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MNP3701 Assignment 1 Semester 1 of 2020
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- University Of South Africa (Unisa)
MNP3701 Assignment 1 Semester 1 of 2020
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STRATEGIC SOURCING (MNP370-1)ASSIGNMENT 1
SEMESTER 1 (2020)
Karan Beef – premier supplier of the highest quality beef products
Background of Karan Beef
Karan Beef is situated south of Johannesburg and was started by the Karan family in 1974 with the focus
on feedlotting. They started with 100 cattle; and today they are the largest feedlot in Africa with 150 000
cattle. In the last 25 years Karan Beef have expanded their business to be one of the biggest in Africa.
The expansions include the purchasing of three adjoining farms, a feed mill, an abattoir, a deboning plant
and a distribution centre. Carcasses are directly distributed from the abattoir; and the deboned products
are transferred to the distribution centre in City Deep, which is a cold store with freezer facilities. Karan
Beef exercises extensive control over each operation process from feedlotting to delivering the final
products to the shops. Karan Beef is known as the premier beef supplier with the highest quality in South
Africa and globally. Karan Beef export their deboned products to countries such as Egypt, Hong Kong,
Mauritius, Seychelles, Maldives and the whole of Africa.
Beneficial relationships
Karan Beef see relationships as one of their most valuable assets; they, therefore, focus on long-term
relationships. Over 43 years they have developed strong and lasting relationships with their local breeder
suppliers. Karan Beef buyers formed close relationships with the selected breeders since only the best
weaner calves are purchased. The breeders know that their cattle have a market as long as they adhere
to the high standards of Karan Beef. Buyer and breeder relationships continue after the purchasing of
cattle. The breeders are kept informed of the cattle they supplied; and feedback is given, which might lead
to the improvement of breeding methods. Breeders are invited to Karan Beef’s feedlot premises where
they are exposed to the latest technology and trends in animal husbandry. Information is shared since
Karan Beef expects the best quality of its breeder suppliers.
Quality drive, certification and technologies
Quality starts with feeding the cattle since Karan Beef believe that what they feed their cattle has an impact
on their beef products. Karan Beef uses the Programmable Logic Controls (PLC) technology, at their feed
mill that helps them collect data across the globe, which are incorporated in their feed recipes. They also
use a computer-aided feeding programme, which automatically allocates the necessary feed to each cattle
pen. Furthermore, hygiene audits; strict maintenance systems and controls are implemented at the abattoir
facility that complies with health standards to minimise the risks of bacterial cross-contamination. In their
drive to be the best, the deboning facility was upgraded in 2002 to meet international standards and adhere
to the Hazard Analysis of Critical Control Points (HACCP) principles. This standard is to build trust with
stakeholders and to manage and mitigate food safety risks.
1
,The Karan Beef food safety and quality drive paid off since they received the following accreditations: ISO
90001 and ISO 140001. Furthermore, Karan Beef’s abattoir is the first South African abattoir that is FSSC
22000-accredited, which is of the highest global food safety management standard. Karan Beef is also
Halaal certified. In addition, to increase the shelf life of their products, they use a packaging system called
the Modified Atmospheric Packaging System (MAP), which consists of a mixture of oxygen and CO2.
Karan Beef also has a fleet of over 70 trucks to meet the demands of their customers.. An advanced GPS
satellite tracking system is used to control and monitor these trucks, which leads to improved customer
services.
Fierce competition
In June 2018, there were rumours that the beef industry, which includes Blaauberg Meat Group, Berlin
Beef, Karen Beef, to name a few, had been involved in price fixing. The Competition Commission, as part
of their investigation, raided the Karan Beef head office. The CEO, Arnold Pretorius, responded as follows
to the raid and rumours: “I am surprised that the Competition Commission initiated this investigation. I
don’t believe that there is any collusion to fix prices in the purchases of weaner calves or the sale of our
beef products. If anything, Karan Beef is in fierce competition with other producers in the beef industry
implicated in this investigation. I respect the work of the Competition Commission to protect South African
consumers particularly those most vulnerable to food inflation. Supply and demand determine the price of
weaner calves and beef products.” Karan Beef cooperated with the investigation and provided all the
documents and information, which were required of them since the trust of their suppliers and customers,
is of utmost importance to them. Karan Beef is built on fair and ethical business practices and this is their
recipe for long-term sustainability.
Behind the quality success
The management team at Karan Beef realise that they are nothing without their passionate, research and
development scientists and other skilled and knowledgeable employees who work hard each day to reflect
Karan Beef’s values such as accountability, integrity, respect, customer-centricity, honesty, people,
keeping up the standards and food that delights and food safety. Karan Beef are of the opinion that they
must improve the lives of their employees through initiatives such as:
- homes are provided to employees and agricultural workers in the surrounding areas
- day clinics which provide primary health care and HIV/AIDS awareness;
- land that was donated to the Tokolohong Homeowners Association includes communal areas for
growing vegetables and livestock that help them to be more self-sufficient.
SOURCES
http://www.karanbeef.co.za http://ultimatebeef.co.za/karan-beef/
https://www.busniesslive.co.za/bd/companies/land-and-agriculture/2018-06-19-management-of-karan-beef-could-seek-picfinance-to-buy-family-
owned-company/
https://www.timeslive.co.za/news/consumer-live/2017-06-19-karan-beef-raided-by-the-competition- commission-for-alleged-price-fixing/
https://www.timeslive.co.za/news/consumer-live/2017-06-15-competition-commission-has-beef-with-meat- suppliers/
http://www.radioislam.org.za/a/index.php/latest-news/1305-karan-beef-unfazed-by-meat-saga.html
All the above resources were accessed: 11 October 2018
2
,Table of Contents Pg. Nr.
1 Various buying organisations recognise the importance of managing sustainability
throughout the supply chain. Sustainability includes strategic environmental and social
responsibility in a supply base. Discuss the sustainability elements of environmental and
social responsibility and explain what Karan Beef does in this regard. What other
sustainability element can you recognise in this case? Describe this element ......................... 4
2 Point out three key supplier evaluation criteria that might be important for Karan Beef with
relevant examples from the case study ........................................................................................... 6
3 Explain price fixing under the following headings ......................................................................... 7
(a) Briefly, explain what is meant by price fixing ................................................................................. 7
(b) Explain why it is ethical or unethical to use price fixing in an industry ...................................... 7
(c) Identify a South African organisation that was involved in price-fixing a few years ago ......... 7
BIBLIOGRAPHY ............................................................................................................................................ 8
3
, 1 Various buying organisations recognise the importance of managing sustainability throughout
the supply chain. Sustainability includes strategic environmental and social responsibility in a
supply base. Discuss the sustainability elements of environmental and social responsibility
and explain what Karan Beef does in this regard. What other sustainability element can you
recognise in this case? Describe this element. (11)
Environmental
This is the ability to meet the current need without hindering the ability to meet the needs of future
generations in terms of economic, environmental and social challenges.
Supply managers are increasingly becoming involved in a wide variety of sustainable and
environmental activities and practices in their supply chains. There includes material related, climate
and energy, procurement specific and transportation and logistics activities and practices, as well as
related metrics and measures.
Material related activities include the procurement of more environment-friendly material replacing
less green' ones. The overall reduction in material usage and disposal can be accomplished through
engineering design changes and reuse and recycling programs. Material related practise also
concentrate appropriate disposition activities for obsolete scrap material and unusual capital
equipment. In addition, tools to assist these activities include product life cycle analysis and
environmental compliance auditing. Supply managers can also require ISO 14000 experience and or
complacency when identifying and selecting new suppliers, as well as enquiring or requesting existing
suppliers to obtain ISO 14000 certification or follow its principles.
Climate and energy activities centre on conserving or reducing energy consumptions well reducing
harmful atmospheric emissions while procurement specific activities seek to purchase environmental
friendly packaging material and component, including consideration of the methods and processes by
which they are produced. Transportation and logistics activities focus on sustainable practices as
packaging product, and vehicle tare weight reduction proved routing of vehicles, reduced vehicle
idling, vehicle fuel mileage improvements and vehicle aerodynamics.
From the case study
In their abattoir facility, hygiene audits; strict maintenance systems and controls are implemented that
complies with health standards. It is necessary to minimize the risks of bacterial cross-contamination.
In their drive to be the best, the deboning facility was upgraded in 2002 to meet international standards
and adhere to the Hazard Analysis of Critical Control Points (HACCP) principles.
4
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