CoolCargo and ExxonMobil:

Global Supply Chains Delivering The Promise

Contents
1. Introduction .............................................................................................................................. 3 2. CoolCargo ................................................................................................................................. 4 2.1. Background ........................................................................................................... 4 2.2. Supply Chain and Logistics.................................................................................... 4 2.3. Infrastructure........................................................................................................ 5 2.4. Challenges............................................................................................................. 5 3. ExxonMobil ............................................................................................................................... 6 3.1. Background ........................................................................................................... 6 3.2. Supply Chain and Logistics.................................................................................... 6 3.3. Infrastructure........................................................................................................ 6 3.4. Challenges............................................................................................................. 7 4. Alternatives .............................................................................................................................. 8 5. Conclusion ................................................................................................................................ 8 6. References ................................................................................................................................ 9 7. Appendix ................................................................................................................................. 10 7.1. Organisational structure of ExxonMobil............................................................. 10

1. Introduction
The key to success in the global food supply chain industry is the ability to collect and deliver fresh produce across the globe. Factors influencing the supply chain on this scale are the perishable nature of the fresh produce and the need to keep its temperature controlled throughout the supply chain. Logistics plays an important element in the decision-making system to create an efficient and costeffective solution for global supply of fresh produce. In the Asparagus from Thailand video transcript, a detailed representation of the temperature controled supply chain system is presented for evaluation. It shows the issues which the management was faced with and how they developed solutions to provide exceptional customer service in delivering fresh produce from the farmers to the supermarket shelves in as little as 24 to 48 hours. It is the aim of this project to analyse CoolCargos supply chain and logistics system management for fulfilment of the requirements in the global food industry. The nature of their business, infrastructure and processes will be critically analysed to establish how CoolCargo has adapted its supply chain strategy and responded to challenges in fulfilling the demands of international customers. As the supply chain and logistics network is researched, the evaluation process will establish the efficiency, challenges, critical elements and methods used by CoolCargo to achieve competitive performance levels. To achieve the objective of thorough analysis, a comparative methodology will be used to evaluate similarities and differences between very different supply chains. The choice of the second supply chain has been identified as ExxonMobil as it has entirely different constraints and requirements. After an analysis has been completed on both supply chains, it may be possible to identify areas of weakness which can be improved through the application and modification of processes in the opposing supply chain system. The project will consist of three sections subdivided into constituent elements. First section will explore CoolCargos background, supply chain and logistics systems and infrastructure; second section will follow the same premise for the ExxonMobil; and in the third sections we will compare the findings and offer solutions or identify areas which may provide benefits in their application from one supply chain to the other.

2. CoolCargo
2.1. Background
CoolCargo is operating a cold chain solution to distribute fresh produce in a temperature-controlled environment. With the global supply chain providing perishable goods from Thailand to Europe it utilises a great deal of air transport. This type of operation requires speed and sensitivity to deliver high quality product to markets which satisfies the needs of the customers. For fresh produce sourced at great distances from the final customer the handling, preparation, packaging and transportation is a critical factor in delivering the right product at the right time in the right condition. CoolCargo provides high quality service including handling of produce, cleaning and packing in special containers, transporting and protecting the goods from the heat at airport terminals and delivering it to the customer within 24 to 48 hours in the tip-top condition. With an established and highly controlled logistics and infrastructure, CoolCargo has gained a great deal of supply visibility and with it a competitive advantage.

2.2. Supply Chain and Logistics

Supply chain and logistics involved in fresh produce requires a deliberate control on behalf of the company as any and all costs incurred from damage suffered by the product whilst in transit will have to be absorbed by the company. This greatly reduces the companys overall profits and nullifies the competitive advantage. CoolCargo is fully aware of these risks and has taken steps to ensure that the product delivered is of quality expected and required by the customers. These steps of supply adjustment are confirmed by Robinson (2009) as fresh produce requires special handling to maintain the quality. This prompted CoolCargo to implement correct handling procedures and practices such as temperature monitoring, right positioning of the product against its best quality temperatures, in the right positions in the right temperatures in the correct room (case study material) to eliminate waste out of the system. To build the system of control CoolCargo developed longterm relationships with the growers to foster collaborative effort in eliminating issues and helping to process and pack goods in a timely manner for refrigeration and shipment. The needs of the systems, such as high quality product, shortest possible lead-times, reduced costs, waste elimination and lean operation has prompted CoolCargo to evaluate possible options in designing efficient and profitable network. CoolCargo removed all non value added activities reducing process costs and added value adding activities which benefit the quality of service they can provide to the customer (Christopher, 2011). Their approach to logistics is from the lean perspective which eliminated problems arising from handling temperature sensitive produce such as decreasing handling times through palletisation, adoption and design of special LD3 packaging to protect goods from temperature variation (CoolCargo web), spoilage and increasing percentage of product occupied space and weight given the constraints of air transportation.

2.3. Infrastructure
To support its business goals CoolCargo had to develop infrastructure which would deliver the promise, mode of transport used to deliver to US and European markets is via airfreight. With constantly high temperatures experienced in Thailand of 30 degrees and poor handling of fresh produce throughout its supply chain journey can cause approximately 20 percent of produce to be damaged (Jorgensen, 2008). This presented numerous challenges needing to be overcome if a company is to remain profitable and competitive. For handling of Asparagus which requires temperature controlled environment at 2 degrees centigrade to keep it fresh until it reaches the final customer, CoolCargo has established an infrastructure from collection to final delivery. Due to distances of all the Asparagus growers, CoolCargo has set up four collection points where the Asparagus is checked for quality and only those which reach export grade are sent to the pack house. Here, Asparagus is packaged to the customers requirement and quickly chilled to the required 2 degrees before it is loaded into the LD3 format container and placed into the thermal protected dolly, developed by CoolCargo (case study material). With numerous locations where breach in temperature can occur, specialised containers and dollies as well as special lightweight air-suction fan which can chill the Asparagus to 3 degrees in an hour. This greatly reduces chance of temperature breach while the produce waits for the aircraft. This system of produce handling has also nullified the need for using ice during transport. Without incurring costs for shipping ice with the produce, CoolCargo can send 70 percent more produce with the same cost.

2.4. Challenges
Alongside of temperature controlled challenges which CoolCargo has efficiently and effectively handled there are other problems which are affecting their business. Global warming, food shortage, increasing fuel costs and shortages, carbon footprint and new diseases are all working towards generating new challenges which will need to be overcome. With such an outlook for the future, CoolCargo is already taking full control to minimise waste and ensure that all product reaches the market without spoilage. When the environmental and external factors start increasing operating costs, every little action which prolongs the shelf-life or maintains the quality of the product will have a positive impact and contribute to maintaining competitive advantage.

3. ExxonMobil
3.1. Background
ExxonMobil is a vertically integrated company in the entire supply chain, from oil exploration, production and delivery to the final customer (see Appendix 7.1). They identify four elements in the downstream competitive advantage as economies of scale, branding, technology and integration. ExxonMobil considers their customer first in defining their operational parameters to be innovative, responsive and competitive when faced with ever-changing consumer preferences. Long-term commitment to developing technology to support their business needs through research in petrochemicals and geoscience led to development of existing and new operations. Their functional approach to development supports and provides synergy in all their global activities. ExxonMobil operates refining operations in 26 countries and operates retail stores in over 100 and in more than 200 countries with lubricant marketing (ExxonMobil, web). Leveraging their supply chain infrastructure, development of supplier base and collaboration ExxonMobil drives efficiency through improving process cycle times, lowering costs and innovating new models of operational excellence.

3.2. Supply Chain and Logistics

With a unique supply chain optimisation model ExxonMobil eliminates unnecessary complexities to lower costs and improve reliability. With complete integration, ExxonMobil is in a unique position to capture value across the supply chain, from the wellhead to the customer (Tillerson, 2011). Nature of the business requires ExxonMobil to take a long-term approach while still maintaining flexibility to adapt to the changing environment. Implementation of best practices, improvements in efficiency and productivity through learning and sharing of knowledge is their modus operandi. ExxonMobil went into partnership with the State of Qatar to develop a collaborative effort in extracting liquefied natural gas (LNG) in the North Field. Controlling the project planning and execution was an enormous task. Major contributor to the success of LNG business was reduction of costs throughout the value chain. Logistics of the operations required control over every aspect of the project to capture value at all stages of the supply chain. This includes gas fields and liquefaction terminals, shipping and marketing the product as well as aligning with the supply chain partners. With such a colossal task, effectiveness of forecasting and planning became critical tasks. ExxonMobil Capital Project System is used for planning and tracking of projects, especially due to any number of unforeseen events which may take place, such as unplanned activities, delays or maintenance issues all of which can have a negative impact on the operational schedule.

3.3. Infrastructure
ExxonMobil relies heavily on research and development to create new technological advances which will significantly benefit their business as well as reduce operational costs (ExxonMobil, 2012). They utilise technology to improve many business areas such as operating constraints and improving reliability. Benefits are achieved through economies of scale as well as technology initiatives such as large-train LNG technology. The state of the art trains have a capacity of 7.8 million tonnes per year and are

extremely efficient. Cost savings also come from using larger ships with almost 80% more capacity than the predecessors (ExxonMobil web). All these technological innovations have ensured that the transportation costs were reduced by 30 percent. Multi-zone simulation technology (MZST) enables ExxonMobil to increase speed, accuracy and cost-effectiveness in their operations. Due to heavy integration of their facilities, ExxonMobil is capable of tracking input and required output in real time to ensure optimal planning in their manufacturing plants and capturing value with complex modelling techniques. This has a positive impact on their inventory as they can use same feedstock for a variety of products, thus limiting the necessity of creating high buffers while producing what they need, when they need it. With the implementation of Environmental and Business Solution they are also capable of integrating sustainability into their processes.

3.4. Challenges
Oil and gas industry is facing numerous challenges. With the decline of new resources research is designed in promoting efficient extraction of resources from challenging environments as well as developing new technology to decrease input costs through efficient and sustainable processes. Cost and responsiveness to market demands remains a high priority. Forecasting, planning and coordination of raw materials for optimal utilisation of technology, as well as, effective decisionmaking process will remain a major factor in sustaining competitive advantage. ExxonMobil has high visibility throughout its supply chain and real-time data synchronisation to maximise sustainability and match supply with the demand.

4. Alternatives
Commodity price fluctuations will continue to drive both companies to maximise the utilisation of the inputs and deliver maximum outputs matched to the demand in their respective industries. Both companies rely on innovation and technology to drive the costs down while increasing the performance. Vertical integration of ExxonMobil has boosted their ability to control various stages in their supply chain while CoolCargo controls stages in their supply chain through collaboration. Reducing risks in their business operations will remain a factor in improving performance and maintaining their competitive advantage. ExxonMobil manages the risk through incorporating is at the early stages of development. Their facilities and processes are designed to mitigate all foreseeable risks with inclusion of logistical responsiveness through early detection and speedy return to normal business operation. This strategy would be beneficial to CoolCargo, instead of waiting for problems to become obvious and then dealing with them in a systematic and slow way. With a more proactive attitude to risk factors, CoolCargo could prevent issues becoming problems in the first place. ExxonMobil designs their facilities to withstand various elemental factors and since fresh produce is equally susceptible to elemental influences it may be prudent for CoolCargo to investigate contingency plans for various risk factors before they arise.

5. Conclusion

6. References
Asparagus from Thailand: case study of upstream logistics in the international food trade. Video Transcript, University of Liverpool. CoolCargo (n.d.) CoolCargo [web]. Available from: http://www.coolcargo.com/ (Accessed: 5 November 2013). ExxonMobil (2012) Financial And Operating Review 2012 [online]. ExxonMobil Corporate website. Available from: http://www.exxonmobil.com/Corporate/Files/news_pub_fo_2012.pdf (Accessed: 13 November 2013). ExxonMobil (2013) ExxonMobil [web]. Available from: http://www.exxonmobil.com/Corporate (Accessed: 5 November 2013). Jorgensen, G. (2008) The Fresh Face Of Perishables: How CoolCargo Is KeepingCool Chain Temperatures And Shipping Costs To A Minimum [online]. Airfreight Logistics, October 2008. Available from: http://www.freshport.asia/assets/Airfreight%20magazine%20Coolcargo%20English%20Version.pdf (Accessed: 5 November 2013). Robinson, A (2009) 'Driving Efficiencies In The Cold Supply Chain', Food Logistics, 111, pp. 10-14, Business Source Complete. Available from: http://ehis.ebscohost.com.ezproxy.liv.ac.uk/eds/pdfviewer/pdfviewer?vid=2&sid=bc7f9c34-27334f39-a4f1-29bacbd0565e%40sessionmgr111&hid=105 (Accessed: 12 November 2013). Tillerson, R. (2011) Presentation And Q&A Session [online]. Analyst Meeting, New York. Available from: Direct link to document (Accessed: 6 November 2013).

7. Appendix
7.1. Organisational structure of ExxonMobil

ExxonMobil Global Structure

ExxonMobil Corporation

Upstream
Exploration Development Production Gas & Power Marketing Upstream Research

Downstream
Refining and Supply Fuel Marketing Lubricants & Specialties Research & Engineering

Chemical
Chemicals

ExxonMobil Global Services

Table 1. as published by the ExxonMobil Corporate website.