Case Study: Fizz Inc.

Introducing Procurement and Supply

Prepared by: Moamen Emam

Procurement Engineer

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Case Study: Fizz Inc.
Fizz Inc., is a soft drinks manufacturer based in Finland that was established five
years ago. It produces carbonated drinks with combinations of natural ingredients
such as ginger and elderflower, raspberry and mint, and strawberry and kiwi.
The company started manufacturing drinks on a very small scale: Mila, who is
now CEO, started off making the drinks at her home using products from a local
wholesaler. Sales of her drinks were increasing rapidly, so she decided to invest in
professional design to make sure her product stood out. She met with two local
design agencies to discuss her requirements and contracted the one she felt
understood her business the best. She was really pleased with the bottle and the
label the agency designed.
Fizz Inc now sources the fresh ingredients for its flavors directly from Fair Trade
farmers. The labels are supplied by a printer in China who is supplied by a paper
manufacturer, also based in China. The paper manufacturer produces the paper
from trees sourced solely from FSC-certified forests. The plastic bottles are
supplied by a company that makes new bottles from 100% recycled plastic. Fizz
Inc. has set up blanket orders with each of its suppliers so it can be assured
of regular deliveries of the same products, and keep its warehousing costs down.
Mila has an ‘open-door policy: she wants the employees to feel they can talk to
her directly and make suggestions for improvements in the way they do their
work. Recently, one of the shop floor workers suggested that the shop floor could
be rearranged so the ‘stations’ and the items, needed at each station were placed
next to each other, rather than all stations at one end, and all supplies at the
other end of the shop floor. Mila thought this was a great idea and implemented
a trial with one station to find out if it made a difference.
The company’s mission statement is ‘making each day taste a little better because
Mila wanted to make a positive impact on everyone who came into contact with
her company. Fizz Inc. has set up several bottle recycling initiatives within
Scandinavia and makes 10% of its profits available to support community projects
within Finland.

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Use the information provided in the case study to answer these questions.
1. What industry does Fizz Inc operate in?
a) Primary sector
b) Secondary sector
c) Tertiary sector
Note for Answer:
The three business sectors:

Answer: b) Secondary sector

2. Fizz Inc.’s procurement team has been asked to source suppliers to design new labels. Which
of the following is the procurement team NOT responsible for?
a) Sourcing a supplier
b) Monitoring the spending
c) Providing feedback on the designs
Note for Answer:
The secondary sector is manufacturing converting raw materials into finished products or
assembling products. Examples: converting oil into plastic, farm crops into food products;
building a house, or assembling a car.
Answer: c) Providing feedback on the designs

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3. Which of the following explains why Fizz Inc decided to use some suppliers from overseas?
a) Cheaper unit costs
b) Cheaper shipping costs
c) Increased cycle time
Answer: Cheaper unit costs

4. Fizz Inc sold $650,000 worth of its product in its first year. Its costs for the same year were
$375,000. What was its profitability?
a) $275,000
b) 42%
c) 58%
Note for Answer:
Profitability = Revenue – COST = 650,000 – 375,000 = 275,000 $ / 650,000$ = .42
Answer: 42%

5. Which of the seven types of waste was the shop-floor worker trying to reduce with his
suggestion?
a) Inventory
b) Defects
c) Motion
Answer: Motion

6. Which of the following is Fizz Inc least likely to outsource?

a) Production of the soft drinks
b) Design of the labels
c) Distribution
Answer: Production of the soft drinks

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7. Which two of the following are customers in Fizz Inc.’s supply chain?
a) Fizz Inc.
b) Fair Trade farmers
c) The paper manufacturer
Answer: Fizz Inc., The paper manufacturer

8. Fizz Inc. has set up blanket orders to keep its warehousing costs down. What is another
benefit to Fizz Inc. of using blanket orders?
a) Fizz Inc. doesn’t have to sign a contract.
b) The supplier takes all of the risks.2
c) The amount of paperwork is reduced.
Answer: The amount of paperwork is reduced.

9. When Milla was looking for input into the design of her product, she met with two local
design, agencies. What would have been the correct method of outsourcing this relatively
small piece of work?
a) Issue an invitation to tender
b) Issue a request for a quotation
c) Issue a pre-qualification questionnaire
Answer: Issue a request for a quotation

10. Fizz Inc. sources the fresh ingredients for its flavors directly from Fair Trade farmers.
What area of Corporate Social Responsibility does this relate to?
a) Ethical
b) Environmental
c) Social
Answer: Ethical

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 Thank you
for your time and attention.
If you have any questions, please feel free to contact me.
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