Agriculture Reference
In-Depth Information
In the past 20 years, fi rms have integrated their materials and distribution functions to
operate and control the agribusiness. The result has been a joined system of purchasing,
scheduling, production control, inventory, and distribution activities. Several of the more
current, expanded supply chain management objectives include:
•
Improved information technology
•
Better customer service
•
Reduction of risk
•
Globalization of operations
Information technology
Fundamental to the increased attention of supply chain management are the improvements
in
information technology
. These improvements let the agribusiness link suppliers, dis-
tributors, and end customers. New information technology developments continue to trans-
form logistics capabilities. For example, RFID chips (radio frequency identifi cation) have
begun to replace UPC codes on packages. Suppliers to large retailers can obtain daily down-
loads of product sales by retail store. In some cases, inventory systems have automated
ordering, with electronic orders being sent to a supplier when the inventory in a store drops
to a predetermined level.
Customer service
Customer service
has become another important objective for supply chain managers in
agribusinesses. Customer service can be one tactical method of differentiating the goods or
services of an agribusiness. For example, timely information about the status of a delivery or
a speedy inventory replenishment system for effi cient and effective customer service is one
way of differentiating a fi rm's product or service. Increasingly, retailers monitor the per-
formance of suppliers in factors such as on-time delivery or damaged items.
Risk reduction
Agribusinesses are also collaborating more with other fi rms to achieve
risk reduction
.
Supply chain managers may establish contracts with suppliers or customers allowing for
shared information and shared investments in transportation, facilities, new technologies,
inventories, and product distribution. Agribusinesses can leverage their strengths and the
strengths of partner fi rms to reduce risk as well. For example, one agribusiness may have
expertise in distribution, while a supplier may have expertise in producing and servicing a
certain component for that agribusiness. Sharing expertise allows agribusinesses to focus on
their core competencies, while also benefi ting from the strengths of key partners.
Globalization
Globalization
is certainly on the minds of most agribusiness fi rms today as we saw in
Chapter 5
. Markets continue to expand abroad while competitors with foreign affi liation
enter domestic markets. However, a global enterprise can be managed only if an effective
logistics system is in place. On the input side, agribusinesses are increasingly going outside
