A SUPPLY CHAIN MANAGEMENT PROCESS MODELING FOR AGRICULTURAL MARKETING INFORMATION SYSTEM

Transcription

1 A SUPPLY CHAIN MANAGEMENT PROCESS MODELING FOR AGRICULTURAL MARKETING INFORMATION SYSTEM K. MYOUNG Department of Information System, Chung-Ang University, Ansung, Kyounggi-Do, , KOREA mks45@post.cau.ac.kr S. PARK Department of Information System, Chung-Ang University, Ansung, Kyounggi-Do, , KOREA psk3193@cau.ac.kr K. YANG Department of Information System, Chung-Ang University, Ansung, Kyounggi-Do, , KOREA yang@post.cau.ac.kr D. KANG SCM/ECR Section, DOOSAN Information and Telecommunication Co., Seoul, KOREA informat@doosan.com H. CHUNG Information Department, National Veterinary Research and Quarantine Service, Anyang, Kyounggi-Do, KOREA chjin@nvrqs.go.kr ABSTRACT A supply is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished goods, and the distribution of the final goods to customers. SCM(Supply Chain ), by definition, involves all activities associated with moving goods, from the raw materials stage through to the distribution of finished goods to the end user. Importantly, it encompasses the s used to monitor all these activities. In this paper, marketing process in Korean agricultural environments were reviewed through a atic methodology, and then a new business process was proposed to enhance the Korean agricultural marketing process by applying a SCM. 1. INTRODUCTION This paper first studies present environments of distribution of farm products by applying a atic methodology and find the problems with Korean agricultural marketing. And then some measures were proposed to reform Korean agricultural marketing by adapting Supply Chain. Until now, the scope of major SCM application has been only the supply of parts of manufactured goods, or transportation of semi-manufactured goods and final goods to consumers. In this paper, we try to expand to the scope of SCM application to the agricultural sector in order to find a solution to solve 409

2 the difficult Korean agricultural problems, such as high distribution cost, low market competitive power and inefficient production process. Based upon understanding of Korean agricultural problems viewed on SCM, this paper propose a technical models necessary for applying SCM in the Korean agricultural marketing. 2. PRESENT SITUATIONS AND PROBLEMS ON THE DISTRIBUTION OF FARM PRODUCTS According to a study on distribution margin of farm products recently, the average farm receiving out of consumer paying was only 38.7%. That means that the rest of 61.3% goes to the market participants. Moreover, 50% of total distribution margins go to retail stage whereas 17% in the delivery stage, 15.5% in wholesale, and 28.5% in retail. The reasons of the unbalance of distribution margin is mainly due to the characteristics of distribution of farm products. The specific reasons are following. First, in Korea The producing areas of agricultural items are far away from the consumption areas therefore, long-distance transportation of farm products is inevitable. Actually almost half of distribution costs occurs in freight cost. Second, loss of weight and lowering qualities of farm products during the longdistance moving are serious. Also, many of farm products are harvested in the specific season while consumed year around, thus the quality reductions are common. Third, usually the of farm products produced by an individual framer is very small and many kinds. As consumer s taste and preference of farm products are so various that farmers have to increase the number of crops to meet the various consumers demands. However, most farmers do not gain proper necessary to decide crop and production s reflected consumer s needs. They just rely on their experience result, these decision making process, quite often, causes instability of supply and demand of agricultural products 3. SCM MODEL FOR DISTRIBUTION OF FARM PRODUCTS 3.1 Production Support Sector The production of farm products is production activity of farmers for making a profit, but it is gear with a macroscopic policy of stable food supply. But, actually, it involves instability of supply and demand of farm products. And the government establishes the policy just depending on fragmentary such as consuming tendency, of consumption and the of farm products produced by farmers. By these reasons, sharing should be essential in the agricultural production. But as mentioned above, by the exclusive use of on the demand of several collection dealers and storage firms at producing area and large distribution companies, distortion of agricultural occurs and this can damage seriously the whole agricultural sector as well as farmers and consumers. To strongly support the agricultural production from a farmer's place, agricultural production processes should be improved and the new application program should be developed wholly. The models for this purpose should be developed in consideration of optimization of the whole supply structure for the agricultural field. The SCM for farm products is composed of integrated DB s, by which may be closely connected producer associations and unions. Therefore growing s may be monitored s, delivery times, and major production regions. Also, a sharp change in price on overproduction and underproduction may be reduced by general macroscopic index of farm products which can be obtained by such as estimated production, supply structure by areas and expected delivery markets and of import s. The decision supporting structure of planting has functions of whether the planting is possible, which decides possibility of growth for the crops to be selected by farmers, and recommends farm products to be grown well in the soil of the area on the basis of proper geographical. 410

3 Also, it provides regression and shifts, which analyze variables for all possible farm products and provide overall shift, and provides of various for farmers like comparative of delivery price to production or to change in climate or weather. The farming technology provides general so that farmers can obtain on various technical knowledge in growing farm products. Farmers may receive necessary on the facts to be controlled in priority in all growing stage of seeding, cultivation and storing in the required time. This unit also provides on the control of damages by blight and harmful insects details of the damages to occur in the proper crops through the whole growing stage, detail symptom, details of the prescriptions and expert opinion of the institution concerned. Reservation function in delivery is to send the like delivery, grade/quality, and safety test of farm products to the distribution companies and agencies in delivering to the distribution agencies and wholesale/retail market. It can reserve the expected time of storage and selection of storing places in advance and reduce distribution cost and time in transport, arrival, and storage. Therefore, private companies, public agencies, and farmers can presume the expectable result by sharing and creating for all subjects in all agricultural production sectors and then it enables to cope with s properly. However, all processes require the reliability and appropriateness timely. First of all, farmers secure themselves reliability of crop production prototypic (Planting intention, of sowed seeds, and cultivating area etc.). And remove factors to incur distortion of (avoidance and distortion of sharing for selfish benefits of each subject). 3.2 Sector In applying SCM to distribution sector, the rapid transport of distribution and the proper mutual connection of are necessary. The first purpose in this sector is to optimize distribution costs and transport time with mutually reliable sharing in a ranging from farm delivery to the delivery into wholesale market, auction process, and delivery into the retailers. The second purpose is to supply a to gain and analyze the controlling distribution by moving of farm products from the integrated (Farm Products SCM System), to analyze purchase pattern and consuming tendency of retailers and consumers by sharing purchase and sales, to supply prototypic as a standard to establish supply & demand policy of farm products nationally, and to transmit given for establishing future production plan to a producer through various media after analyzing and processing into the needed for farmers. eauction manages general distribution, analyzes supply/demand of farm products in wholesale stage, and supplies the results to the associated agencies. And it helps to manage general s like credit limit and purchase pattern of wholesalers and trading participants, to prevent illegal trade, to manage general s of deliverer, and to trade farm products reliably by of delivery pattern and trading inferior. market and distribution center consist of of wholesale corporation, format of EDI standard, facility, and distribution functions. This is to manage overall operation and of wholesale market and distribution center effectively. of wholesale corporation's functions is to manage wholesale corporations participating in auction, to create and manage the of wholesale corporations, and to supply the to deliverer. stronghold manages the by with eauction when deliverers store delivered products in warehouse within wholesale market and distribution center. And it enables to reduce stocks and the carrying cost by executing automatic storage procedure 411

4 electronically and reducing moving time from warehouse within wholesale market or distribution warehouse of distribution transit place to other consuming places. Its functions include various such as standard, order received, ordering, storage, delivery, transit place, operation of vehicles, stocks, returns, and loading/shipping. 3.3 Consumer/Purchase Sector Concept of SCM is to manage the whole supply generally ranging from supplier to consumer and to control the flow of distribution,, and money. This control will make expected effects such as reduction of distribution costs, rapid reaction to consumer demand, and reduction of stocks. Also when applying to the agricultural sector, the expected effects similar to other manufacturing sector may be gained and so does the consuming sector. First, long cultivating period, freshness, and safety function as important factors to decide quality due in the features of farm products. For these features, a direct selling place should be built and managed in the consumer nearer region, or reliable products should be purchased by with main producing regions by ecommerce. And producers or the associations also should be able to find broader market instead of local market. Producer can access more places to sell by ecommerce, get many-sided like purchase pattern and consuming tendency of the final consumer, and the collecting data of consumption and of consuming pattern, can support farmers to make a decision in the production plan when cultivating new crops. Customers receive the of shipment plan and grade according to the standardized type with web-based application in e-commerce shopping site which is operated by producer associations or distribution center in a producing area. And they enter like item name, purchase, delivery date, and delivery place and then pay the cost after selecting a payment method by payment requirements. If customer is a large-sized distribution company or consumers' cooperatives, he searches delivery of product, writes needed product and in a standardized invoice, sends it via EDI, selects the payment method, and then orders. Producer collects these of customers, analyzes stocks, connects to the nearest distribution center or warehouse, and sends it. Producer can manage the customer by of distribution, consuming pattern and demand tendency. 4. CONCLUSIONS In this study, we examined the present situations of farm products distribution and defined problems involved in Korean agricultural sector. By applying SCM in the distribution of agricultural products, we enlarged the applying scope of SCM and suggested infrastructure and methods to build these s. If once SCM is implemented successfully in agriculture, all participants in production, distribution, and consuming could trust each other and get benefit by sharing. That is, Win-Win relation can be made to satisfy agricultural producer, distributor, and consumer together by faster and rapid reaction in production and consumption. The most important factor, in this regard, is the sharing of through SCM. of enables organization to prepare rapidly by sharing risk factors as well as mutual benefits. And these factors must be a prerequisite to implement SCM. 412

5 Planting Systematic Decision-making support System Retail Market Sales Retail sales Market tendency Farm products demanded tendency Analysis of expected crops production Producible crops Producible corps market sales Supplied Farm products supplying tendency Analysis of production change Expected production change Production by growing steps Planting intention Planting intention Product Support Delivery decision-making Sales Imported farm products Cultivating tendency by main producing place Ministry Ministry of of agricultural agricultural and Agricul and Products AFMC* Forestry/Korea Forestry/Korea Rural -turist Rural Group Economic Institute * Agricultural & Fishery Marketing Corporation Agricultural technology General of Delivery System consumer quality opinions Production Quality General of consumer quality opinions Market tendency Agricultural by growing steps Production by steps Production change Market tendency by growing steps FIGURE 1. Application of SCM in Production Support Sector Imported farm products distribution quality steps quality Retail profit Retail profit Market profit Market profit by steps Agricultural technology by step Agricultural technology National Private Quality Plant Private Quarantine Service Company service service Delivery Market Delivery Market Transmission & operating car Transmission & operating car applying Delivery time Delivery time Delivery plan Farm Products SCM System Farm products demand tendency Worms occurrence Technology related to agriculture Worms occurrence sales Technology related to agricultural Retail sales profit profit sales Quality grade Quality grade Seeds improvement Delivery decision-making Delivery decision reserved applying Agricultural basic,delivery market location Meteorological Rural Rural National National Korea Development Development Geography Meteorological Administration Administration Institute Institute administration Delivery time Meteorological, Delivery market Delivery reserved confirmation and applying Operating car, delivery place, transmission, and transport, steps Operating car, delivering place, transmission, and transport Consumer/ Purchase Transportation Transportation Retail Retail Market center Market center Company Company distribution Sales by retail items, Retail price and sales Promotion, special market, and delivery reserved confirmation applying/confirmation Consumer quality demanded,consumer quality RECALL Consumer Production Support Consumer/ Purchase Delivery reserved Deliverer Cost calculation general Delivery general Storage Deliverer Deliverer Bidding Calculation Market of other region Products»ý»ý»êÀÚ Agricul AFMC* Group Ü Ü Ã¼ ü -turist Corporation * Agricultural & Fishery Marketing Corporation eauction System Auction Daily market steps distributing by regions Purchase Invoice, trading format Auction process Delivery Collection/ Distributed s corporation s managed Daily market of other region Auction AFMC* Purchaser Purchaser Imported & other regional Auction Purchase Trading format related to the delivery reservation ( Market) facilities s market System Special facilities Facilities Facilities EDI format Other regional distribution Imported farm products Special facilities General facilities General facilities market general Invoice, trading format Storage Company Corporation s managed corporation s Amount Retail distribution Corporation s managed General facilities National Geography institute Special facilities Stronghold System Storing Storing Amount & item Ordering Ordering Ordering Farm Products SCM System General facilities Special facilities Storing Shipping market location Storing s Transmission & operating car, Road Transport Company Supply & Demand Applying of operating car Shipping market location Transmission & Operation car Shipping Consumer s demanded Transmission & Operating car Road & Traffic Road & Traffic Road of of the the Ministry of of Construction & Transportation transport Retail distribution Transmission & Operating car in consuming place Returned item & returns Location Consumer demanded, Stocks Retail Transmission & operating car in consuming place general Consumer demanded Consumer FIGURE 2. Application of SCM in Sector 413

6 Product Support Consumer/Purchase Consumer General Quality Information Consumer RECALL Information Amount of storage Consumer general quality confirmed Promotive,Special market Consumer Amount of storage by item Retail Products AFMC* Group Market * Agricultural & Fishery Marketing Corporation, transport Delivery reserved Delivery reserved confirmed transit place Marketing Farm products Proper stocks Sales Information System Sales Amount of storage Stocks Sales Proper ordering Retail distribution(large-sized distribution company,food service company) FIGURE 3. Application of SCM in Consumer/Purchaser Sector Stocks Certification REFERENCES Hu Gil-Haeng et.al (1986), Study of Improvement of Farm and Fishery Products System, Korea Rural Economic Institute Allen, Eric(1998), Supply Chain Software Vendor Comparison and, University of Texas At Austin Gradurate School of Business, May, 37. Cole, Michael H.(1996), Consider Service in Logistics Network Design Models, Univ of AR, 34. Garg, Amit(1996), Product and Process Design Strategies for Effectives Supply Chain, Stanford University, 49. Garwood, Dave(1997), Supply Chain : New Paradiams forcustomers and Supplier, APICS, 212. Gentry, Julie Joann, The Role of Carries in Buyer-Supplier Strategic Partnership : A Supply Chain Approach, Arizona State University, 320. Handfield, Robert B. & Ernest L. Nichols, Jr.(1999), Introduction to Supply Chain, Prentice-Hall, Jain, Nikhil Trishpal(1999), Supply Chain Strategies for Shot Life Cycle Products, The Unversity of Texas, 3, 511. Martin, Christopher(1994), Logistic And Supply Chain, Financial Times/Irwin Pub. Ross, Anthony Dewayne(1996), Logistics Planning within The Supply Chain: Methodology and Solution Approaches, Indiana University, stock Stocks Sales Sales Sales item and price Farm Products SCM System Proper ordering Certification agency ecommerce System Stocks Stocks Delivery certificate Certification Finance Certificate Integrated Shopping Mall Certificate, Out Sales item and price Certificate,Certificate confirmed Available stocks Certificate,Certificate confirmed Certificate Products Search, epayment General consumer Product search,