At the Port of New Orleans, the largest coffee port in the United States, one company is handling an old-fashioned way. Frederico Pacorini’s SiloCaf, a fully computerized bulk coffee storage, handling ,and processing facility ,is a place where tradition meets technology.
SiloCaf was founded in 1933 as a forwarding company: in other words, a company that takes any type of product and moves it from any location to any other location. Today, the company specializes in forwarding commodities, primarily coffee, and the way it handles coffee is about as high-tech as it can get.Why has SiloCaf invested in technology for such a seemingly simple product? The main reason is that consumers want the same flavor from each and every can of coffee they buy. Coffee, however, is a natural product, with impurities and defects, and coffee crops are never the same, so getting a consistent flavor is difficult without some way to control the coffee blend. SiloCaf is addressing this challenge by using information systems technology and computer technology.
Mossimo Toma is SiloCaf’s system and resources manager. He is responsible for overseeing the coffee-blending process. Coffee beans come into SiloCaf’s warehouse from all over the world. Each week 10 million? pounds of coffee are blended(about 4 million bags per year).The coffee never stays in SiloCaf’s plant more than one week. Once it’s been processed and blended, it’s loaded into bags or in bulk and shipped to a coffee roasting company. At any one time, SiloCaf has from 35 million to 40 million pounds of coffee in its facility for processing. If you consider the price of a pound of coffee, SiloCaf has an extremely valuable resource in its possession. Actually, SiloCaf never owns the coffee; it’s owned by the roasting company or the dealer who delivers the coffee to the roasting company.
All the mechanical parts in SiloCaf’s New Orleans facility have been brought from Italy, which is where the company first developed the technology. Frederico Pacorini, the son of the founder and the manager of the New Orleans facility, says that technology in a business like theirs is important because it allows them to make all the blends they need for their customers(coffee roasters),to optimize the way they do blends, and to control blends. SiloCaf’s employees receive continual statistical reports for each one of the scales used to blend the coffee. The reports enable them to check the consistency of the scale’s performance, which is important for achieving the consistency of the product that the end user (consumer) wants.
You’d think that all this high-tech control would be expensive, but it’s not. The nice thing about SiloCaf’s solution to the blend consistency challenge is that the technology they’re using is relatively simple. In fact, the company’s investment was a mere 1 percent of all plant investment dollars spent.
Questions
1.What types of control do you see in this example? Be specific.
2.How could you use this case to demonstrate the link between planning and control?
3.SiloCaf never owns the coffee it blends. Considering this fact, why would controls be important?
4.Do controls have to be expensive to be effective? Explain.