Beruflich Dokumente
Kultur Dokumente
Tobacco Industry
Kateryna Radishevska
7 April 2009
Kate Radishevska
Tobacco Industry
Contents
Potential Suppliers...........................................................................................................................3
Product Details:........................................................................................................................3
Product Details:........................................................................................................................3
Product Details:........................................................................................................................4
Contract Negotiation........................................................................................................................6
Trade-offs/Best Practices.................................................................................................................9
Closing Statement..........................................................................................................................10
Potential Suppliers1
1
All Supplier Information was taking from Alibabe.com Global Trade Website.
Kate Radishevska
Tobacco Industry
Product Details:
Tobacco Type Leaf
Type Raw
Place of Origin Uttar Pradesh India
Brand Name India Tobacco Works
Payment & Shipping Terms:
Minimum Order Quantity: 500 Ton
Price: FOB yet to be decided USD 2~500
poly packs,gunny bags,pouch sachet of various
Packaging Details:
denominations,tin packs of various denominatins.
Delivery Time: 21 days
Payment Terms: L/C,D/P,T/T,Western Union
Supply Ability: 50000 Ton per Week
In our choice for suppliers we were driven by the price and the more beneficially and
agriculturally advanced parts of the world where the best quality tobacco could be grown. We
carefully selected three best tobacco suppliers that are all in different parts of the world and have
a potential of getting a contract with our company base on the table below.
Base on the Supplier Decision Matrix table Supplier A and B would be a better choices for
our company new tobacco supplier chain. Since both suppliers are rated equally on all the factors
that our company is looking for in a supplier relationship, South Eastern Tobacco Co. will
however, choose the supplier A, Indian Tobacco Works Co., as its main supplier, yet our
company will outsource some of the smaller projects to the second choice supplier B, Tobacco
Indonesia Co., for additional or rush orders, since the Indonesian company has the fastest
shipping/delivery time, then the Indian Tobacco. Our choice mainly based on quality and
flexibility options that we as a buyer have by dealing with Indian Tobacco Works Co. our
company will try to establish the best shipping option available to decrease shipping/delivery
time for the Indian Tobacco company. The partnership that we will establish with this supplier
Kate Radishevska
Tobacco Industry
will benefit us with the better quality of tobacco, better leadership, better flexibility, and the best
price, where it will leave them some space for improvement in their technology and their
delivering abilities. We will recommend various best practices to our suppliers in order to
improve the outsourcing operations and will applied them in a critical and creative way toward
Contract Negotiation
In the contract negotiation strategy between South Eastern Tobacco Inc and Indian Tobacco
1. Outsourcing Contract Type is Cost Plus, where supplier profit guaranteed over the actual cost.
2. Supplier Relationship Type focuses on Collaboration and Strategic Alliance, which means we
will establish a long term business relationship with Indian Tobacco Works where we will merge
our cultures and help each other develop better business strategies and accomplish our goals in a
3. While as a Strategic Alliances both parties will keep the confidentiality and acknowledge that
the information provided by South Eastern Tobacco Inc in this business venture is confidential;
therefore, Indian Tobacco Works agree not to disclose it without the express written permission
4. Indian Tobacco Works agrees to follow the quality instruction in packaging as negotiated: poly
packs, gunny bags, pouch sachet of various denominations, tin packs of various denominations
5. Indian Tobacco Works agrees to pprepare the yearly Outsourcing Tobacco Results Report.
This report shall include, but not be limited to the all the required documentation and research
information to be included and attached to the report with all the proper and current research and
contact information.
Kate Radishevska
Tobacco Industry
6. Indian Tobacco Works agrees to the annual inspections of the facility for the quality and labor
control by the SET Inc. inspection team to comply with all the sanitary and environmental
conditions.
7. Indian Tobacco Works agrees to follow the Corporate Social Responsibilities international act
8. Indian Tobacco Works requires complying with WTO requirements and informing EST Inc of
any changes in Indian Law that are concerning the tobacco industry and its operations.
following proper agriculture procedures and using high quality tobacco seeds on their
plantations. Use of toxic pesticides is highly prohibited and will be tested on every delivery of
10. Both parties, in the performance of this contract, shall be acting in their individual capacity and not as
agents, employees, partners, joint ventures or associates of one another. The employees or agents of one
party shall not be construed to be the employees or agents of the other party for any purpose whatsoever
11. Indian Tobacco Works accepts full responsibility for payment of unemployment insurance, workers
compensation and social security as well as all income tax deductions and any other taxes or payroll
deductions required by law of India for its employees engaged in work authorized by this contract
11. Indian Tobacco Works Co commits to constant the quality improvement, improved delivery
In managing supplier relationships between SET Inc and Indian Tobacco Works both parties
will commit to monitor and improve performance and management relationships. SRM tools that
are required to be used by both parties in order to maintain performance are included but not
limited to Internet base technology used for communication, processing, ordering, and payments
methods that will be electronically transferred to the supplier upon receiving the shipment.
Even though, Tobacco Industry has faced the downfall, the certain key decisions and
characteristics in this supply chain that shape and impact the overall performance of the cigarette
market should be included as a potential strategic and operational resolution that must be made
1) As cigarettes knowing for being hazardous to the health, the choice of more healthier and
more toxin free production is essential. Producing “Green” brands such as American Spirit: We
are the only brand that manufactures both cigarettes made with 100% certified organic tobacco
as well as cigarettes made with 100% additive-free natural tobacco. (Natural American
Spirit.com, 2009)
environment. Make sure that supplier uses the best available nonchemical technology for tobacco
growing.
3) Use information technology to utilize Just in Time inventory, by forecasting demand and
better manage the inventory and fair production of supplier to minimize the cost of warehousing
Trade-offs/Best Practices
Cigarettes popularity drop and health concerns began in 1964 when Surgeon General
made the first report on tobacco saying that "cigarette smoking may be hazardous to your
Kate Radishevska
Tobacco Industry
health." In 1966, a law was passed requiring that all cigarette packaging contain the message. In
1971, the surgeon general revised the statement to "cigarette smoking is dangerous to your
health"(Sociology at Duke, 2009). Following the 1998 event the Government published
"Smoking Kills", the first UK White Paper on tobacco control. Beyond Smoking Kills reviews
progress made since then and sets out an agenda for a comprehensive tobacco control strategy.
(ASH.com, 2008) Since then customer needs for tobacco products has been redefined,
contemporary cigarette consumers want more healthier choices, more environmentally harmless,
and more practical solutions to cigarette smoking. The key customer needs and trade offs for
✔ Non Addictive
✔ Fire safe
Both SET Inc and Indian Tobacco Works will commit to continuous improvement and
advancement of the tobacco quality and variety in order to minimize the risks of tobacco and
Closing Statement
Here we have developed a strategic and innovative outsourcing strategy that will help
to improve and excel tobacco industry to a different level and help to control environmental and
health concerns along with developing internal capabilities and changing direction of tobacco
growing and tobacco production strategy to the more healthier, more user friendly cycle of life
even with the tobacco product being in a last life stage of product cycle.
Kate Radishevska
Tobacco Industry
Cited:
Coorporate, (21 December 2005). Press release. Retrieved April 26, 2009, from Phillip
Moriss International Web site:
http://www.philipmorrisinternational.com/PMINTL/pages/eng/press/pr_20051221.asp
Xindeco Business Information Company, (1997). CHINA NATIONAL TOBACCO
IMPORT & EXPORT CORP. Retrieved April 26, 2009, from China's Top 500 Import and Export
Companies Web site: http://www.chinavista.com/business/500/13.html
Alibaba Global Trade Network, Retrieved April 20, 2009, from their website:
http://www.alibaba.com
Sebelius, K. (Ed.). Kansas DA. (2008). INVITATION FOR BID (IFB). In 1140 RFQ
product example Topeka: Kansas DA.
Ethical Shopping, Retrieved April 2, 2009, from
http://www.ethicalshopping.com/food/packaged-products/american-spirit-cigarettes.html
Corporate, (2009). Retrieved April 4, 2009, from Natural American Spirit Web site:
http://www.nascigs.com/?ticket_guid=b14de13f-28c1-45b6-88b8-890e7d63c303
Kate Radishevska
Tobacco Industry
(2009). GLOBAL VALUE CHAIN. Retrieved April 4, 2009, from Cigarettes Web site:
http://www.duke.edu/web/soc142/team11/globalvaluechain.htm#majorplayers
(2007). Tobacco. Retrieved April 4, 2009, from Census of Agriculture Web site:
http://www.agcensus.usda.gov/#top