Customer Stories
The journey of tea leaves, from the hilly gardens where they are nurtured to the perfect blend in your cup, is a testament to the complexity of the tea supply chain. It’s a series of intricate processes, from cultivation and harvesting to blending and packaging. And yet, tea manufacturers must deliver the same quality, taste, and aroma in every sip of tea.
The success story of Lipton Teas and Infusions, spanning over a century, showcases their resilience and adaptability in facing multifaceted challenges. As their global operations continue to grow and add complexity to their supply chain, Lipton Teas and Infusions have partnered with ICRON.
This case study is focused on Lipton Teas and Infusions’ journey as they leveraged cutting-edge solutions to build a more resilient supply chain and overcome blending challenges. Integrating decision intelligence and AI-driven supply chain solutions from ICRON helped them navigate numerous industry challenges and consistently deliver millions of cups of perfect tea to customers worldwide.
Maintaining High-Quality Blends While Minimizing Costs
Tea manufacturing begins with the procurement of the best-quality tea leaves. Global tea brands have diverse markets and channels for procuring their raw materials. In many cases, they also buy from auction centers at different prices that may fluctuate. Lipton Teas and Infusions has one of the most efficient procurement lines in the business, and its commitment to delivering the highest-quality tea remains unwavering. As market leaders, they aimed to maintain the competitive edge by identifying procurement challenges and finding the optimal solution to manufacture the highest quality blends at the minimum cost.
Here are the key supply chain concerns at Lipton Teas and Infusions
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
Blending Challenges for Lipton Teas and Infusions
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.
Here, is a glance at the key challenges at Lipton Teas and Infusions
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.
ICRON Procurement Planning and Blending Optimization
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.
Here are the benefits of ICRON Procurement Planning and Blending Optimization
Agile Blend Optimization
- Generating dynamic blend recipes based on market availability and blend quality specifications.
- Performing in-depth ‘What-if’ scenario analysis to compare possible changes in demand, supply, and blend specifications. This will enable preparedness and agile responses to supply chain disruptions.
- Administering a comprehensive root-cause analysis to determine the factors leading to unsatisfied blend requirements if needed.
Optimal Buying and Decisions
- Supporting data-driven decisions for strategic buying and manipulating the market pressure
- Integrating mission-critical lead time data, such as port-to-port transportation, port-to-production location transportation, and purchasing, into the base data for buying decisions
- Gaining visibility over the global supply of materials in the tea industry towards usage in production. It includes buying decisions, transportation, stocking, and usage in production.
- Creating a multi-user environment with specified user roles and authorization.
Integrated Data Management
- Two-way data integration with data sources located in diverse locations worldwide.
- Data generation, management, maintenance, and coordination based on business rules to enable data-driven decision intelligence.
- Convenience in managing relevant business data, including Excel upload/export functionality and data archiving.
Results
Lipton Teas and Infusions witnessed significant tangible and intangible gains after implementing ICRON Procurement Planning and Blending Optimization.
Here’s a look at the most noteworthy benefits in this case
- Raised the demand satisfaction levels to 96%.
- Reduced procurement costs by 30%.
- Reduced the optimization run time from 180 minutes to 15 minutes.
- Reduced worldwide inventory levels by 5%.
- Increased savings through cost optimization as a percentage of total tea spend to 2%.
- Achieved a multi-objective optimization.
- Improved the ‘What-if’ scenario analysis and comparison to make it quicker and easier.
- Enabled a detailed backlog and unsatisfaction reason analysis to highlight process shortcomings.
Customer Spotlight
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.
“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.”
Gabriall Christy
Tea Procurement Director,
Lipton Teas and Infusions
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.
