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Improving entry into food supply chains by SME local producers Eliseo Vilalta-Perdomo & Martin Hingley Marketing and Supply Chain Research Group University.

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Presentation on theme: "Improving entry into food supply chains by SME local producers Eliseo Vilalta-Perdomo & Martin Hingley Marketing and Supply Chain Research Group University."— Presentation transcript:

1 Improving entry into food supply chains by SME local producers Eliseo Vilalta-Perdomo & Martin Hingley Marketing and Supply Chain Research Group University of Lincoln, LBS OR55 Conference – Community & Third Sector OR Stream 3 – 5 September, 2103 University of Exeter

2 Content SC language: challenges and expectations inside SME SC supporting abilities: Microenterprises and food industry Testing current principles: On-going project Future development: Communities of microproducers

3 CHALLENGES AND EXPECTATIONS INSIDE SME SC LANGUAGE

4 SC language: Challenges and expectations inside SME What is a Supply Chain? “… all parties involved, directly or indirectly, in fulfilling a customer request” (Chopra & Meindl, 2007) “… a linkage or strand of operations that provides goods and services through to end customers” (Slack et al, 2007) “… a series of activities that moves materials from suppliers, through operations to customers.....each product or service will have its own supply chain, which may involve many organisations in processing, transportation, warehousing and retail” (Greasley, 2008)

5 SC language: Challenges and expectations inside SME What is a Supply Chain? "Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology”. (Council of Supply Chain Management Professionals, CSCMP, 2011)

6 SC language: Challenges and expectations inside SME Challenges towards sustainable supply chains CostsComplexityOperationalisation Mindset and cultural changes Uncertainty Abbasi & Nilsson, 2012)

7 SC language: Challenges and expectations inside SME Challenges – What to do Planning and management of all activities involved in logistics. Coordination and collaboration Integration of supply and demand management within and across companies. Linking major business functions and business processes within and across companies into a cohesive and high-performing business model. Driving coordination of processes and activities Expectations – Performance To get the right goods or services to the right place, at the right time, and in the desired condition, while making the greatest contribution to the firm (Ballou, 1999) To control demand fluctuations by means of synchronisation between SC members (Greasley, 2009) Metrics (KPI) at senior (e.g. profitability ), operational (e.g. picking efficiency ) and functional (e.g. receipts processed same day/next day) levels (Mangan et al, 2012) To meet customer requirements in an efficient manner (Jones & Robinson, 2012) Coordination, information sharing & collaboration (Sanders, 2012)

8 SC language: Challenges and expectations inside SME Recommendations To diagnose current business position and strategically plan intended changes by enhancing their operational capabilities. They may strive to take practical steps to evolve from efficiency SMEs all the way to innovation SMEs (Hong & Jeong, 2006) SMEs should adopt technology-based planning and control methods. Horizontal cooperation with other SMEs to share competence and other resources. Vertical partnership to implement shared planning and control systems (Vaaland & Heide, 2007).

9 SC language: Challenges and expectations inside SME Recommendations (Thakkar, Kanda & Deshmukh, 2008): SMEs can consider SCM as strategic weapon to improve their performance. SCM can help SMEs to establish better relationships with their Original Equipment Manufacturers (OEM) or larger enterprises and hence derive the opportunity to improve their learning curve. Adoption of SCM by first-tier and second-tier SMEs can help to consolidate the component level requirements of their OEM customers at few stages and in turn it can help too boost the profit of their own and overall supply chain. Coordinated efforts can help to reduce waste and buffer inventories at SMEs factory and warehouses.

10 MICROENTERPRISES AND FOOD INDUSTRY SC SUPPORTING ABILITIES

11 SC linking abilities: Microenterprises and food industry Enterprise sizeEmployees (max)Annual turnover (max)Annual balance-sheet (max) Medium25050 mill. €43 mill. € Small5010 mill. € Micro102 mill. € (The Commission of the European Communities, 2003) Definition of micro, small and medium-sized enterprises

12 SC linking abilities: Microenterprises and food industry SC in food industry Common understanding High-volume Low-variety Make-to-stock Short time delivery Cost as a major order-winner Micro-enterprises Small batches Product differentiation Product innovation Best-before limitations Unpredictable processing (i.e. raw materials availability)

13 SC linking abilities: Microenterprises and food industry StrategyDescription Buyer-focused operationsTo single out part of the (shared) resources with the purpose of satisfying demand for one single buyer Virtual buyer focused operationsTo single out part of the capacity for specific buyers virtually. Aggregated hierarchical planningTo organise the planning decisions in a hierarchy. Integrated planning and scheduling decisions To structure a scheduling problem of finding the optimal order of producing the required product quantities in time. (Van Donk, Akkerman van der Vaart, 2012) Different strategies for SME to achieve good performance

14 ON-GOING PROJECT TESTING CURRENT PRINCIPLES

15 Testing current principles: On-going project Aim : To identify microenterprises’ drivers for striving to cooperate: Procedure : Initial series of in-depth interviews (6 microenterprises in Lincolnshire): – Pork product (mainly sausages) (2): North East Lincolnshire and Boston Borough – Cheese: West Lindsey – Fishcakes: North Lincolnshire – Jam: Lincoln City – Ice cream: North Kesteven

16 Testing current principles: On-going project 1. Tell us about you, the business and how it developed Pork product: North East Lincs.New business (< 10 years) Pork product Boston BoroughThird generation (early 1900s) Cheese: West LindseyNew business (< 5 years) in an old dairy Fishcakes: North LincolnshireSecond generation. First generation fishermen transformed into a food processing facility Jam: Lincoln CityNew business (< 5 years) Ice cream: North KestevenSecond generation (1950s)

17 Testing current principles: On-going project 2. Why do you do what you do? Pork product: North East Lincs.Additional income to support the pork farm. Excellent product with wide acceptance Pork product Boston BoroughFamily business that we want to maintain. Proud of our product Cheese: West LindseyAdditional income to support the dairy Fishcakes: North LincolnshireDifficulties for fishermen pushed for new opportunities Jam: Lincoln CityGood doing the product. Additional family income Ice cream: North KestevenTo maintain the tradition

18 Testing current principles: On-going project 3. Tell us about your market and customers? Who are they? (regularity?) Market growth? Cycle of business? Pork product: North East Lincs.Farmers’ markets + sales through internet Pork product Boston BoroughOwn shops (Boston and London) + sales through internet Cheese: West LindseyFarmers’ markets + sales through internet Fishcakes: North LincolnshireDifferent distributors + shops Jam: Lincoln CityThe Lincolnshire co-operative Ice cream: North KestevenOwn ice cream parlour in the top of the hill (Lincoln City) + some restaurants

19 Testing current principles: On-going project 4. Do you consider yourself a … Specialist food producer? Local food producer? Sustainable food producer? Innovative food producer? Pork product: North East Lincs.All of them Pork product Boston BoroughAll of them Cheese: West LindseyAll of them Fishcakes: North LincolnshireSpecialist / Local Jam: Lincoln CitySpecialist / Local Ice cream: North KestevenAll of them

20 Testing current principles: On-going project 5.a. Can you outline the structure of your supply chain? b. Main concerns in your supply chain? Pork product: North East Lincs. a)Own raw material – Own processing – Internet sales/Farmers’ Market – Parcel distribution/Own transportation b)None identified Pork product Boston Borough a)Local raw material – Own processing – Own shops/Internet sales – Own transportation/Parcel distribution b)Transportation Cheese: West Lindsey a)Own raw material – Own processing – Internet sales/Farmers’ Market – Parcel distribution/Own transportation b)Marketing + Distribution Fishcakes: North Lincolnshire a)Local raw material – Own processing – Own shop/Internet sales – Own transportation/Parcel distribution b)None identified Jam: Lincoln City a)Different providers of raw material – Own processing – The Co-op b)Marketing + Distribution Ice cream: North Kesteven a)Local raw material – Own processing – Own shop/Restaurants – Own transportation b)None identified

21 Testing current principles: On-going project 6.a. Do you consider yourself expert in supply chain? b. Your strengths (what do you know)? Your limitations (what do you need to know)? c. What are the biggest problems of the supply chain? (Concerning products, relationships and logistics) Pork product: North East Lincs. a)No direct answer b)Excellent product; good management; good recognition c)Expansion to other markets (international) Pork product Boston Borough a)No direct answer b)Excellent product; clear objectives c)Expansion to other markets (West England) Cheese: West Lindsey a)No direct answer b)Excellent product; clear objectives c)Small workforce + Distribution Fishcakes: North Lincolnshire a)Yes. Own distribution (frozen products) b)Excellent product c)None Jam: Lincoln City a)No direct answer b)Excellent product; good acceptance c)Marketing + Distribution Ice cream: North Kesteven a)Yes. Own distribution (frozen products) b)Excellent product; well-established c)None

22 Testing current principles: On-going project 7. What do you think makes an effective and efficient food supply chain? a. Are there any opportunities to collaborate with others? (logistics, purchasing, marketing, etc.). b. What would motivate you to work with others? Pork product: North East Lincs. a)Shared resources for marketing (e.g. Select Lincolnshire) b)No need for it Pork product Boston Borough a)Shared transportation b)Reducing cost of transport and distribution Cheese: West Lindsey a)Shared resources for marketing; shared distribution; cross- selling b)Current collaboration with other cheese producer; Tourist routes linked to food Fishcakes: North Lincolnshire a)Not sure. Limited to frozen products b)Nothing in specific Jam: Lincoln City a)Shared resources for marketing; shared distribution; cross- selling b)Any help to increase sales Ice cream: North Kesteven a)Not sure. Limited to frozen products b)To support local producers;

23 Testing current principles: On-going project 8. Which are the elements that constitute the best strategy for food related SMEs to succeed in a national/ globalised economy? a. Do you follow it? Why? Why not? What help, if any, have you received in the development of the business? Has it been useful? b. What future help, if any, do you require? c. Where do you want to take this business in future? Who else in the supply chain might that involve? Pork product: North East Lincs.a) Happy with current situation. Support expanding to London (Jamie Oliver’s restaurants) b) Solving international distribution c) Expanding maybe internationally. Pork product Boston Borougha) Not too much support. b) Solving West England distribution (new shop) c) National expansion Cheese: West Lindseya) Not too much support. b) Distribution and packaging c) International expansion

24 Testing current principles: On-going project 8. Which are the elements that constitute the best strategy for food related SMEs to succeed in a national/ globalised economy? a. Do you follow it? Why? Why not? What help, if any, have you received in the development of the business? Has it been useful? b. What future help, if any, do you require? c. Where do you want to take this business in future? Who else in the supply chain might that involve? Fishcakes: North Lincolnshirea) No comments b) No comments c) No comments Jam: Lincoln Citya) Not too much support. b) Marketing, distribution and packaging c) Regional expansion Ice cream: North Kestevena) Not too much support. b) Better marketing of “Made in Lincolnshire” branding c) To maintain the current market

25 Testing current principles: On-going project Strategies proposed Buyer-focused operations - Important clients? Virtual buyer focused operations Aggregated hierarchical planning Integrated planning and scheduling decisions Potential applications Pork product (North East Lincolnshire) None in particular. Maybe Jamie Oliver? Pork product (Boston Borough) None Cheese: West Lindsey None Fishcakes: North Lincolnshire None Jam: Lincoln City The Co-op Ice cream: North Kesteven Own distribution None

26 Testing current principles: On-going project Proposal Stop looking at microproducers as entities externally organisable according to unnatural success principles and criteria. To look at microproducers as people, potentially engaging in communities internally organised to develop supportive actions.

27 COMMUNITIES OF MICROPRODUCERS FUTURE DEVELOPMENT

28 Future development: Communities of producers Community is “an embodied or imagined group of persons who are so meaningfully connected, for example, through forms of communication, recognition and/or shared identity”. Performance criteria : “A strong community can be regarded as one in which either the connections among the members are strong or the community as a whole is powerful”. (Somerville, 2011)

29 Future development: Communities of producers “A person who is able to act stabilised against all obstacles obviously appears ‘strong’, or a strong actor. Similarly, those who achieve a new level of stability, beyond the last one, become ‘stronger’ actors”. (De Zeeuw, 2002) What remains stable? Knowledge?

30 Future development: Communities of producers How do micro-enterprises become stable? How they may engage in building of communities of producers? How micro-enterprises may (co-)create knowledge and learn? Imposing the behaviour (law enforcement, forced collectivisation) Manipulating resources and opportunities (public policy) Improving individual and collective actions (knowledge that adds value)

31 Future development: Communities of producers Procedure for improvement: Language of needs To identify different needs Ind1 Ind2 Ind3 Ind4 Ind… To develop a consensus over a common need To provide a solution for every agreed need Ind1 Ind2 Ind3 Ind4 Ind…

32 Future development: Communities of producers Procedure for improvement: Language for action Identify different ‘issues’ relevant for individual and/or community survival Ind1 Ind2 Ind3 Ind4 Ind… Identify collective tasks and their coordination Identify individual actions that will contribute to achieve collective tasks Ind3 Ind1 Ind2 Ind4 Ind…

33 Future development: Communities of producers Future steps: To identify potential languages for action that may support the development of strong communities of microproducers. – To visit COR illustrations as sources for inspiration To test different configurations that may strive for the constitution communities of producers (Select Lincolnshire / MaSC) – To conduct a survey to identify drivers for collaboration – To build experiential illustrations that document the design principles

34 Thanks for your attention Any questions or comments? Eliseo Vilalta-Perdomo Prof. Martin Hingley Marketing and Supply Chain Research Group Lincoln Business School marketingandsupplychain.blogs.lincoln.ac.uk/members /


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