A NEW FLOW-BASED MODEL OF END-TO-END INTEGRATION IN PREMIUM PRODUCT SUPPLY CHAINS

ABSTRACT

Gedryf deur die totale koste van eienaarskap, handel en tegnologiemededinging tussen die Verenigde State van Amerika en China, en die COVID-19-pandemie, ondergaan wereldwye voorsieningskettings 'n groot herstrukturering wat binnekort die besigheid en ekonomie oor die hele wereld sal transformeer. Onlangs het voorsieningskettings met end-totend-integrasie vir premium landbouvoedselprodukte as 'n nuwe sakemodel na vore gekom. Hierdie artikel ondersoek hoe hulle moet funksioneer, en identifiseer die voorsieningskettingstruktuur / - produksie / - besigheids toestande wat nodig is vir hul ontwikkeling. Ons bestudeer 'n premium voorsieningsketting wat bestaan uit baie klein plase wat piesangs van topgehalte produseer, een integreerfirma en duisende kleinhandelwinkels. Ons gebruik industrie- en besigheidsdata om 'n meervoudige roete-vloei-gebaseerde model te kalibreer van plase tot integreerder tot kleinhandelaars/markte. Ons gebruik dan sensitiwiteitsanalise om die belanghebbendes se besluitgedrag te analiseer, en identifiseer en bespreek drie hoofbesluitkwessies kontrakboerdery, kapasiteitstrategie en besigheidsrobuustheid. Vir kontrakspesifikasie is kontraktering op prys, eerder as hoeveelheid, bevorderlik om die belange van die belanghebbendes te koördineer. Vir die kapasiteitstrategie moet die integreerder rou produkte van baie klein plase verkry eerder as minder groot plase. Vir besigheid se robuustheid kan die integreerder steeds robuuste winste verseker deur sy produkaanbod te reguleer wanneer nuwe mededingers ontstaan of vraag verander. Hierdie resultate word onder verskeie scenario's getoets om die impak van insetparameters of voorsieningskettingstruktuur te bepaal, en word geverifieer met 'n bedryfspraktisyn wat ondervinding het met veelvuldige premium agri-voedselprodukte. Die resultate, tesame met die vloeimodel en sy berekeningsprosedure, kan deur voorsieningskettingbeplanners gebruik word om nuwe besighede te begin of om kleinhandelaars se premium produkaanbiedinge in mededingende besigheidsomgewings te onderskei.AlternateDriven by the total cost of ownership, US-China trade and technology competition, and the COVID-19 pandemic, global supply chains are undergoing a major restructuring that will soon transform business and economics all over the world. Recently, supply chains with end-to-end integration for premium agri-food products have emerged as a new business model. This paper examines how they should function, and identifies the supply chain structure/production/business conditions necessary for their development. We study a premium supply chain consisting of many small farms that produce top-quality bananas, one integrator firm, and thousands of retail stores. We use industry and business data to calibrate a multiple-route flow-based model from farms to integrator to retailers/markets. We then use sensitivity analysis to illuminate the stakeholders' decision behaviour, and identify and discuss three main decision issues contract farming, capacity strategy, and business robustness. For contract specification, contracting on price rather than quantity is conducive to coordinating the interests of the stakeholders. For the capacity strategy, the integrator should source raw products from many small farms rather than fewer large farms. For business robustness, the integrator could still ensure robust profits by regulating its product supply when new competitors arise or demand changes. These results are tested under various scenarios to determine the impact of input parameters or supply chain structure, and are verified with an industry practitioner who has experience with multiple premium agri-food products. The results, along with the flow model and its computation procedure, could be used by supply chain planners to start new businesses or to differentiate retailers' premium product offerings in competitive business environments.