Explain, using material from the case study, the potential sources of differential advantage that a coffee retailer may identify and apply to achieve competitive advantage in its Supply Chain over its market rivals.

Stage: 4
Instructions for Learners
This assignment is worth 40% of the Supply Chain Management module.
In writing the assignment you should rely on material presented during the lectures, material
from the module reading lists, and other relevant research and material. All research should
be referenced fully. Your assignment should clearly outline any positions you take on key
issues, and include a discussion of the significance of your findings. Your assignment
should conclude with any recommendations and conclusions you deem appropriate.
Please do not use any actual organisations or individuals names. These can be changed to
“Supervisor 1” or “XYZ Aviation Ltd” for example.
Assignment length 2,000 words. Please answer 1 of the questions below.
Assignment Format The assignment should be word processed in 12pt font size,
with 1.5 line spacing. Marks will be awarded for
presentation and layout.
General Students are advised to retain a soft copy of their project.
Students are encouraged to upload draft documents on
Blackboard Upload Please upload one copy by the deadline below in word
format to FINAL TURNITIN. Insert a picture of the
plagiarism sheet as the first page of your assignent. There is
not a requirement to include your name in the assignment
document – your student number will suffice.
Submission Deadlines January 26th 20182
Assignment Questions
Question 1
Evaluate the factors that a coffee retailer should consider, at each stage of the sourcing
process, for its supplies of coffee.
Question 2
Explain, using material from the case study, the potential sources of differential advantage
that a coffee retailer may identify and apply to achieve competitive advantage in its Supply
Chain over its market rivals.3
The Coffee Market
PERUVIAN GROUND COFFEE – Intense and velvety with chocolate and almond notes.
Expertly selected by: (signed) ……. Specialist coffee buyer. 100% Arabica Coffee
The small farms dotting the slopes of the Peruvian Andes boast high altitudes, even
temperatures and plenty of rain – perfect growing conditions for coffee. It gives this coffee
an exquisite flavour profile with notes of almond, walnut and bittersweet chocolate, making
a velvety, intense and beautifully balanced cup. Packed in UK with coffee from Peru
FAIRTRADE certified and sourced from FAIRTRADE producers. Visit
www.info.fairtrade.net Fairtrade means fairer trading conditions and opportunities for
producers in developing countries to invest in their businesses and communities for a
sustainable future.
The above information was taken from a pack of Peruvian ground coffee purchased from a
leading UK retailer whose entire sourcing of beverages such as coffee and tea is Fairtrade™
certified. This retailer brand has a very high reputation and level of trust within the UK, so
in a sense, the coffee has two levels of certification; one is the Fairtrade™ logo and the other
is the brand of this particular retailer, known for stringent quality standards and sustainable
supply management policies. This Peruvian coffee is sold at a premium price above that of
other coffees, even though it is a retailer own-brand. Normally, such own-branded products
retail at a discount compared to pricing of recognised manufacturer brands in the same way
that a bottle of Coca-Cola sells at a much higher price than retailer own-brand cola, for
Professional coffee tasting is referred to as coffee ‘cupping’ and this can be done informally
or professionally by ‘Master Tasters’ and is an attempt to:
measure aspects of the coffee’s taste, specifically the body (the texture or mouthfeel,
such as oiliness), sweetness, acidity (a sharp and tangy feeling, like when biting into
an orange), flavour (the characters in the cup), and aftertaste. Since coffee beans
embody tell-tale flavours from the region where they were grown, cuppers may
attempt to identify the coffee’s origin.
A significant market has developed and is growing for gourmet or speciality coffees such as
this; coffees often produced in a specific region by a specific grower or coffee cooperative.
An important and growing element of the coffee market is developing not only an
appreciation of fine quality coffee, but also concern for the way in which it is produced and
supplied to market. The rapid and sustained growth in markets for these ‘differentiated
coffees’ is of benefit to producers and producing countries, since a higher price for the
coffee can be obtained and a greater value retained. The more discerning consumer and
commercial buyers are primarily concerned about quality, consistency and provenance. A
report commissioned by the World Bank recognised the importance of consumers
understanding the ways in which the origin and particular nature of individual coffees can be
communicated and verified:
As markets for differentiated coffees grow, there is an increasing need for consumers
to understand the sometimes complex verification or certification processes that apply
to the standards-oriented coffees, such as organic, fair trade, eco-friendly, Utz Kapeh,4
and those using Geographic Indicators of Origin (GIO). The legitimacy of third-party
certification is a vital market mechanism that can prevent indiscriminate use of these
The consumer purchasing the above Peruvian coffee is generally seeking assurance not only
of the quality and the unique taste of the coffee, but also that it has been produced in an
environmentally sustainable manner and that the farmers who grow it have been paid a fair
price – often at a premium above the rate set by the commodity markets. The Fairtrade™
certification has become a very important element in providing that assurance. The growth
of Fairtrade™ and the fair trade movement is a direct manifestation of the desire of
consumers not just for a high quality beverage, but also for the assurance that the people
who are providing the product are being treated fairly and that the sources of supply are
A number of factors will influence the final price paid by the consumers:
Volatility in the producers’ share of the retail value will still be more influenced by
changes in the price level of green coffee than by changes in any other cost component
because the value-adding costs are independent of the price of green coffee. Green
coffee prices are the single most volatile expense incurred in putting roasted coffee on
the market shelf and, consequently one of the major determinants of changes in the
producing countries’ share of the retail value.
Fairtrade™ and Cafédirect
Fairtrade™ was founded in 1991 by a group of non-governmental alternative trading
organisations (ATOs) including Oxfam (whose mission is to ‘make poverty history’),
Traidcraft Exchange, Equal Exchange and Twin Trading. Cafédirect was also launched in
1991 and its first Fairtrade™ certified coffee was initially distributed via Oxfam, Traidcraft
and other ethical stores and charity shops (ibid). Equal Exchange’s original mission was:
to build long-term trade partnerships that are economically just and environmentally
sound, to foster mutually beneficial relations between farmers and consumers and to
demonstrate, through our success, the contribution of worker cooperatives and Fair
Trade to a more equitable, democratic, and sustainable world.
Original ownership of Cafédirect was:
• Equal Exchange 25%
• Twin Trading 25%
• Oxfam 25%
• Traidcraft 25%

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