supply chain management for agricultural products

Supply Chain Management in Agricultural Products

Dr. S.V. Warade

Assistant ProfessorSchool of Agri-Business Management, Nagpur

Dr. PDKV,Akola

Supply Chain Management: A Concept• The concept of supply chain management in agriculture is

relatively new. This concept is widely used in industrial sector. • It includes the all stages directly or indirectly involved in

fulfilling the customer request. • In includes all the functions of the product development,

manufacturing, marketing, operations, distribution, finance and customer service.

• It is the process of managing of these intermediaries and functions efficiently.

Need of Supply chain management

• Spatial and temporal distribution• Demand shifts• Sensitivity to market• Health consciousness• Cost consciousness• Quality consciousness• User Convenience

Formation of supply chains

• Trade environment• Nature of the commodity• Strategies of the company• Availability and cost effective infrastructure• Economic strength of the consumers• Consumers demand

Supply Chain

Management of the supply chain depend on various decision

• Supply Chain strategy or design:

• Supply Chain planning

• Supply Chain operation

Management of the supply chain depend on various decision as fallows

• Supply Chain strategy or design:This decision involves how to structure the supply chain. It is process of making a configuration of the chain. It involves the decision regarding the

selection of locations, mode of transportation and capacities of the production unit, warehouse and retail outlet.


• Supply Chain planningIt is decision regarding the planning of the set of operating

policies to be performed to achieve the framed objectives for short term period. It involve the plans of

inventories production,supply target, subcontracting, replenishment of the stock etc.


• Supply Chain operationThe company makes weekly and daily decision regarding the operations based individual customer orders. It involves

allocation of the individual orders to inventory or production department with due dates, generation of pick lists, allocation of orders to shipment etc.

Process of Supply Chains• Cycle View:

The process in a supply chain is divided into a series of cycles, each performed at the interface between two successive stages of a supply chain. It involves customer order cycle, replenishment cycle, manufacturing cycle and procurement cycle.


– Customer cycle-Arrival of customer.-Order entry-Fulfillment of order -Receiving of the product


– Replenishment cycle– Refilling on the time is very

important

-Triggering the order.-Order entry-Fulfillment of order -Receiving of the products


– Manufacturing cycle-Arrival of orders.-Planning of production schedule-Manufacturing of the products-Receiving of the product by distributor


– Procurement cycle- Arrival of the order of the supplies.- Planning of production schedule by

supplier-Manufacturing of the supplies-Receiving of the as input by

manufacturer

Process of Supply Chains• Push/Pull view• The processes in a supply chain are divided into two

categories depending on whether they are executed in response to a customer order or in anticipation of customer orders.

• Push processes are initiated by performed in anticipation of customer orders.

• Pull processes are initiated by a customer order and • For example the production of the spare parts of the

machinery are push processes and assembling the parts as a unit on demand of customer are pull processes

Strategic fit in Supply Chain Management

1 Understanding the customer

2. Understanding the supply chain

3. Achieving the strategic fit


1 Understanding the customer: quality, quantity, response time, variety, service level, price/rate.


2. Understanding the supply chain: response of the chain to quantity and quality

demanded , short lead times, handling of the product, service level, cost-responsiveness efficiency .


3. Achieving the strategic fit: amongst

Responsive Supply chain-

Responsiveness spectrum-(chain response to quantity Demanded- capacity)Efficient Supply Chain

Certain Demand- Implied Uncertainty spectrum– Uncertain demand

Zone of strategic fi

t

Farm level strategies

• Market led production• Quality production • Group marketing• Adoption of technology• Undergoing Training• Community use of infrastructure

Globalization and supply chain management

• Global trade Opportunities• Components of success in global trade• Market integration• SPS Measurers• Importance of Time

Drivers in Supply Chain Management

1. Inventory

2. Transportation

3. Facilities

4. Information


1. Inventory: 1. Quantity (higher quantity inventory, the low cost per unit)

2. Volume (more volume, more cost),

3. Nature of inventory :liquid, solid, raw material, semi-finished, finished


2. Transportation:

Mode: road way, railway, ship, airway

Route and network selection.


3. Facilities :

Space for moving inventories (like yard),

labour, capacity of facility loading unloading devices (bucket elevator, belt conveyor).


4. Information: -data on availability and requirement of inventory,-data on the position of the inventory in various stages ( inventory on the way, in warehouse, time to be taken to reach)

Bullwhip Effect in Supply Chain ManagementBullwhip(Belt for bull)

1. Supply chain efficiency improves if the all the stages of the chain take actions that together in coordination that increase total supply chain profit.

2. BULLWHIP EFFECT is the fluctuations in orders increases, as the orders moves up in supply chain from one functionary to another. The demand vary in short time before the orders reaches to retailer. Generally it is seen in online buying and selling firms like ebay, infibeam

3. Lack of coordination in Supply chain functionaries increase

Impact of Lack of Coordination in Supply Chain Management

Lack of coordination in Supply chain functionaries increaseManufacturing CostInventory CostReplenishment Lead timeTransportation CostLabor Cost for shipping and receivingLevel of product availabilityIt lead to disputes amongst chain partners

Supply Chain Management and Value Chain Management

1.Supply Chain Management differs from purchasing in that it encompasses also all logistics activities.

Value Chain Management builds on SCM. Here the idea is that suppliers are challenged by the (larger) customer organization to improve its value proposition to its end-customers. Usually the supplier works closely together with the technical and marketing staff to reduce the product’s overall costs, add new designs or features to the product which are attractive to the end-customer.


2. One key difference between supply-chain management and value-chain management has to do with where the emphasis is placed, Timothy R. Furey, CEO at Oxford Associates. "Supply-chain thinking has traditionally been efficiency-oriented -- a cost-reduction and productivity sort of thing -- whereas value-chain thinking is effectiveness-oriented (enhancement of the quality),”.

When companies stress effectiveness, they aren't necessarily trying to reduce costs, but rather "to create the highest value for the customer - which isn't always the lowest-cost approach.


3. The Value chain of an individual company is normally part of total supply chain of value-creating activities.

While Porters says’ value chain concept decomposes all activities of one firm in to parts and analyses each individual activity and their interdependence,

The supply chain concept tries to optimize the supply chain system as a whole by taking into account the interdependence between the activities in multiple firms.


4.Supply Chain Management focuses on the management of the relationships between firms in order to facilitate the movement of inventory and the components of inventory. As such the focus is still on the reduction of costs, but it focuses more on how to facilitate information flows to reduce costs of physical inventories and the processes associated order processing, inventory management, and forecasting end demand.

Value Chain Management focuses on managing logistics and the supply chain to support a firm's strategic position in order to both reduce costs and enhance revenues.

Value Chain Value Chain

Bio-materialsBio-materials

Bio-fuelsBio-fuels

FeedFeed

FoodFood

Co

nsu

mers

Co

nsu

mers

Growers GrowersEnd User

Mfg.End User

Mfg.Grain

ProcessorsGrain

ProcessorsInput

ProvidersInput

Providers

Value Delivery

Supply Chain in tomatoSupply Chain in tomato

supply chain management for agricultural products

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