Latte Logistics

DubTrade‘s new DC in Dubai, will ensure that CBTL customers can get the cup of coffee they want, says Vikas Sandhir.

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By  Robeel Haq Published  November 1, 2005

Latte Logistics|~|coffeebean2.jpg|~||~|The boom in coffeeshops is evident throughout the world, not least in the Middle East, where the likes of Starbucks, Second Cup and Costa are encouraging the local population to ‘wake-up and smell the coffee.’ Another major player in the market, The Coffee Bean & Tea Leaf (CBTL), is expanding at a fast rate too. It has eleven outlets in the UAE, including five new stores launched within the past year. Naturally the rapid growth has placed new demands on the company’s infrastructure, which DubTrade, the master franchisee of CBTL in the Middle East, recently tackled by opening a new 185 m2 operations and training centre in Dubai’s Al Quoz industrial area. “Our operations were previous split between an administration office in Bur Dubai and a warehouse in Al Quoz,” says Vikas Sandhir, operations manager, DubTrade. “However following our expansion in the region, we needed more space for running the business. We decided to invest in this facility, next door to the warehouse and kitchens, shifting everything together.” DubTrade opened its first Coffee Bean & Tea Leaf store in the region in 2001. Within Dubai, DubTrade now has outlets in a number of shopping malls, including Ibn Battuta and the Burjuman Centre, as well as in various hotels and the Dubai World Trade Centre. The company also has coffeeshops in the Al Jimi Mall in Al Ain and the Sahara Centre in Sharjah. DubTrade is also the master franchisee for CBTL in the Middle East, covering Saudi Arabia, Qatar, Oman, Bahrain, Lebanon and Kuwait. The company does not operate shops in these countries itself, but it does support the national franchiseholders. “We are basically the management designees for CBTL International and represent the company in the Middle East,” explains Sandhir. DubTrade opted to open a new operations and training centre in order to support CBTL’s ambitious plans in the UAE, as well as in Saudi Arabia and Oman. Selecting the right location for the centre was a key consideration for DubTrade, as it needed to have good access to all of its current and future outlets. “The way Dubai is developing right now, we are quite centrally located in terms of supplying items to the outlets,” says Sandhir. “We also supply goods to Oman from here because it is a small territory without its own kitchen and warehouse... Al Quoz is a great location for us.” The distribution process begins in the operations centre’s kitchen, where baked products and meals are prepared. They are then delivered daily to the various outlets by a 20 strong distribution team. “The logistics of supplying the daily needs of the stores is handled from the operations and training centre. We even deliver the equipment from here,” adds Sandhir. “In terms of gourmet products, the sandwiches, pastas, salads and breads are produced in the kitchens. We never buy gourmet products from outside the company. Everything is baked in our central kitchen, and distributed to the outlets in air-conditioned vans with the temperature set at 4.5oC.” The ingredients for food products, such as milk, cheese, bread, flour and sugar, are sourced locally. However items needed to make coffee and tea are imported from abroad. “Our focus is beverages. The gourmet items simply accompany the coffee and tea. Raw materials for the beverages come from the warehouse in America. We do not source these items locally,” says Sandhir. The green bean and loose tea leafs are sourced by CBTL from around the world and then shipped to its roasting facility in California. The beans and tea leafs are then processed and distributed to all CBTL stores worldwide in special vacuum sealed packs. When the beans and leafs are shipped, they are moved in special humidity and temperature-controlled containers. The same care is also shown during the last leg of the delivery process, so that goods arrive at the outlet in good condition. “You need to have air conditioned vehicles in this scorching heat otherwise items such as cheesecake are not delivered in edible conditions, especially during the longer journeys to outlets such as Al Ain,” says Sandhir. The teas and coffees also need to be kept chilled. However, because they need to be kept at -8oC, the vans have a separate storage compartment for these goods. “Selecting the right temperature and humidity is important for the coffee beans,” says Sandhir. “They are very sensitive products, which many people fail to realise.” “If someone puts a bag of coffee beans in their refrigerator, for instance, they will be surprised about how fast the beans pick up smells from surrounding items. This is the reason smoking sections in our outlets are always partitioned with a glass wall,” he adds. Sandhir notes the importance of having a smoothly running supply chain with efficient stock levels. Every drink on the menu should always be available for the customer otherwise CBTL’s reputation will be negatively affected. “All logistics, including decisions about stock levels, are made through our new centre. The entire data is accumulated and we run through the information, analysing highs and lows. Then we decide the stock for each outlet. I cannot afford to run out of coffee. It takes three months to ship the beans down from US,” states Sandhir. “We are connected to the outlets online. Everything is done live, including data transfer, loading of menus, sales and stock information. I can access the information whenever it’s needed. It really helps our logistics control.” DubTrade keeps track of its inventory levels, expiry dates and the stock levels in its warehouse and outlets using a specially developed application called Materials Management System. The system allows the DubTrade team to carefully plan deliveries and to ensure that outlets do not run out of stock. A regular delivery and ordering programme is also followed within the company, so that each outlet knows when to make its orders. “Everything is structured out,” says Sandhir. “Each outlet is assigned a day during the week to order coffee and tea. The gourmet items are delivered every two days. Depending on the quantity and requirement of the store, the vans make deliveries to either one or two outlets at a time. It is important to get the logistics right otherwise it becomes hard to control,” he says. A further complication is the fact that many of the outlets are in shopping malls or hotels, which often limit when deliveries can be made. As such, DubTrade has to build its schedule around these windows. “Our outlets are situated in various different locations with different procedures and rules from each landlord,” says Sandhir. “For instance, some malls do not allow deliveries between 09:00 and 23:00, so we need to take that into account,” he continues. “Furthermore, we do not work on Fridays [although the outlets are open], so we also need to take the weekend into account when setting the dates and times. Everything is decided after careful consideration and every outlet is clear about when to expect their individual deliveries,” he adds. The escalating traffic problems in Dubai also lead to delivery difficulties, especially when goods must arrive within certain time periods. Potential traffic jams therefore have to be factored into the delivery schedules. “We have varying levels of traffic problems,” says Sandhir. “The outlet at Sahara Shopping Centre, for instance, can produce lots of problems during the delivery process. The Dubai World Trade Centre outlet is also very busy and needs support from the warehouse, but we know that trying to send a van there within an hour is impossible,” he adds. As a back-up, the outlets can call on another shop nearby for extra supplies. “Sometimes an outlet runs out of cakes, breads or coffee and the warehouse is closed or too far away, so we cannot reach the outlet in time. The manager then contacts the nearest outlet and asks about stock levels there,” says Sandhir. The problem of goods damaged during transit is another area needing careful consideration. Food products, especially items such as muffins and cheesecakes, are quite delicate and the beverage items are also sensitive, so damage during deliveries is not uncommon. “There are damages on the road in terms of coffees, teas and cakes. After the delivery is complete, the outlet manager will acknowledge the damages and sign off a list of items received. There are discrepancies between the amount of goods sent out and the amount received because of the damage. This information is placed into our system and the details noted. We simply write off goods damaged in transit,” explains Sandhir. “We try to minimise damage by ensuring items are handled and packed properly. But sometimes these things are unavoidable. If there are heavy bumps in the road or the driver breaks suddenly, damages are bound to happen. But we take these occurrences into account during the budgeting.” Expiration dates are also a key consideration for DubTrade, as wasted products need to be thrown away. Otherwise, stale food could be served, which would displease both customers and the health authorities. “It is important to keep checks on expiry dates,” says Sandhir. “Whilst transporting the goods, we include details such as production dates and expiry dates.” “Anything coming into the country must also include these details. And, the information should be stuck in a place where it cannot be rubbed off by someone’s finger, for instance. Whenever you bring a product into Dubai, a certificate of origin and health certificate is also required. The [Dubai] Municipality regularly check the outlets too,” Sandhir adds. Slow moving items are particularly likely to reach their expiry date, and hence need to be discarded, so CBTL keeps a close watch on sales levels. “If a product does not sell on a regular basis, for whatever reason, we either try to improve the situation by holding a promotion or we drop the product from our menu,” says Sandhir. Having a more efficient distribution system in place should also help the outlets in terms of expiration dates, as they will no longer have to worry about running out of stock. This factor, along with other advantages, is why DubTrade rates its new facility as a success already. “The decision to shift everything to Al Quoz was the right choice,” says Sandhir. “The impact of opening the operations and training centre is very positive and we are pleased with the results. It will also support future expansion in the region, not only in terms of operations and logistics, but also training staff from the different territories,” he concludes.||**||

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