Principles of

1

• Principles of
• supply chain management
• and their adaptation to
• the Asian horticulture sector
• Peter J. Batt
• Curtin University of Technology
• Perth

2

• Overview of presentation
• defining supply chain management
• drivers for supply chain management
• implications for producers
• producers can respond
• capture key points and strategies that will
  emerge from this symposium

3

• Definition
• supply chain management
• refers to the coordination and
• alignment of materials
• financial and information flows
• for all activities and processes
• involved in a supply chain
• 
  
  (Simchi-Levi et al. 2000)

4

• A supply chain describes
• the full range of activities that are required
• to bring a product or service from
• conception through the different stages
• of production and processing
• to deliver superior value to the customer
• at least cost to the supply chain
• as a whole

5

• Supply chain management coordinates the
• sourcing and procurement
• production scheduling
• order processing
• inventory management
• warehousing
• servicing customers
• across the many independent firms that are
• involved in the distribution of food

6

• Customers have a legitimate right to command
• most basic principle of marketing is the need to
  satisfy customer wants
• power is not always negative
• power is the means by which supply chains are
  coordinated
• suppliers must make choices

7

• While the objectives of supply chain
  management are primarily to
• deliver superior value to customers
• at least cost
• the analysis of supply chains
• is best conducted within the context of
• the agribusiness system

8
Agribusiness system boundary
Socio-economic political environment
Inputs services
Production system
Post harvest
Processing packaging
Marketing sales
Consumers
Supply chain
Agro-climatic-ecological environment
9

• Supply chain management
• is NOT something new

10

• Supply chain management enables
• firms to respond more effectively to
• greater competition

11

• Competition has intensified
• deregulation
• low cost producers
• globalisation
• aggregation and consolidation
• market saturation
• improved technology
• transport and logistics
• communication
• biotechnology

12

• Implications for producers
• fewer customers
• customers are more demanding
• quality
• cost competitiveness
• exclusivity
• own labels
• new product innovations

13

• Implications for producers (contd)
• customers have more power
• reject poor quality product
• impose penalties
• require suppliers to invest
• production capacity
• infrastructure
• information and communications technology
• quality assurance systems

14

• Benefits for producers
• improved product quality
• technical
• functional
• preferred supplier status
• regular market access
• greater access to market information
• production planning
• incentives to invest
• less risk

15

• Benefits for producers (contd)
• reduced product deterioration
• less waste
• greater profitability
• develop new products more cost effectively

16

• Impediments to more effective scm
• inequitable sharing of value
• fixed value
• superior bargaining power of buyers
• control prices
• control quality
• control production practices

17

• Impediments to more effective scm (contd)
• lack of incentives
• inability of the market to reward growers for
  producing superior quality
• traditional methods of sale
• consumer demand
• seasonality
• inability to dispose of second grade produce

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• Impediments to more effective scm (contd)
• lack of credit
• embeddedness
• inability to invest in
• production inputs
• production capacity
• infrastructure
• qa systems
• ict
• extended credit terms

19

• Impediments to more effective scm (contd)
• inability to take risks
• intimate relationship between household expenses
  and the farm expenses
• lack of information
• production technologies
• market options
• jackpot mentality

20

• Impediments to more effective scm (contd)
• lack of awareness of market needs
• isolation from the market
• lack of knowledge
• customers needs
• product deterioration
• inability to respond to market needs
• lack of capital
• lack of technical advice

21

• Impediments to more effective scm (contd)
• lack of commitment
• growers
• social commitments
• price transparency
• time horizon
• buyers
• poor returns
• opportunism

22

• Implications for primary producers
• emergence of a dual marketing system
• in suppliers
• comply
• out suppliers
• do not comply
• risk of becoming increasingly marginalised

23

• Small producers can respond by
• minimising costs
• minimise the use of inputs
• ipm
• focus on what customers really want
• reduce wastage
• leverage competitive advantage
• focus on labour intensive crops

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• Small producers can respond by
• consolidation
• improve reliability of supply
• secure greater volumes
• production planning
• improve quality
• implement quality standards
• make investments in infrastructure/logistics

25

• Small producers can respond by (contd)
• differentiation
• offering superior service to customers
• cultivating desired proprietary varieties
• greater product assortment
• pre-packing
• pre-cut and semi-prepared products
• labelling

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• Small producers can respond by (contd)
• differentiation
• pursuing alternative market segments
• direct marketing
• home delivery
• internet

27

• Small producers can respond by (contd)
• differentiation
• brand
• method of production
• organics
• hydroponic
• ethical production
• Fair Trade
• sustainability

28

• Key success factors
• clear benefit for both parties
• farmers look for
• high price
• guaranteed market
• buyers look for
• low price
• reliable supply

29

• Key success factors (contd)
• build enduring long-term relationships
• interdependence
• compatible goals
• trust and respect
• commitment
• attitudinal
• instrumental
• temporal

30

• Key success factors (contd)
• appropriate means of governance
• equitable sharing of value
• measure performance
• open exchange of information
• willingness to learn
• willingness to adapt
• effective leadership