Assignment #$3-$ Goldenbread $($part $3)$

Characteristics of Dry Raw Materials

From the available data, Goldenbread management was interested in better understanding how the categories in the area "Raw Materials $-$ Dry" were managed in the past year. Some additional and useful information is reported in the following for each category and related to the purchasing approach used by Goldenbread.

Candied fruit. This category includes different types of candied fruits $($e$.$g$.,$ dates, cherries, pineapple, peaches, ginger root$)$ to be used for lines of products in the business unit Snack Cakes and Frozen Products. It is pretty significant in terms of spending. These fruits are not particularly complex to purchase and are primarily available in the local market; although Goldenbread purchased them in large volumes $($as the inventory and storage costs are marginal$),$ no supplier capacity problems were foreseen. Goldenbread has traditionally engaged with suppliers located in the U$.$S$.$ who have been working with the company for a long time. Ideally, each BU would like to have dedicated suppliers for this type of purchase so that suppliers can become familiar with the production approach used within each BU$.$

Dehydrated vegetables. This category is not relevant in terms of spending, as Goldenbread BUs produce a limited amount of salty products that require these items $($e$.$g$.,$ potatoes, beans, snap beans, lima beans, leafy vegetables, carrots, corn, and onion$).$ However, they make a difference in the final product taste, so they need to be available in good quality and, possibly, without being stored in inventory for a long time, as they are highly perishable and subjected to temperature variation. For these reasons, Goldenbread tried to work with suppliers through "just$-$in$-$time" deliveries. This is not easy to obtain due to the purchase volume requested by the company, which, in the past, has generated issues in terms of delayed$/$missing orders because suppliers tend to prioritize other customers.

Dried fruit and derivatives. This category has characteristics that are very similar to those of candied fruits. They are only used by BUs Snack Cakes and Frozen Products; they have a significant impact on spending and are largely available on the global market. The main difference is that these items are considered commodities $-$ so their price is very variable, and suppliers tend to sell them in bulk. So$,$ to ensure the available volume, Goldenbread sometimes needed to ask suppliers $($especially the biggest companies$)$ for "reserved capacity," with associated costs.

Flour. This is a pure commodity and one of the categories that mostly impacts Goldenbread spending. This is a critical raw material, and BU production cannot proceed without the needed quantities. While largely available on the market, Goldenbread has specific requirements regarding flour's quality and type, and suppliers' capacity for these products tends to be sold quickly. This is why, in this case, Goldenbread also agreed with some suppliers on "reserved capacity," with a preference for local suppliers.

Grains. Grains are similar to flour, although Goldenbread mostly needs standard grain typologies, which are largely available on the local and global markets.

Other third$-$party finished products. This is a critical category, as it includes finished products $($such as snack cakes, biscuits, and special edition products $-$ such as those for Christmas, Easter, and Halloween$)$ that are $($re$)$sold with a Goldenbread label, but they are produced $($and licensed$)$ by

third$-$party suppliers. These products have high inventory costs, which is why Goldenbread tried to adopt a frequent reorder policy and just$-$in$-$time delivery with suppliers, but there was also the need to reserve supplier capacity ahead. Due to the wide variety of products included in this category, several supplier relationships needed to be activated.

Raisins. Raisins are another commodity that has a high impact on Goldenbread purchasing costs, and it is critical for the taste of several products in the BUs Snack Cakes and Frozen Products. Due to high price variability, Goldenbread decided to establish short$-$term contracts. Additionally, although largely available on the market, Goldenbread preferred not to transport this product over a long distance, thus limiting the supply base to a local scope and increasing the risk of supply availability.

Yeasts and starches. Yeasts and starches are other critical raw materials without which BU production cannot occur. Similarly to flour, Goldenbread has specific requirements regarding yeast and starches quality and type, and suppliers' capacity for these products tends to be sold quickly. This is why, also, in this case, Goldenbread agreed on "reserved capacity," with a preference for local suppliers.

Category strategies

The available data shows that Goldenbread made some heterogeneous choices regarding contract characteristics with the suppliers of Dry Raw Materials.

First of all $-$ due