Download A study of relationship between supply chain actors

1. Name: Lalrinawma Zadeng
2. Student Id: 0631871
3. Full Title of Paper: A study of relationship between supply chain actors in
the context of developing food supply chains and its affect on the performance
of actors and reflection on downstream customer demand: A comparative
study between actors in the semi-short chains of cottage industry and the semiconventional chains of low-tech food packaging industry.
4. BBS Doctoral Symposium 23rd & 24th March 2009
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ABSTRACT
There are many researches that dwell on the affect of supply chain collaboration on
performance of actors in the chain and downstream customer satisfaction. However,
the majority of such works are based on modern supply chain in developed
economies. This research project, on the other hand, aims to look at such variables in
the context of a developing economy (the Mizoram state of Northeastern India); on
supply chains that are basically low-tech and traditional and on consumer demands
that are basic. By investigating the nature of relationships between actors in the chain,
it aims to identify the role collaboration plays towards enhancing actors’ performance
as well as meeting consumer demands, all in the context of a developing food supply
chain.
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WHAT IS THE RESEARCH:
Title:
A study of relationship between supply chain actors in the context of developing food
supply chains and its affect on the performance of actors and reflection on
downstream customer demand: A comparative study between actors in the semi-short
chains of cottage industry and the semi-conventional chains of low-tech food
packaging industry.
Aims and objectives:
•
To study and compare the nature of relationship in the food supply chain
between the cottage industries and the low-tech packaging industries. Hence,
in the context of a relatively young and traditional supply chain.
•
To identify the link between the nature of relationship in the chain and its
affect on the performance of actors in the chain.
•
To identify how end consumer demands are reflected or otherwise in the
supply chain.
•
To develop a best-fit framework that can be adopted to improve the chain
configuration and ultimately the performance of the chain.
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WHERE
Mizoram Overview
Mizoram is one of the 28 states of India and is part of the seven-sister states of
Northeast India. It is one of the youngest states, one of the smallest states and also the
second most sparsely populate state in India (Khongsdier, 2008). Its economy is
largely land based and the existing industries are mostly local and cottage based while
the more conventional packaging industries are also emerging.
In an agricultural context, the widely adopted shifting (or Jhum) cultivation is seen as
a major obstacle to development. The government have pursued various efforts to
reduce this by encouraging a shift from primary to secondary sectors by way of
developing rural industries such as handloom/handicraft and other village and cottage
based industries which are met with some success. Meanwhile, within the primary
sector itself, the government is proactively promoting plantation crops, fruits and
vegetables ahead of grain production. Hence the recent emergence of food processing
and packing industry (bottled squash, juices, tinned foods, jams, etc) is of no
coincidence.
This research project is particularly interested in two types of food supply chain
present in the region. The first one is the semi-short food supply chain that exists
within the local cottage industry and its route to local markets. A wide variety of local
food products (mostly traditional foods) are channeled through this medium which
may be considered semi-short due to the relative simplicity of its route to the market
(i.e. grown locally, processed locally and sold locally). The second one is the semiconventional food supply chain where produces are transported from various areas
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across the region, processed/packaged in a factory and sold across the region. These
are mostly cooperative owned and may be considered semi-conventional as they
resemble those in business linkages but not quite in technological and contractual
sophistication.
These two chains however, can only be considered competing indirectly as their final
product to the market are not entirely of the same food product but within the same
category and of crops (e.g. soybean products). While the semi-short chain found in the
region is characterized by its informality, the semi-conventional chain is not much
regulated either particularly when compared to conventional chains in developed
economies. This led Thanchungnunga (1998) to suggest how necessary it is to create
an institutional hierarchy which is large enough to exploit economies of scale and this
research is interested to know not only if such objectives (cost factors) are met by the
existing supply chains in the region but also how appropriate it is to the market (i.e.
customer satisfaction).
Hence, by looking at the nature of relationship/linkages in the food supply chain in
the region and how these correlates or otherwise throughout the chain on actors
performance as well as consumer benefits, the writer aims to highlight a supply chain
framework best fit for such economical context. A study will be carried out between
actors in both sets of supply chain identified in the region with the aim of identifying
the significance of their relationship for themselves as practitioners, as well as for the
good of the market.
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WHAT
Comparing the food supply chain between the semi-conventional and the semishort networks – Theoretical Framework.
Table 1. Characteristics of Interorganisational Relationships (NECTEC, 2006)
The supply chain relationship that exists in both sets of the supply chain identified
will be examined in order to identify their configuration within the above framework
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(Table 1). Looking at both sides of the coin (i.e. the conventional versus the short
chains) the depth of the relationship will be investigated with an attempt to identify its
correlation with cost factors in the supply chain as well as consumer satisfaction.
‘Collaborative business relationships including strategic alliances, joint ventures,
clusters, and consortia are popular mechanisms for dealing with resource constraints
accelerating technological advancement, and heightened levels of competition in the
global marketplace. Companies enter into such relationships in the hope of accessing
resources, skills, or markets, and in doing so minimising the effect of their weakness
or building and maintaining competitive advantages’ (Palakshappa and Gordon, 2007.
p1). In particular, small-scale farmers as a group should have the greatest motives for
these, they suggest, as they lack the resources to independently face market challenges
and demand.
However, they question the extent in which this intended benefit of supply chain
collaboration is realised by the food supply chain network of small farmers and
intermediaries, in particular to developing economies. Therefore, one of the focuses of
this research project will be to identify the level of collaboration between actors in the
identified chain and examine if resources and market benefits are met. In particular, to
identify a framework that will incorporate such supply chain configurations and
outcomes in the context of a developing and traditional supply chain.
Although there is a growing body of work in the study of relationships which
emphasizes the benefits of collaboration and the sharing of information between
actors in the supply chain, Harland (1996) points out the weakness of many studies by
highlighting how hard and objective measurements are not always suitable for such
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studies and indicating the importance of softer measures. Secondly, he emphasize the
need to design the measurement system in the perspective of a quasi-organization
rather than a one sided organizational which can often be biased.
Beamon (1998) identifies an important component in supply chain management
which is the establishment of appropriate performance measures which helps in the
determination of the efficiency and effectiveness of existing systems, or compare
between competing systems. He broadly classifies these measures into two categories
– quantitative and qualitative performance measures, and also highlights the
importance of adopting a modern integrated approach of viewing the supply chain as
a single entity in studies.
Van Hoek (1998) shared this sentiment of an integrated approach in performance
measurement as control is no longer based on ownership only, but rather on
networking across interfaces. However, the research will also take heed of warnings
from Suwanruji and Enns (2004) against any performance measures with multiple
focus. They highlighted the possibility of trade-offs occurring between such measures,
with one typically improving while the other deteriorates.
Beamon (1999) highlights a shift in focus on performance measurement which used to
rest predominantly on costs but has since moved on to a new framework of
performance measurement which incorporates resources, output and flexibility
(ROC) as shown in table 2 and figure 1 below. This framework of ROC will be
adopted by this research project in the form of relationship, customer and
performance where relationship will be the prime focus interlinking the other two
variables.
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Table 2. Goals of performance measure types (Beamon, 1999).
Performance measure
Resources
Goal
High level of
efficiency
Purpose
Efficient resource management is
critical to profitability
Output
High level of
customer service
Without acceptable output, customers
will turn to other supply chains
Flexibility
Ability to respond to
a changing
environment
In an uncertain environment, supply
chains must be able to respond to
change
Figure 1. The supply chain measurement system (Beamon, 1999).
R
O
F
As can be seen from the above table and figure, R, O and C are all interlinked. The
resources affect the output of a supply chain in terms of quantity and quality; and
similarly determines the nature (flexibility) of the supply chain. Meanwhile, the
flexibility of the chain will be reflected on the output in terms of accuracy to demand,
which will also determine the resource requirements. Hence, the framework presents a
combination of quantitative and qualitative functions.
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A combination between qualitative and quantitative framework is important as
Gunasekaran et al (2003) highlight that while financial performance measurements
are more suitable for strategic decisions and external reporting, day to day controls of
manufacturing and distribution operations are considered to be more suitable with
non-financial measures. Meanwhile, this research also identifies the
interconnectedness between qualitative and quantitative measures based on Troyer
(1996) and Chan et al (1997), (quoted in Abuhilal et al, 2006) where significant cost
savings are related to collaborations in the chain, researches which have influenced
this project a great deal.
Meanwhile, as Van Hoek (1998) and Osinga and Hofstede (2005) highlights, the role
and contribution of various actors in the chain (which could differ) is of immense
importance in the chain and would be investigated. Last but not least, as Chan (2003)
advocates how consumers must be the ultimate focal point of any performance
measures, this research will also attempt to highlight such interlinkage between the
chain and consumers.
It is therefore important to note that there is a vast array of comparative measures to
choose from when comparing between different supply chains. The critical issue is
the selection of the appropriate comparative method which will truly reflect what the
research sets out to do with reasonable scale of input requirement. Based on the above
observations, it is imperative that a combination of qualitative and quantitative
measures are adopted for the study and that an integrated approach of studying the
entire chain would provide the best results.
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HOW
Methodology:
This research will adopt a method of an exploratory study in determining and
investigating the phenomena and collecting, analysing and evaluating data. It will
move on to an explanatory mode in interpreting these data and phenomena and will
seek to formulate a theory with the knowledge in context (i.e. the link between the
nature of relationship in the food supply chain and performance of actors and
reflection of consumer demand).
Primary Research:
This stage of the research will take place on field locations in the Mizoram state of
Northeastern India and is expected to be a three-folded process. Firstly in the study of
relationship in the food supply chains, qualitative methods will be adopted. Methods
such as informal discussions with employees or formal approaches on
management/proprietors through in-depth interviews will be considered to study the
nature of the linkage in the chains and what emphasis are placed by actors on their
linkage with other actors in the chain. Attempt will then be made to identify these
findings on NECTEC’s (2006) characteristics of interorganizational relationship
framework to enable comparison between the two sets.
Secondly, both quantitative and qualitative methods will be adopted to study the
effect of collaboration as experienced by both sets of actors in the chains in terms of
performance. Since this effect could range from sharing information to training, from
price discounts to lending, it is imperative that both qualitative and quantitative
methods are used. It is aimed that such effects would enable the formation of a
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framework best fit for young and low-tech supply chains, albeit leaning towards either
the traditional or conventional spectrum.
Thirdly, on the study of how food consumer demand is reflected in the chain (i.e. how
the chain actors take heed of consumer demand), a more quantitative approach in the
form of questionnaire at the point of sale will be strongly considered. However the
benefits of interviews, focus groups and observation are not overruled. If appropriate
and robust, findings of other consumer survey and studies may even be considered.
However, considering the supply chain and the market upon investigation are of such
specificity that specially designed study may be best suitable.
Secondary Research:
The systematic review, summary, collation and/or synthesis of existing research,
reports and publications takes place at University location and other learning
institutions with relevant data for the project. Data collected are being and will
continue to be carefully analysed and used to generate both qualitative and
quantitative findings using the appropriate data analysis software.
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BIBLIOGRAPHY
1. Abuhilal, L., Rabadi, G., and Sousa-Poza, A. 2006. Supply chain inventory
control: A comparison among JIT, MRP, and MRP with information sharing
using simulation. Engineering Management Journal. 18(2).
2. Beamon, B.M. 1998. Supply Chain Design and Analysis: Models and
Methods. International Journal of Production Economics. 55(3).
3. Beamon, B.M. 1999. Measuring supply chain performance. International
Journal of Operations and Production Management. 19(3)
4. Chan, F.T.S. 2003. Performance Measurement in Supply Chain. The
International Journal of Advanced Manufacturing Technology. 21
5. Gunasekaran, A., McLaughlin, J., Motwani, J., Madan, M.2003. Using
information technology to improve downstream supply chain operations: a
case study. Business Process Management Journal. 9 (1)
6. Harland, C.M. 1996. Supply Chain Management: Relationships, Chains and
Networks. British Journal of Management. 7 (Mar 1996)
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India: Implications for the Prevalence of Chronic Diseases. Tribe and Tribals:
Special Volume. 2
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8. National Electronics and Computer Technology Center (Thailand). 2006.
Interorganisational Standards (Online). Updated 2006. Available at:
http://wiki.nectec.or.th/setec/Knowledge/InterorganisationalStandard
9. Osinga, S.A. and Hofstede, G.J. 2005. Transparency in the pork supply chain:
Comparing China and the Netherlands. 99th EAAE Seminar, Bonn, Germany.
Feb 2005.
10. Palakshappa, N. and Gordon, M.E. 2007. Collaborative business relationships:
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chain simulations with tradeoffs between multiple objectives. Simulation
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