Hero Dog Treats for Global Sourcing

Hero Dog Treats

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For Global Sourcing

Contents

Executive Summary        3

Issues Identification        3

Environmental Analysis        3

Root Cause Analysis        3

Options        3

Recommendation        3

Implementation        4

Monitor and Control        4

Conclusion        4

Executive Summary

Issues Identification

The issues in this case are:

• Customers are demanding new product types at a competitive price and quality
• Hero’s Dog Treats is the little fish in a big pond. There is a large market which is not being captured. The market for pet products is steadily increasing in North America and Hero’s revenue is only around $1,000,000 per year

Environmental Analysis

On a global scale, the pet product industry has shown substantial growth and will be a $100 billion industry by 2014. In Canada alone, there were over 5 million dogs in households and with growing disposable income amongst Canadians, there is higher incentive to spend more on their furry pets but Canadians still remain price sensitive and typically buy using best-value strategies. Dog food alone will reach $1 billion in Canada in 2016. In comparison, dog food sales grew 3% from 2010 to 2011 but took 5 years for dog treats to reach a 4% growth. Dog food has proven to be a faster growing industry than dog treats. The dog treats market is competitive with 701,321 new products brought to market from 2006 to 2011.

There are strong regulations in place for animal food products, just like with food products for humans. There must be a solid chain of traceability should anytime come into the market that presents a risk to the public. If an import does not meet CFIA standards, it will be refused entry and can disrupt a company’s supply chain significantly.

Root Cause Analysis

• Hero is not a large company and has around $1,000,000 in annual revenue.
• Hero is also not a diversified company as they only have 3 lines of product: Meat treats, Bully Sticks and Antler Chews. The market is demanding specialized products for their pet which range from breed-specific to age-specific and the current product line is quite generic.
• The push to meet the objective of increase revenue of 40% by the end of the year
• The push to meet the objective of reduced production cost by 20%

Options

There are several options in this case and will be assessed below. It should be noted that there is significant risk for both options 1 and 2 and just changing his supply model to include and be dependent on importing food products causes his supply chain to be quite frail. After all, he is a small fish in a big pond.