales, human resources,
production, accounting, etc.) that request your services.

Programs.
It is an administrative tool in which it indicates the quantities of items,
organic products that must be purchased, as well as the time in which they
must be supplied to the warehouse for the production of ARABICO coffee.
“ABC” classification is assigned to coffee beans in relation to their cost, 80%
of the total to be purchased to those with the highest cost, 15% to those of
medium cost and the remaining 5% to those with the highest cost. low.

REVERSE LOGISTICS

The Highland Coffee company does not develop this. Traditionally, in

Logistics we focus on improving the direct supply chain, which goes from
supplier-manufacturer-wholesale-retailer-customer.

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Reverse logistics manages the return of goods in the supply chain, in the
most effective and economical way possible. It is responsible for:
•Recovery and recycling of containers, packaging and hazardous waste.
•Customer returns, obsolete products or seasonal inventories

•Costs. They may be higher and less predictable compared to direct logistics
in terms of transportation, handling, repair and repackaging; and accounting
speaking, there is a significant variation in its value.

Reverse Logistics is not a whim, it must or can be promoted by the leaders of

this company:
•Cost-benefit: better products with lower production costs
•Social responsibility: promoted by non-governmental organizations or coffee
and consumer associations. Ex. Collection of disposable containers and
wrappers for subsequent recycling.

•Returnable glass containers, PET ref and plastic drums.

•Wooden pallets/plastic pallets

ANNEXES

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Quality control of Arabica coffee Advice to coffee collectors

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Stacks of coffee Coffee packaging presentation

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Storage Unloading of containers

German organic certifier Organic

certifier United States

Commerce Equitable France – Switzerland PE – BIO – 141 AGRICULTURE

PERU

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IMPORT AND EXPORT PACKING LIST

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COMMERCIAL INVOICE

EXPORT TO ITALY OF ARABIAN COFFEE

Export the product to Italy from Lima-Peru, with the aim of diversifying abroad.
Its market is the eighth country in the world with the highest coffee
consumption, with an annual average of 5.9 kg per capita. The company has
dedicated itself to a single niche specifically in Italy and that is that of coffee-

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savvy consumers, as exclusive consumption, since the means of distribution is

through Fair Trade. In the long term, with this new export, the company seeks to
extend its coverage in Italy, entering corporate sales to companies such as:
restaurants, cafes, offices, among others.

Exclusive distribution is carried out with fair trade stores, of which Italy currently
has five. By signing said contract with the stores, you have exclusivity.

EXPORT TO THE UNITED STATES OF ARABIAN COFFEE

Another export destination country is the United States, since for several years
it has been an important coffee consumer. And proof of this is the statistic
presented below, which shows that in 2013, the United States was ranked No. 1
as the main importer of coffee.

Total Tax
%Var
%Part 2012
No. Country 12-
12 (million
11
US$)
1 USA -15% 26% 6,511.50
2 Germany -14% 18% 4,515.55
3 Japan -19% 7% 1,951.90
4 Belgium -19% 5% 1,391.69
5 France -16% 4% 1,054.44
6 Spain -12% 4% 897.69
7 Canada -15% 3% 795.11
8 Swiss -11% 3% 712.99
9 United Kingdom -16% 3% 637.50
10 Sweden -13% 2% 571.84
Other Countries
1000 -31% 24% 7,395.83
(134)
Figure 7. Main coffee importing countries
Source: COMTRADE

THE NECESSARY DOCUMENTS REQUIRED BY CUSTOMS TO EXPORT

COFFEE

•The commercial invoice: this purchase and sale document must be written in
English if the destination country is not Spanish-speaking. The accrual date
must appear in this commercial document, in addition to indicating the amount
to be paid. Even on the invoice, the information of the sender and the recipient,
in this case the United States, must appear, that is, the transfer of goods to the
customer domiciled abroad and the description of the merchandise must
appear.

•Packing list: indicates the number of items each package contains, including
weights and dimensions.

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•DIGESA Certificate: prior compliance with the requirements, such as: Health
Authorization, batch inspection and microbiological analysis established in the
current health standard. Health Authorization of Additives for national and
foreign trade.

•Bill of Lading or Bill of Lading: Document that certifies that the goods have
been received by the carrier. Copy or photocopy of the transport document with
seal and signature of the authorized personnel of the transport company

•Health Certificate: Document that certifies that the product to be exported is

suitable for human consumption.

•Certificate of origin: Document that certifies that the merchandise has been
manufactured in Peru; allows you to benefit from tariff benefits in the destination
countries.

CERTIFICATIONS AND DOCUMENTS REQUIRED BY THE UNITED STATES

FOR THE IMPORTATION OF COFFEE

 FDA Import Procedures, after review, if the products comply with what is
established, the shipment is released once the corresponding tariffs are
canceled
 Register with the FDA (Foog and Drug Administration)
 Phytosanitary certificate: Other basic requirements that the product must
meet.
⁻ Harmless (Safe)
⁻ Free of contamination
⁻ Microbial
⁻ Chemistry
⁻ Dirt
⁻
 Manufactured under good manufacturing practices that apply
 Appropriately labeled
 Establishment Registration: Who has to register?
 Manufacturers or processors
 Packers
 Storage operations

CERTIFICATIONS AND DOCUMENTS REQUIRED BY ITALY FOR THE

IMPORTATION OF COFFEE

 Commercial invoice.
 Filter and sanitary certificate, when applicable.
 Packing list.
 Copy of the commercial invoice.
 Certificate of Origin – ICO (Departmental Chamber of Exporters)
 Request ICO registration number. Contribution to the International Coffee
Organization according to export volume.

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 SENASAG certificate (for processed coffee).

 Export Coffee Quality Certificate (IBNORCA).
 Voluntary certificate, at the request of the exporter.
 Single Export Declaration DUE.
WEBGRAPHY

• https://prezi.com/gxmwpld7xofi/copy-of-copy-of-i-analisis-de-la-empresa/
• http://selvacentral.com.pe/chanchamayo-highland-coffee/
• http://www.fao.org/3/a-as545s.pdf
• http://highlandproducts.com.pe/prod-organic-jam.php
• http://highlandproducts.com.pe/infl-area.php
• http://highlandproducts.com.pe/coffee-export.php
• http://highlandproducts.com.pe/programa-cert.php
• http://www.razonsocialperu.com/empresa/detalle/empresa-agraria-
cafetalera-chanchamayo-highland-coffee-sac-20486021773

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