1. ADVANCED MANAGEMENT CONTROL and SUSTAINABLE DEVELOPMENT
Lecture 10: SMART LEADER APPROACH
Prof. Angelo Riccaboni
University of Siena
Department of Business and Law

2. Agenda Agreements towards co-operation — co-ordination — collaboration
The role of the Leader in the integration and collaboration approach
Barilla Case-Study
The role of the leader in the Value Chain
The reasons to introduce collaborative contracts
The reasons to accept supply chain contracts
The advantages for stockers
The advantages for farmers

3. Agreements towards co-operation—co-ordination--collaboration
Food industry adopt innovative strategies to enhance the strong relationship among companies, which necessitate trust, commitment, co- operation, co-ordination and collaboration.
Collaboration is related to
Integration
is linked to sharing and collaborating efforts
Cooperation
is linked to sharing information, which allows the forecast of market demand, avoiding losses and reduction of profit margins, thus avoiding the increase in costs

4. The role of the Smart Leader in the integration and collaboration approach
Leader company plays a key role in integration and synergy connection between actors within the supply chain.
Collaboration and integration approach, where the focal company connects downstream with upstream companies- emphasizes the connection on three dimensions: economic, environmental and social.
The collaboration strategy enhances the potential of economic advantages along the supply chain. With the possibility to coordinate all members and guarantee the fair profitability

5. Barilla Case Study The role of the leader in the Value Chain
The reasons to introduce collaborative contracts
The reasons to accept supply chain contracts
The advantages for stockers
The advantages for farmers

6. The role of the leader in the Value Chain
Barilla, as a chain leader and actor directly involved in the contracts with the stockers, is committed to reducing the information asymmetries between the counterparts, between farmers and stockers themselves, through the publication and dissemination of the contractual clauses, requests and required parameters and furthermore communicates the payment methods the price and the premium, established on the basis of the quality of the wheat.
The advantage for Barilla from the implementation of BSF results in terms of Supply Security, in terms of protein improvement ,quality, efficiency, stability of production and safeguarding the territorial proximity

7. The role of the leader in the Value Chain
Barilla, being Chain Leader, in creating agreements or cultivation contracts has direct relations with producer organizations but has not direct relations with farmers themselves.
There are exceptions, and Barilla has direct contacts with farmers, when the farmer is of large size with more than 1000 ha. In these cases, production and sales are closer to the American model, where the farmer is an agronomist / entrepreneur who has his farm and leases other farms / land and manages them.

8. The reasons to introduce collaborative contracts
Cultivation contracts are agreements signed between several parts:
Barilla and Stocker/Producer associations
Stocker and farmer/smallholders
The counterparty is not the direct farmer but the producer / stocker / producer association. The data included in the BSF platform are used only to encourage and persuade farmers to join Barilla and negotiate contracts.
Cultivation contracts have important advantages for the cereal supply chain, as these contracts are considered an important way of integration to cope with the increasing globalization and to guarantee the survival of the durum wheat supply chain in the long term.

9. The reasons to introduce collaborative contracts
Cultivation Contracts present 3 main functions and to those function specific and concrete needs and requirements are connected.
Functions
Needs and Requirements
Coordination
Provide an institutional framework for greater dialogue between actors
Support the integration of the most fragmented components of the supply chain (farmers)
Ensure coordination of the entire production process
Grounds/Motivation
Need sufficient motivation to stimulate farmers financially
Need for initial investments to gain the trust of different actors and build a critical mass
Reduction of
transaction costs
Aggregate farmers to reduce research and bargaining costs

10. The reasons to introduce collaborative contracts
The realization of a highly sustainable production under an environmental profile, which allows water savings, reduction of CO emissions and savings on transport costs
The increase in quality, guaranteeing "top quality" in protein content and gluten strength, ensuring the 100% Italian product
The improvement of product quality, both in the field and in the management and storage phase
Safe income and fair profitability distribution in a global market
The use of the certified inputs in the correct ways, allowing to produce more and this is more noticeable with unfavorable weather conditions bring to the improvement of quality

11. The reasons to accept supply chain contracts
Increase the availability of national durum wheat quality and produced in a sustainable way to meet the needs of the milling industry and pasta
Encourage and support virtuous agriculture, with production bonuses linked to the achievement of grain quality standards and the characteristics of the production area
Gradually concentrate the durum wheat supply and register the storage centers suitable for the preservation of quality durum wheat
Stimulating training, research and innovation in the Italian grain-semola-pasta chain
To promote and defend a strong image of Italian pasta in a cohesive manner, guaranteeing its security through the computer traceability of the various steps in the supply chain.

12. The advantages for stockers
Lower costs thanks to improved procurement planning
Greater revenue thanks to greater homogeneity and quality of lots
Better selection and loyalty of suppliers
Lower financial risks related to market fluctuations

13. The advantages for farmers
Increased security in product allocation
Greater guarantee of payment (high price volatility with limited margins)
Better uniformity on the price mechanism that the farmer can have (in some cases the farmer has the right to choose the period when he wants to fix the price); theoretically the contracts and the price are stipulated in the phase of sowing.
Have a quality goal - (know the goal you must achieve)
Increased crop income thanks to the safest price
Increased crop income thanks to the quality of the product
Increased crop income thanks to the greater quantity produced
Increased income security (less fluctuation risks)
Improvement of cultivation techniques and professionalism, thanks to technical assistance
Greater stability of the "rules of the game"