Evaluation of supply chain performance in fresh produce distribution: a study of north-eastern part of Thailand.

AuthorThanyakhan, Sutana

1.0 INTRODUCTION

A supply chain describes the full range of activities that are required to bring a product or service from conception through the different stages of production and processing to deliver superior value to the customer. The analysis of supply chains is best conducted within the context of the agribusiness system. Fresh fruit and vegetable supply chain may include key operations such as production, harvesting, packaging, transport, storage, wholesaling and retailing. The supply chain performance is an overall performance measure that depends on the performances of the individual chain stages and the respective processes that are executed in those stages (Van der vorst, 2006). The efficiency, flexibility, responsiveness, and food quality are identified as key performance components of the fresh produce supply chain performance measurement system (Aramyan, 2007)

The agricultural sector in Thailand comprises of small farmers mostly engaged in animal (pig, fish, cattle and frog) and vegetable cultivating. There are a total of 27 kinds of vegetables planted and this includes vegetable crops that are irregularly cultivated like cantaloupe, water melon, sweet potato and other temperate species. About 41.1 percent of vegetable growing area is located in the central plain (covers provinces in the West and the East), whereas the North-Eastern and the Northern regions have 25.5 and 24.9 percent respectively (FAO). Thailand has strong corporate retail sector. There are three models in vegetable supply chain distribution viz., conventional, spot market and contract farming models respectively (Buurma, 2006)

1.1 Conventional model: The conventional fresh Produce supply Chain model described in Figure 1. In the distribution chain fresh produce logistics begin from Farm fields reach the consolidation agents called collectors. The exchange process takes place in the wholesale market. The retailers buy fresh vegetables from the wholesalers and sell to the customer. The Caterers, Hawker and Fixed market retailers also buy their produce from the wholesalers and finally the produce reaches the end users through the retail distribution system. The lack of market information is a major problem for the Thailand fresh produce agriculture and thus limiting their profitability access new markets. It is particularly severe for farmers who reside in rural areas where the information flows much slower and is often not reliable once it reaches the farmer.

1.2 Contract Farming Model: In contract farming model, the investments are generally made by the producing company and they encourage the farmer to cultivate the vegetables under certain forward agreement and predetermined prices which is known as contract farming. The product will either be immediately sent to the factory for processing or store in a cool storage for later use. Firm has controlling power over the quality, volume, price and other requirements as stipulated in the contract. There is a strong integration among the upstream and downstream customers in this model. The demand and supply is more or less certain as the contracting company maintains the close interaction with the famers and downstream customers like supermarkets, processors and exporters. The technical know-how is imparted to the farmers in a view to obtain the desired quality of the fresh vegetables that reach the global hygienic standards. There are assemblers who work under contract with farmers. The assemblers consolidate the produce and also handover the same to the company. Contract companies operate captive logistic systems including cool chain, transport safety equipment and trained handing staff in order to reduce the spoilage in the produce movement until they reach the end user. However, a negligible amount may perish in transit due to inevitable factors like maturity, damage and multiple handling.

1.3 Spot Markets Model: Supermarkets in Thailand sell only limited quantities of fresh and processed...

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