occasional paper 17corrected-6

1 AGRICULTURAL MANAGEMENT, MARKETING AND FINANCE occasional paper Agro-industrial supply chain management: concepts and applications FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONSRome, 200717byJack van der Vorst Professor in Logistics and Operations ResearchDepartment of Social SciencesWageningen University, Wageningen, The NetherlandsCarlos A. da Silva Agribusiness EconomistAgricultural Management, Marketing and Finance ServiceRural Infrastructure and Agro-Industries DivisionFood and Agriculture Organization of the United NationsRome, ItalyJacques H.

2 Trienekens Associate Professor in Supply Chain ManagementDepartment of Social SciencesWageningen University, Wageningen, The Netherlands3 FQSJOUFE 5IF EFTJHOBUJPOT FNQMPZFE BOE UIF QSFTFOUBUJPO PG NBUFSJBM JO UIJT JOGPSNBUJPOQSPEVDU EP OPU JNQMZ UIF FYQSFTTJPO PG BOZ PQJOJPO XIBUTPFWFS PO UIF QBSU PG UIF 'PPE BOE "HSJDVMUVSF 0 SHBOJ[BUJPO PG UIF 6 OJUFE /BUJPOT '"0 DPODFSOJOH UIF MFHBM PS EFWFMPQNFOU TUBUVT PG BOZ DPVOUSZ UFSSJUPSZ DJUZ PS BSFB PS PG JUT BVUIPSJUJFT PS DPODFSOJOH UIF EFMJNJUBUJPO PG JUT GSPOUJFST PS CPVOEBSJFT 5IF NFOUJPO PG TQFDJGJD DPNQBOJFT PS QSPEVDUT PG NBOVGBDUVSFST XIFUIFS PS OPU UIFTF IBWF CFFO]

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4 GBP PSH '"0 ContentsACKNOWLEDGEMENTS viiPREFACE vixACRONYMS xi1. INTRODUCTION 12. THE GLOBAL AGRIFOOD SYSTEM 33. WHAT IS A SUPPLY CHAIN? 7 DEFINITION OF A SUPPLY CHAIN 7 PERFORMANCE PROBLEMS IN THE TRADITIONAL SUPPLY CHAIN: THE BULLWHIP EFFECT 8 CAUSES OF THE BULLWHIP EFFECT AND POTENTIAL SOLUTIONS 104.

5 WHAT IS SUPPLY CHAIN MANAGEMENT AND WHY IS IT IMPORTANT? 13 DEFINITION OF SUPPLY CHAIN MANAGEMENT 13 FOOD SUPPLY CHAIN NETWORKS 14 SPECIFIC CHARACTERISTICS OF FOOD SUPPLY CHAIN NETWORKS 155. SUPPLY CHAIN MANAGEMENT AND LOGISTICS 19 WHAT IS LOGISTICS? 19 CASE 1: CLIMBING THE INTEGRATION LADDER AS A FRUIT AND VEGETABLE EXPORTER 21 LOGISTICS ACTIVITIES AND THE CUSTOMER ORDER DECOUPLING POINT 23 CASE 2: THE CUSTOMER ORDER DECOUPLING POINT AT A POULTRY PROCESSOR 28 THE TRADE-OFF BETWEEN EFFICIENCY AND RESPONSIVENESS IN SUPPLY CHAINS 32 PERFORMANCE IMPROVEMENT 356.

6 KEY DECISIONS FOR SUPPLY CHAIN REDESIGN 377. MORE PRACTICES OF SUPPLY CHAIN MANAGEMENT IN THE AGRIFOOD SECTOR 41 CASE 3: PORK CHAIN IN CHINA 42 CASE 4: TOPS FRESH VEGETABLES CHAIN IN THAILAND 44 CASE 5: THE SUPPLY CHAIN FOR BEANS IN CENTRAL AMERICA 45 CASE 6: QUALITY MANAGEMENT IN THE DAIRY SUPPLY CHAIN IN BRAZIL 47 CASE 7: THAI FRESH PROJECT 49iii8.

7 CRITICAL SUCCESS FACTORS FOR SUPPLY CHAIN MANAGEMENT 53 REFERENCES 55ivLIST OF TABLESTABLE 1. CONTRASTING SUPPLY CHAIN MANAGEMENT WITH TRADITIONAL MANAGEMENT 14 TABLE 2. OVERVIEW OF THE MAIN CHARACTERISTICS OF FOOD SUPPLY CHAIN NETWORKS AND THEIR IMPACT ON LOGISTICS AND INFORMATION AND COMMUNICATION TECHNOLOGY 17 TABLE 3.

8 SUPPLY CHAIN SCENARIOS FOR EXPO 23 TABLE 4. PHYSICALLY EFFICIENT VERSUS MARKET-RESPONSIVE SUPPLY CHAINS 32 TABLE 5. BUSINESS PROCESSES THAT COULD BE INTEGRATED IN THE SUPPLY CHAIN. 39 TABLE 6. TWO GROUPS OF MANAGEMENT COMPONENTS. 40 LIST OF FIGURESFIGURE 1. SCHEMATIC DIAGRAM OF A SUPPLY CHAIN WITHIN THE TOTAL SUPPLY CHAIN NETWORK 7 FIGURE 2. THE TRADITIONAL VIEW OF SUPPLY CHAIN PROCESSES: CYCLES 8 FIGURE 3.

9 THE BEER SUPPLY CHAIN 9 FIGURE 4. ORDERING PATTERNS SHOWING THE FORRESTER OR BULLWHIP EFFECT 9 FIGURE 5. SCHEMATIC DIAGRAM OF A SUPPLY CHAIN FROM THE PERSPECTIVE OF THE PROCESSOR WITHIN THE TOTAL FOOD SUPPLY CHAIN NETWORK 15 FIGURE 6. VIEWS ON SUPPLY CHAIN PROCESSES. 25 FIGURE 7. FIVE POSITIONS OF THE DECOUPLING POINT 26 FIGURE 8. FOUR NETWORK DESIGNS WITH DIFFERENT DECOUPLING POINTS FOR PERISHABLES 27 FIGURE 9.

10 ELEMENTS THAT INFLUENCE THE POSITION OF THE DECOUPLING POINT 28 FIGURE 10. SUPPLY CHAIN OVERVIEW 30 FIGURE 11. SUPPLY CHAIN DESIGN IN RELATIONSHIP WITH THE NATURE OF PRODUCT DEMAND. 33 FIGURE 12. DIFFERENT SUPPLY CHAIN STRATEGIES TO COPE WITH (UN)CERTAINTY 34 FIGURE 13. KEY DECISIONS IN SUPPLY CHAIN MANAGEMENT 37 FIGURE 14.