Creating fairer collaborative supply chains

Transcription

1 Creating fairer collaborative supply chains 25 th January 2018 Jan Godsell Professor of Operations and Supply Chain Strategy

2 3 things 1. Do we really have agri-food supply chains? 2. Vision for fairer collaborative agri-food supply chains 3. How could we get there?

3 Do we really have agri-food supply chains?

4 Term supply chain was first used in 1982 Supply Chain Value Chain Originator Oliver and Weber Porter Organisation Booz Allen Hamilton Harvard University Year Focus Strategic Strategic Internal perspective Internal scope External perspective Holistic Brings together under one strategy the functional areas of planning, purchasing, manufacturing, distribution and sales Holistic Activities that are performed to design, market, deliver and support a product Value chain of an individual firm is part of a broader value system of suppliers, channels and buyers

5 Supply chain comprises of 5 core processes Supply chain council (

6 Planning is the most critical SC process Customers IBG s Product and R&D Global Business units Marketing End-markets/ commercial Opco s Regulators Global SCSC People/Process/ Definition of Business System functional strategies, Planning Development policies & Stds Supply Chain design and Global S&OP optimisation Procurement of global goods and services Asset management of Manufacturing Equip. and CapEx allocation Tobacco Utilisation, Sourcing and Supply Product development and spec. mgt Location Factory Factory Leaf Operations Planning for new products (based on new tech.) Customer Acc Mgt & Customer Service Product Development & Imp Geographical SCSC Performance Demand fulfilment Management and Supply planning Improvement Procurement Operational S&OP of non global goods and Logistics services Factory Factory Factory Policies and Manufacturing Execution Standards Leaf Supply Materials suppliers Logistics Providers Services & parts suppliers

7 FULFILMENT Reaches beyond the bounds of the firm Extended supply chain Supply chain the arc of integration Farmers Suppliers Operations End Markets Distributors Retailers Consumers Design Plan Buy Make Move Service DEMAND Design Demand and Supply Planning Procurement Manufacturing Logistics & Distribution Order Mgt, Customer Service and Support Competition is no longer company to company, but supply chain to supply chain Martin Christopher (1992)

8 Do we really have agri-food chains? Consumers not offered / willing to pay the true price for food Retailers fear lost sales and never want to be out of stock, leads to food waste Retailers primarily compete through cost not differentiation Promotions culture creates variability in demand Focus on procurement (lowest price) not planning by all actors across the supply chain Farmers continue to produce even when loss making at a loss, undermining the true cost of food

9 Vision for a fairer collaborative agri-food supply chains

10 Treating people equally without favouritsim or discrimination NESS

11 What is collaboration? The action of working with someone to produce someone. Traitorous cooperation with an enemy?

12 Vision for fairer agri-food chains To deliver agri-food products to consumers at the lowest possible cost whilst ensuring a fair return to all parties across the end-to-end supply chain

13 How could we get there?

14 Different ways to compete MARKET BUY Joint R&D Outsourcing Licensing Contractual Cooperation JIT JV Equity Share MAKE HIERARCHY (Vertically Integrated) Functional Specialism Functional integration Market Efficiency Opportunism NETWORK Protection from market pressure Trust Separate information owner Information integration Source: After Hinterhuber and Hirsch (1998)

15 Choose your approach Economies of Scale vs. Economies of Scope but you will have to be productive

16 Demand (Units) Demand (Units) Demand (Units) Strategic alignment is a way to achieve this COST REDUCTION GROWTH Minimise Operational Costs Surge Create Consumer Interest Base Time Time Time

17 Demand Need to develop a planning capability across agri-food supply chains... Surge Base Understand and segment demand Avoid promotions (unless they are designed to deal with genuine surge in production) Willingness to be out of stock, if dealing with a peak leads to food waste Supported by the correct contracts Time

18 Consumers are changing

19 Find new ways to connect with customers

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22 1. What would a fair agri-food supply chain look like for my co-operative? 2. What role could my co-operative play in planning the agri-food chain? 3. How can my co-operative take advantage of the shift to more responsible consumerism?