Agriculture Reference
In-Depth Information
centralized warehouse to the farm, or groceries ordered online might be picked up at the
supermarket by a consumer trying to save time. In both cases, supply chain management
systems are involved throughout the process of moving the product from the manufacturer
to the buyer.
Many other examples of advanced technologies impacting production and logistics can
be found in the food industry. Electronic data interchange (EDI) is an old information tech-
nology that allows business interactions between fi rms to take place electronically using a
standard language format. The standardization enables EDI to be used by any company and
has improved accuracy, shortened response time, and has even cut inventory.
Summary
Understanding the functions of supply chain management is imperative to the agribusiness
manager's success. Supply chain management has become a key business function over the
last few years, growing in both relevance and importance. More agribusinesses now fi nd
greater effi ciencies through going outside their own operations and linking their materials
and physical distribution systems directly with supplier and customer systems.
Inventory control, transportation management, and cycle-time-to-market illustrate how a
company's profi tability can be impacted through effective supply chain management. Other
supply chain functions include purchasing the inputs for production, coordinating the pro-
duction of goals, determining the levels of inventory, and probably most importantly, serv-
ing as the linkage between the agribusiness, suppliers, and customers.
Agribusiness production managers who wish to maintain control of their operations will
have to forecast trends, purchase in line with these trends, control the amount of inventory
on hand, and employ sophisticated scheduling methods and quality controls. Purchasing is
an activity that requires skill, knowledge, and honesty in dealing with bids and negotiations
from suppliers. Such factors as quantity, quality, price, time, and customer service are ele-
ments of effi cient purchasing.
The amount of inventory and kind of inventory systems used depend upon an agribusi-
ness's size, complexity, and management sophistication. Physical distribution systems
(PDS) include warehousing, transporting and scheduling, routing, and selecting product
delivery. The right technology applied at the right time and in the right place can help supply
chain managers increase overall effi ciency while expediting the accurate and timely delivery
of top quality products to the customer. The manager who is able to exercise control over
these facets of supply chain management will have a tightly run operation that stands a good
chance of maximizing profi ts.
Discussion questions
1.
Why is supply chain management important in an agribusiness fi rm? Describe the vari-
ous functions and responsibilities of supply chain management.
2.
What are some of the objectives of an effi cient supply chain management system? How
have these objectives changed over time?
3.
What are the principle activities of purchasing? Explain some of the factors to consider
in selecting a supplier.
4.
Why might inventory levels be minimized and why might some level of inventory be
acceptable?
