The Total Delivered Cost of Sieved Red Raspberries: A Procurement Optimization Model
Misty Trumble, Glenwood, Iowa, defended her thesis, “The Total Delivered Cost of Sieved Red Raspberries: A Procurement Optimization Model” on May 13, 2015. Trumble is an August graduate from Kansas State University with a Master of Agribusiness (MAB) degree.
The United States is the world’s third largest producer of raspberries behind Russia and Poland. Most U.S. production of red raspberries occurs in the Pacific Northwest during July and August depending on variety. Harvest and production for industrial pack typically runs for five weeks.
“Our company uses frozen, sieved red raspberries in our products such as pies, confectionaries and other consumer food products. Because of the short window of red raspberry production and limited suppliers, my company competes with other companies using sieved raspberries as inputs. Building the right alliances and organizing the procurement process can make significant difference in the profitability of a company’s procurement process,” Trumble said.
For her MAB thesis, Trumble developed a model to optimize the procurement of sieved red raspberries and minimize the overall procurement costs for her company that currently uses five suppliers and six transportation routes to get the sieved red raspberries to the manufacturing plant.
“The results indicate that it is possible to reduce procurement costs and improve efficiencies by making changes to the current procurement strategy. By implementing the procurement strategy developed in this study, we show that the company may save as much as $1.69 million per year. This would suggest that adopting the optimization strategy could allow the Company to increase its total sieved raspberry use,” Trumble said.
Though the optimization strategy decreased the amounts of sieved red raspberries some suppliers provided, maintaining positive relationships with those suppliers allows Trumble’s company to negotiate better payment terms as an additional cost-saving measure.
Dr. Vincent Amanor-Boadu, Professor of Agricultural Economics and Trumble’s thesis advisor, said, “The practical nature of the MAB thesis is where the value resides for the employers who encourage their staff to pursue the program. By getting the student and faculty to work systematically on an issue of relevance to the company, the company can recoup its investment in an employee’s education in just a few weeks. Misty’s study is evidence of this.”
The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/19715.