DIFFERENTIATION OF LOGISTICS EXCELLENCE IN SELECTED AGRIBUSINESS COMPANIES. Joanna BARAN

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1 DIFFERENTIATION OF LOGISTICS EXCELLENCE IN SELECTED AGRIBUSINESS COMPANIES Joanna BARAN Warsaw University of Life Sciences (SGGW), Warsaw, Poland, EU, Abstract The article presents selected organizational and technical solutions within the scope of logistics in Polish agribusiness companies. As a whole, the level of the logistics organization in the researched companies was assessed with the usage of a designed indicator, which took into consideration the assessment of the processes taking place in the following areas: logistics organization, customer service, reserves, warehousing, packing, transport and IT. The results of the research proved that the scope as well as the level of the logistics solutions in the agribusiness companies is varied. The most developed solutions within logistics are in cereal-processing enterprises and in fruit and vegetables processing enterprises. Keywords: logistics, agribusiness, synthetic indicator of logistics activity 1. INTRODUCTION The changes that took place in the food market after Poland's accession to the European Union led to a rise in variety of demanded food and a rise in signification of maintaining modern networks and supply chains in food market, forming a network of relationship and correlation of organizations, which deal with organization, planning and control of the flow of agri-food goods starting at the place of its production and finishing at the point of the consumer of the food [1]. The main object of the modern supply chains in the food market is to satisfy the needs of the market and, at the same time, observing the food safety procedures, the minimum costs and the minimum of the capital input [2]. The role of the logistics in agribusiness is especially crucial because of the specific character of the industry, which is characterized by the following factors [3]: lack of stability in supply and demand for agricultural goods (it is mainly characteristic in arable production, including cereal-processing and fruit and vegetable processing industry); low level of susceptibility for transport and warehousing of many agricultural products (e.g. milk, meet, fruit and vegetables); numerous and independent links in the whole supply chain - "from the farmer's field to the consumer's table' - which makes some interference within the information flow and results in too high reserves which go up to the top of the supply chain - according to the mechanism described by Forrester as the 'bullwhip effect'. To improve international competitiveness of Polish supply chains of food market it is necessary to cooperate effectively among all the links of the supply chain. The chance for the expansion of the Polish agri-food goods within the EU markets depends on the flexible adaptation of the whole of the logistics agri-chains to ever-changing conditions and implementing the newest technologies i.e. CRM (Customer Relationship Management), SCM (Supply Chain Management) or ebusiness [4]. All the actions undertaken in the supply chain should be subject to the pursuit of satisfying customers needs. They can be of an anticipatory nature, i.e. result from an earlier analysis of the environment and resources. On the other hand, the actions can be of an adaptation nature, i.e. adept to the current, changing situation in the market [5, 6].

2 The proper organization of the logistics processes in Polish agribusiness companies, suitable for the particular sector, may undoubtedly improve the competitiveness among the companies by optimization of costs, as well as offering a higher level of customer service. 2. METHODS OF RESEARCH Therefore, the aim of the following article is to assess the level of the excellence in logistics processes in agri-food companies in Poland. In order to meet the target, the following steps have been undertaken: a survey was conducted concerning the most important areas of logistics activity in agribusiness companies and an indicator of the level of the logistics excellence in Polish agribusiness companies has been designed. The survey was conducted on the turn of the 2009 and 2010 year among the agri-food companies. It included questions concerning the logistics solutions implemented in the company within the following areas: logistics organization, reserves management, warehousing, packing, transport and IT. It also included some questions about the level of knowledge concerning logistics in the company and the assessment of the implemented logistics solutions. The questionnaires were sent to all Polish small, medium and large companies, classified according to the employment level, and to 1.5 thousand randomly chosen micro-companies of agri-food industry which are listed in the Polish National Register of Business Entities (REGON). The amount of the sent questionnaires reached 10 thousand; 507 companies have responded to the survey (5.07%). The biggest group is represented by the small companies and amounts to 63%, the smallest group consists of large companies and amounts to 6% of the researched companies; the other groups of micro-companies and medium companies amount to 12% and 20% respectively. Taking into consideration the fact that the whole of the food industry includes 70% of micro-companies, 24% of small companies, 5% of medium companies and 1% of large companies, it can be concluded that the structure of the researched sample is similar to the real structure of the agri-food industry. The complex assessment of the level of logistics solutions implemented in the particular companies was conducted with the usage of an artificial indicator which took into consideration the following areas: logistics organization, customer service, reserves, warehousing, packing, transport and IT. The indicator ranges from 0 to 10. According to the indicator, the companies have been classified and put into 5 groups of excellence in logistics solutions: I group [min x, x - s(x)] very low level of excellence in logistics solutions II group [x - s(x), x - s(x)/2] low level of excellence in logistics solutions III group [x - s(x)/2, x + s(x)/2] average level of excellence in logistics solutions IV group [x + s(x)/2, x + s(x)] good level of excellence in logistics solutions V group [x + s(x),max x] very good level of excellence in logistics solutions where x is the average value of the indicator, s(x) is the standard deviation, min x is the minimum value, and max x is the maximum value of the indicator within the group of analyzed companies. 3. RESULTS On the basis of the conducted research, it has been deduced that the majority of the analysed agribusiness companies (80%) had no separate division dealing with complex logistics processes. In many small companies, which constitute 60% of the researched sample, the relevance of the existence of such a division is not so obvious, that is why only 2% of micro-companies and 12% of small companies admitted to have a separate logistics division. The existence of the separate divisions dealing with particular subsystems of logistics in the researched companies had also been analysed, i.e. reserves, warehousing, transport, packing

3 materials management, information management. The analysis proved that the most commonly found divisions in agribusiness companies are transport division and warehousing. The less common divisions were packing materials management and information management (Fig. 1). Fig 1. The structure of separate logistics divisions and the divisions dealing with particular areas of logistics in agribusiness companies Fig 2. Usage of external warehouse space in agribusiness companies Some branches of agribusiness are seasonal what has a great impact on the organization of the warehouse processes. Cereal-processing industry or fruit and vegetables processing industry are seasonal and this brings some difficulties in decision-making processes within the restocking which has to be made in the time when the resources are available. Additionally, the seasonality of some resources brings greater demand for warehousing and transport in some part of the year. In the analyzed group of agribusiness companies from 13% micro-companies to 45% large companies showed the lack of sufficient warehouse space in relation to the demand. However, only 10% of them declared the usage of the external warehouse space. The quality of the stock and agri-food goods usually depends on the conditions of the storage and transport. The research proved that there is a need for keeping the cold chain during transport and storage of agri-food goods, that is why the most common types of warehouse space in medium and large agribusiness companies are temperature controlled storage warehouses (refrigerated warehouses, fruit store rooms, etc.), which are significant also in micro- and small companies (Fig. 3). Fig 3. Types of warehouse space used by agribusiness companies

4 The research also proved that agribusiness companies use mostly one means of transport - the motor transport. Large and medium companies also use maritime, rail and air transport but rather occasionally (Fig. 4). Fig 4. Kinds of transport services used by agribusiness companies Fig 5. Means of transport used in agribusiness More than 50% of the researched agribusiness companies showed that they use only their own transport (Fig. 5). The external transport services are used rather in cereal-processing and fruit and vegetables processing industry. It is connected with the above mentioned seasonality when the demand for transport services is higher during the cereal and fruit and vegetables harvest. Taking into consideration the sources of financing of the own means of transport, the agi-food companies claimed to use their own financial resources or leasing (Fig. 6). Fig 6. The sources of financing the own means of transport It should be also marked, that the research proved that micro-companies (70%) and small companies (60%) of agribusiness rather do not use transport services at all. It is logical in that cases where they operate only within local markets, where usage of transport services is not profitable because of the lack of degression of transport services rates what brings high costs (Fig. 7). For the medium and large companies of agribusiness, which operate within the whole of the country market as well as the foreign markets, it is more profitable to use transport services because of the degression rates effect

5 and elimination of the problem of formalities which is dealt by the forwarding company. This is the reason why around 90% of the large companies of agribusiness used the transport services, where the level of forwarding and individual transport services is comparable. In the case of the medium companies, 60% of the analysed companies used transport services and 30% used forwarding services. Fig 7. Using transport services in agribusiness companies The last stage of the research included a complex assessment of the logistics systems functioning in the researched companies. The assessment was conducted with the usage of the indicator mentioned in the part of the article describing techniques of research. The conducted analysis has shown that the advancement of the implemented solutions within the logistics does not depend on the size of the company. Both, 1/3 of the small and large companies proved to have a high advancement in logistics system. On the other hand, it has been observed that significant differences concerning the advancement of the logistics processes depend on the kind of industry. The highest level of the logistics excellence was observed in the cereal-procession and fruit and vegetables procession companies. And the lowest level of logistics excellence was observed in companies of oil-fat sector. Fig 8. The advance of logistics processes excellence in agribusiness companies depending on the range of activity

6 Fig 9. The advance of logistics processes excellence in agribusiness companies depending on the kind of industry 4. CONCLUSION The growing expectations concerning the quality of food, tracking its source and right process of distribution of the agri-food products should stimulate the agribusiness companies to use complex and modern logistics solutions. On the basis of the research it can be claimed, that the agribusiness companies usually do not possess separate divisions dealing with complex logistics; they use mainly their own warehouses and use rather their own transport resources but occasionally also use transport and forwarding services. However, it can be concluded, that the usage of logistics solutions in agribusiness is still rather low. The deeper assessment within this area has been undertaken using the designed indicator of the implementation of organisational and technical solutions. The research proved that only 30% of the companies, which were taken into consideration in the research, presented a high level of the usage of logistics solutions. Taking into consideration the branch of industry, the cereal-processing and fruit and vegetable processing companies presented the highest level of logistics solutions. ACKNOWLEDGEMENTS Research granted by Ministry of Science and Higher Education from the funds for science in years as a scientific project no N N Systemy logistyczne w funkcjonowaniu przedsiębiorstw przetwórstwa rolno-spożywczego. LITERATURE [1]. Szymanowski W., Zarządzanie łańcuchami dostaw żywności w Polsce kierunki zmian, Difin, Warszawa 2008 [2]. Klepacki B.,Agrologistyka nowe wyzwanie dla nauki i praktyki, Logistyka nr 3, Poznań 2011 [3]. Baran J., Logistyka w przedsiębiorstwach agrobiznesu, Logistyka nr 3, Poznań 2011 [4]. Kiperska-Moroń D., Krzyżaniak S., Logistyka, Biblioteka Logistyka, Poznań 2009 [5]. Wicki L., Rokicki T., Differentiation of level of logistics activities in milk processing companies. Information systems in management: computer aided logistics. Nr X, WULS Press, Warsaw 2011 [6]. Logistyka. Wybrane zagadnienia, Wydawnictwo SGGW, Warszawa 2008