As their global operations continue to grow and add complexity to their supply chain, Lipton Teas and Infusions partnered with ICRON. This case study explores how ICRON addressed the diverse complexities and challenges across Lipton’s supply chain. ICRON’s solutions enabled Lipton Teas and Infusions to raise demand satisfaction levels to 96% while reducing procurement costs by 30%. Additionally, optimization run times dropped from 180 minutes to just 15, exemplifying the impact of advanced supply chain technology.
The success story of Lipton Teas and Infusions, spanning over a century, showcases their resilience and adaptability in facing multifaceted challenges. Lipton aimed to maintain consistent product quality and minimize production costs while optimizing procurement and blending processes to address supply chain complexities.
As market leaders, they have one of the most efficient procurement lines in the business, and their commitment to delivering the highest-quality tea remains unwavering. However, it was essential to identify procurement challenges and find the optimal solution to manufacture the highest quality blends at the minimum cost to attain a competitive edge. Here is a look at the key supply chain goals at Lipton Teas and Infusions
Tea blending businesses may have limited purchasing capabilities based on the prices and quantities available with their suppliers. Therefore, Lipton Teas and Infusions must engage with multiple blending businesses to buy and ship the requisite amount to meet global demand. A finite purchasing capability affects cost efficiency and competitive edge worldwide.
Cost forecasting and budgeting are challenging when the unit price depends on the purchase quantity. In a tea blending business with a global supply chain, a purchase quantity-dependent unit price leads to price fluctuations and calls for strategic purchasing decisions - to control costs, optimize procurement operations, and facilitate careful inventory management.
Procurement planning is challenging without a bill of materials (BOM) or a fixed recipe. Variations in ingredient requirements cause inconsistencies in product quality and flavor profiles. The blending process may also need to be adjusted and monitored repeatedly to maintain consistent flavor without a BOM or recipe. In turn, the changes in the blending process and variations in ingredient requirements increase costs and may not deliver the desired flavor consistently
Optimizing Purchasing Capability
Tea blending businesses may have limited purchasing capabilities based on the prices and quantities available with their suppliers. Therefore, Lipton Teas and Infusions must engage with multiple blending businesses to buy and ship the requisite amount to meet global demand. A finite purchasing capability affects cost efficiency and competitive edge worldwide.
Purchase Quantity-Dependent Unit Price
Cost forecasting and budgeting are challenging when the unit price depends on the purchase quantity. In a tea blending business with a global supply chain, a purchase quantity-dependent unit price leads to price fluctuations and calls for strategic purchasing decisions - to control costs, optimize procurement operations, and facilitate careful inventory management.
No Fixed BOM/Recipe
Procurement planning is challenging without a bill of materials (BOM) or a fixed recipe. Variations in ingredient requirements cause inconsistencies in product quality and flavor profiles. The blending process may also need to be adjusted and monitored repeatedly to maintain consistent flavor without a BOM or recipe. In turn, the changes in the blending process and variations in ingredient requirements increase costs and may not deliver the desired flavor consistently
Leveraging ICRON’s AI-driven Procurement Planning and Blending Optimization Solution, Lipton significantly improved cost efficiency, agility, and visibility throughout its supply chain. The solution provided dynamic blend optimization, allowing Lipton to adapt its blending recipes to market availability, and enabled comprehensive scenario analysis to prepare for supply chain disruptions. By integrating mission-critical data and enhancing global coordination among over 100 supply chain professionals across 15 countries, ICRON’s solution supported optimal purchasing decisions and streamlined procurement operations.
Lipton Teas and Infusions, renowned for its exceptional blending process, has been exploring new solutions to refine its techniques further. Climate shifts, seasonal fluctuations, and geopolitical tensions may abruptly intensify the complexity of their blending process any day. And despite their proven excellence, developing resilience to such challenges in the global tea supply chain was critical.
As a global tea blending business, Lipton Teas and Infusions must source their ingredients from multiple markets and channels. Differences in prices, price fluctuations due to internal or external factors, and logistical challenges amplify the uncertainties in the blending process.
The quality of ingredients used in the tea blending process may vary based on seasonal changes. It poses a significant challenge to consistency and reliability in the blending process. A thorough quality check for the ingredients is necessary to ensure that seasonal factors are considered and the blending process is adjusted accordingly. However, additional steps in the blending process may cost time and affect the delivery timing.
A global tea giant like Lipton Teas and Infusions works with numerous blending facilities scattered worldwide. Each blending facility is responsible for a different region and must adhere to customer preferences in its market. Catering to a diverse demand requires significant adaptability and responsiveness, including balancing production schedules, inventory management, and delivery schedules to ensure timely delivery and customer satisfaction.
Diverse Ingredient Sourcing
As a global tea blending business, Lipton Teas and Infusions must source their ingredients from multiple markets and channels. Differences in prices, price fluctuations due to internal or external factors, and logistical challenges amplify the uncertainties in the blending process.
Variations in Ingredient Quality
The quality of ingredients used in the tea blending process may vary based on seasonal changes. It poses a significant challenge to consistency and reliability in the blending process. A thorough quality check for the ingredients is necessary to ensure that seasonal factors are considered and the blending process is adjusted accordingly. However, additional steps in the blending process may cost time and affect the delivery timing.
Adaptability Across Global Facilities
A global tea giant like Lipton Teas and Infusions works with numerous blending facilities scattered worldwide. Each blending facility is responsible for a different region and must adhere to customer preferences in its market. Catering to a diverse demand requires significant adaptability and responsiveness, including balancing production schedules, inventory management, and delivery schedules to ensure timely delivery and customer satisfaction.
Lipton Teas and Infusions partnered with ICRON to find the most efficient solutions for their long-term and mid-term blending and purchasing decisions. The idea was to enable optimized decisions across the Lipton supply chain to create high-quality blends at the minimum costs. ICRON Procurement Planning and Blending Optimization Solution is a revolutionary cloud-based product that lends a high degree of visibility and flexibility to blending businesses. For Lipton Teas and Infusions, ICRON ensured end-to-end coordination between 100 supply chain professionals in 15 countries and over four continents to make optimized decisions for daily procurement, production, distribution, and customer satisfaction.
Consequently, Lipton reduced inventory levels by 5% and increased overall cost savings as a percentage of total tea spend. With ICRON's advanced capabilities, Lipton Teas and Infusions has fortified its market leadership by optimizing operations and maintaining its legacy of delivering the highest-quality blends to customers worldwide.
Lipton Teas and Infusions witnessed significant tangible and intangible gains after implementing ICRON Procurement Planning and Blending Optimization.
Lipton Teas and Infusions is the market leader in quality tea blends and herbal infusions. Known for its customer-centric approach to supply chain planning, risk management, and forecasting, Lipton Teas and Infusions has created unparalleled value for its stakeholders, society, and the planet. With 150 years in the business, they have a legacy of thirty-six world-famous and local brands enjoyed worldwide. As the supply chain planning partner, ICRON has significantly contributed to Lipton Teas and Infusion’s evolutionary supply chain journey. Together, they identified various blending challenges in the global supply chain network. Furthermore, ICRON Procurement Planning and Blending Optimization offered customized solutions for improving the blending process, enhancing decision intelligence, and keeping up with changing customer priorities in the beverage industry.
With an unwavering commitment to quality and technological innovation, ICRON continues to deliver numerous high-end customized solutions to various food and beverage industry clients. These transformative solutions have not only optimized operations but revolutionized supply chains, placing customers at the heart of business success.
“ICRON, our supply chain partner, has successfully provided us with innovative solutions to optimize our tea blending process. In today’s competitive market, every industry aims for cost reduction, improved visibility, and streamlined planning to navigate complexities effectively. However, achieving a remarkable 96% increase in demand satisfaction and yet delivering blend cost savings through recipe optimization is truly unprecedented. Through our partnership with ICRON, we have adopted a customer-centric approach to supply chain planning, risk management, and forecasting. This has enabled us to consistently deliver the exceptional taste that our customers expect in every sip of Lipton Tea.”
ICRON Demand empowers businesses to navigate uncertainty through accurate forecasting using AI-driven methods that take into consideration historical data, reaTime updates, and fast adaptation to changing market conditions and disruptions.
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