Supply chain management and logistics are important for the revenue generation of the companies in the agro food department. Sustainability of the supply chain management is a critical issue that the global companies are facing in order to maintain the value chain in the global agri-food supply chain. Agri-food supply chain is defined as the transfer of farming goods or agricultural foods from the production level to the final consumers. The supply chains consist of pre production activities and post consumption activities in the sector of agri-food department. In the world of globalization, countries and companies are focused in protecting the environment and reconciling the natural resource management. It creates a good impact on the field of food supply-chain management. The environmental pollution and the change in climate are considered as the factors that are responsible for threatening the different strategies towards management of sustainable supply chain. The report focuses on the issues faced by global agri-food supply chain along with implementation of theoretical frameworks in support to it. Apart from that, the role of culture in maintaining the green and effective supply chain by companies are also described in the report along with the concept of green supply chain management practices by global agri-food companies.
It can be said that the main area of issues that the agri-food supply chain faces is in the area of the logistics. Supply chain management is related to distribution channel and logistics. These two aspects are considered as the lever of the sustainable supply chain management. The issues of the supply chain management is based on the subject of order management, warehousing, packaging, delivery, waste disposal and sales returns management, shipment, delivery, etc (Burch & Lawrence, 2013). The issues of the supply chain of agri-food companies in a global basis are described in the following.
There are many theories related to the supply chain management. Among them, three theories will be selected that will address the above mentioned issues.
Six sigma in logistics is defined as the way of implementing the approach which will yield in the development of choices which is based on the balance of risk and values (Mangan, Lalwani, & Lalwani, 2016). It is an internationally accepted process of management that is focused on manufacturing higher quality services or products while meeting demands and needs of the customers. The DMAIC methodology is the core of the six-sigma theory. It includes define, measure, analyse, improve and control. The processes of supply chain management are based on these aspects of the model (Dabbene, Gay & Tortia, 2014).
Lean manufacturing is an approach that is used by dealers and manufacturers of agri-food companies that focuses on elimination of waste in the manufacturing system. This process of manufacturing will help in the elimination of the waste from the process of manufacturing of the products (Mangan et al., 2016). The lean manufacturing system focuses on three aspects of quality, costs and delivery times. Lean manufacturing on the elimination of wastes is related to the sustainable supply chain activities. Environmental protection is also done using this practice of manufacturing (Keramydas et al., 2016).
Multinational organizations use Just in Time theory that is focused on the reduction of the flow times in the whole production system along with response times from the various ranges of suppliers to the customers. Just in time is a popular theory in the supply chain management that helps in maintaining the inventory kevel as well as reducing the level of waste. It is popularly known as Toyota Production system (Aung & Chang, 2014). It also maintains the different types of issues related to demand and supply of products between the manufacturers of products and the customers that ultimately helps in the maintenance of reputation (Zhang et al., 2016).
Big retailers like Tesco, Wesfarmers, etc are facing issues in their supply chain management that affects the profitability of the company. Apart from that, it is seen that the codes of conduct of suppliers of the Tesco are not up to the mark. Hence, the suppliers are not providing quality materials to Tesco. The quality of the products of the Tesco is getting compromised. Besides this, the customers are complaining about the quality of the products (Handayati et al.,2015).
The distributors of the agricultural products are facing issues in the increased cost of transportation. These big supermarkets usually take control over the small dealers and distributors of the agricultural products. The control of the multinational giants is due to the excessive control of the supply-chain management aspects (Mylan et al., 2015).
It is seen that the prices of products of Aldi are lower than that of Tesco and Wesfarmers. It is due to the lack of inventory management and distribution of the products due to issues with the suppliers. In many countries, the transportation facilities and other technological aspects are not feasible (Bourlakis et al., 2014). It leads to lower profitability and larger cost in the manufacture of products of the agri-food companies along with maintenance of the supply chain and logistics aspects of the company.
Culture has a deep impact on formulation of strategies that helps companies in building efficient, competitive and green supply-chain management strategies. For developing, efficient and competitive supply chain strategies, mutual trust, partnership, sharing information and cooperation among the different business partners are essential (Younis et al., 2016). The element of corporate culture is slightly different from that of nation’s culture. Agri-food companies must accomplish their corporate culture with the nation’s culture of their country of operation. The definition of culture consists of the collective programming of the human minds that is responsible for making differentiation from people of one culture to another culture (Schaltegger & Burritt, 2014). Companies must practice cross-cultural communication in building strategies for the suppliers and the suppliers’ code of conduct. The six principles are described in the following that will help the agri-food companies in building effective and competitive supply chain that improves relations with the suppliers (Notarnicola et al., 2017).
Apart from that, there are cost orientation and competitor orientation that are considered as part of organizational culture that are used by these global agri-food companies that will focus both on the nation’s culture and organizational culture (Shukla & Jharkharia, 2013). Hence, culture helps in improving employee relations as well as improved and competitive supply chain processes that will result into profitability. It is seen that American culture and Asian culture are different from one another. Suppliers code of conduct are formulated in a way so that they can work as per the expectations (Yu et al., 2014).
The concept of green supply chain and logistics is defined as the supply chain which is related to the improved performance of the company while measuring the attributes of cost reduction, sustainability, emission reduction by using the metrics of carbon footprint and other various technological aspects (Aitken et al., 2016). The green supply chain is used by many companies nowadays in order to maintain sustainability in the perspective of supply chain also. However, it can be said that sustainability in the aspect of logistics and supply chain is critical. Nevertheless, many companies are practicing carbon footprint and other metrics (Bhattacharya et al., 2014). There are many drivers of green logistics such as increase of energy costs, global alarm exceeds over the greenhouse gas emission, climate change, environmental protection and government agency regulations, improved awareness in the community (Matopoulos et al., 2015). The objectives of the early adopters of green supply chain management are as follows:
Mitigating risks in business while speeding up innovations
Reducing costs of operations
Promoting alignment with customers and suppliers
Attracting interests of the customers while increasing employee satisfaction (Fahimnia, Sarkis & Davarzani, 2015)
Creating differentiation with the competitors by recognition and brand distinction
For instance, British retailer Marks and Spencers is the first in opening factories of lingerie which are known as eco-factories in the year of 2008. The factories includes many green activities of supply chain such as waste reduction, use of renewable sources of energy, healthy working conditions, energy saving devices, etc. It helps Marks and Spencers in order to save 40% less electricity. Another company Toyota is considered as the best green global brand (Beske & Seuring, 2014). The supply-chain management system of Toyota is recognized as the reduction in the emission of the processes related with processes of logistics while achieving the results through utilisation of the improved assets. It shares transportation of vehicle with other enterprises. However, agri-food companies like Walmart, Hershey’s, Kellogg’s etc. are practicing green supply chain processes while maintaining sustainability in the process of business operations (Luthra, Garg & Haleem, 2014).
The report focuses on the problems faced by agri-food companies across the world. Issues of logistics and supply chain management are common while they are responsible in creating a deep impact in the different areas of business operations such as demand and supply, financial aspects, inventory management, distribution system and finally to profitability. Apart from that different types of theoretical frameworks of supply chain management such as lean manufacturing, six-sigma, and just in time are explained in details that covers all the issues described in the above. The agri-food companies are also facing problems in terms of greater control of their dealers. On the contrary, big companies like Wesfarmers, Tesco, etc. are also facing issues in their supply chain management aspects and distribution aspects that leads to compromise in quality and costs of products. The concept of green supply chain management is also described in details along with its objectives and drivers initiating the different green activities of reducing the environmental impact of the practices of supply chain management. Beside this, culture is an aspect that affect the formulation of effective sustainable strategies in global supply chain management of the agri-food companies. The aspect of culture deals with the people and employees associated with the whole supply chain and logistics of the agri-food companies.
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