The supply chain

SUPPLY CHAIN 1 : FARM TO FACTORY Hives are located on land near manuka forests. The land owner charges a rental that is a percentage of the honey crop value. Hives need to be free of pest and diseases, and have a large population of bees.

SUPPLY CHAIN 1 : FARM TO FACTORY The manuka blossom period, which is about six to eight weeks, has to be carefully judged by beekeepers to avoid diluting the pure manuka honey with honey from other species. Rain during the blossom period washes away nectar and reduces yield significantly.

SUPPLY CHAIN 1 : FARM TO FACTORY The timing of blossom depends on sunshine and temperature and follows this sequence: Far NorthAug/Sept Bay of IslandsOct/Nov WaikatoNov/Dec TaupoDec/Jan WairarapaJan/Feb

SUPPLY CHAIN 1 : FARM TO FACTORY Honey is collected from the hives by beekeepers who may travel up to 250 kilometres to find good locations. Honey is extracted from hives and put into drums. Hygiene regulations must be adhered to.

SUPPLY CHAIN 1 : FARM TO FACTORY Honey is delivered to the factory and must have a ‘harvest declaration’. This identifies the hive, location, beekeeper, date of harvest etc. This is to allow ‘supertraceability’ of the product right back to the hive for export regulations.

SUPPLY CHAIN 1 : QUESTION Cyclone Ngaire has drenched the North Island during spring and many beekeepers are in trouble, having little or no harvest and cashflow problems preventing relocation of hives. Question: What should Comvita NZ Ltd do? Activity card 1

SUPPLY CHAIN 1 : QUESTION Last season a beekeeper with high-UMF honey but poor management skills, put in a false harvest declaration. No problems resulted from this, and the false report was only recently discovered in the files. This year’s harvest time is approaching. Question: What should Comvita NZ Ltd do? Activity card 2

SUPPLY CHAIN 2 : FACTORY TO MARKET The manuka honey range sells in stores in Taiwan, Hong Kong and mainland China. The local requirements for labelling are different even though all three jurisdictions are part of ‘Greater China’.

SUPPLY CHAIN 2 : FACTORY TO MARKET Comvita honey products are shipped by sea to the southern Chinese port of Shantou and then moved by rail to major distribution centres. Transport costs are low compared with the products’ value.

SUPPLY CHAIN 2 : FACTORY TO MARKET The retail market for Comvita products is rapidly growing in Hong Kong (5%) and China (16%) annually, although Australia was still the single biggest market (by revenue) in 2011.

SUPPLY CHAIN 2 : FACTORY TO MARKET Due to ongoing distribution problems, in 2011 Comvita took direct control of distribution in Australia, and boosted customer service and logistics personnel. Sales have rebounded.

SUPPLY CHAIN 2 : FACTORY TO MARKET Online sales of Comvita products – which come from eight specific language websites based in countries including Hong Kong, Japan, the UK and Germany – have increased rapidly in Products can be tailored to each country’s market.

SUPPLY CHAIN 2 : FACTORY TO MARKET Comvita expanded its product range with the purchase of Olive Products Australia in 2007, and Kiwi Bee Medical in Research into the medical effects of these products is under way. In 2011, Comvita lost a patent case in the UK, but has set aside funding to appeal the judgement.

SUPPLY CHAIN 2 : QUESTION The container vessel Rena, which was due to pick up a Comvita container for China, ran aground on Astrolabe reef, making prompt delivery to a new retail outlet in Shanghai unlikely. What should Comvita NZ Ltd do? Activity card 3

SUPPLY CHAIN 2 : QUESTION The recently expanded network of shops in Hong Kong (now 56) has led to a spate of mixed-up orders. Comvita NZ Ltd management feels the brand reputation is under threat in this market. What are the options for Comvita NZ Ltd ? Activity card 4

SUPPLY CHAIN 2 : QUESTION Comvita has a new range of fish oil products that it is keen to release in China and Korea. However, consumer feedback is that these fish oil products do not sit well within the Comvita brand. Suggest three ways for Comvita NZ Ltd to proceed. Activity card 5