Supply Chain Management in

Agricultural Products

Dr. S.V. Warade

Assistant Professor
School 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.
 Management of the supply chain depend on
various decision as fallows
• Supply Chain planning
It 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.
 Management of the supply chain depend on
various decision as fallows

• Supply Chain operation

The 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.
 Process of Supply
Chains
• Cycle View:
– Customer cycle
-Arrival of customer.
-Order entry
-Fulfillment of order
-Receiving of the
product
 Process of Supply
Chains
• Cycle View:
– Replenishment cycle
– Refilling on the time is
very important
-Triggering the order.
-Order entry
-Fulfillment of order
-Receiving of the products
 Process of Supply
Chains
• Cycle View:
– Manufacturing cycle
-Arrival of orders.
-Planning of production schedule
-Manufacturing of the products
-Receiving of the product by
distributor
 Process of Supply
Chains
• Cycle View:
– 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

 Strategic fit in Supply Chain Management

1 Understanding the customer:

quality,
quantity,
response time,
variety,
service level,
price/rate.
 Strategic fit in Supply Chain
Management

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 .
 Strategic fit in Supply Chain Management

3. Achieving the strategic fit: amongst

Responsive Supply chain-

gic
t e
Responsiveness spectrum- r a
(chain response to quantity f st
o fit
Demanded- capacity) ne
Zo
Efficient Supply Chain
Certain Demand- Implied Uncertainty spectrum– Uncertain demand
 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
 Drivers in Supply Chain Management

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
 Drivers in Supply Chain Management

2. Transportation:

Mode: road way, railway, ship, airway

Route and network selection.

 Drivers in Supply Chain Management

3. Facilities :

Space for moving inventories (like yard),

labour,
capacity of facility
loading unloading devices (bucket elevator, belt
conveyor).
 Drivers in Supply Chain Management

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 Management
Bullwhip(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
1.Lack of coordination in Supply chain functionaries
increase
Impact of Lack of Coordination in Supply
Chain Management

Lack of coordination in Supply chain

functionaries increase
Manufacturing Cost
Inventory Cost
Replenishment Lead time
Transportation Cost
Labor Cost for shipping and receiving
Level of product availability
It 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.
 Supply Chain Management and Value Chain
Management

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.
 Supply Chain Management and Value Chain
Management

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.
 Supply Chain Management and Value Chain
Management
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

Food

Consumers
Input Grain End User Feed
Growers
Providers Processors Mfg.
Bio-fuels
Bio-materials
Value Delivery
Supply Chain in tomato