Shortening the supply chain does benefit growers and offer opportunities to save cost, according to Poupart Group chairman Laurence Olins.
Olins, who spoke today (7 February) at the Oxford Farming Conference, said reducing the number of processes in the supply chain is better for the producer, although a shorter chain is “not without its difficulties”.
His talk, entitled ‘Are shorter supply chains really benefiting farmers?’, examined three types of supply chain management in the fresh produce business: management by retailer, management by an intermediary, and joint management.
He said management done solely by the retailer is best suited to larger growers with simpler ranges. “The biggest challenge for the producer in this situation, is that with only one customer, you have no access to information about the whole marketplace. The grower is in danger of making the wrong decision about promotions, capital investments and pricing.
“In my experience, the weakest negotiators are those with only one customer – they are afraid to say no,” he said.
Intermediary management from a packer, exporter or marketer, “clearly adds costs”, said Olins, although they do benefit members by owning unique varieties or branded products.
And he said joint management, such as Asda’s IPL or Tesco’s GFS model, is still in a very fluid state and has seen some complexities enter the chain.
“It’s plain to see that shortening the supply chain has been of benefit to the producer and the retailer, although the benefits are not always shared equally.
“The producer must be prepared to play a very active role. There is no one set way of supplying fresh produce to the multiple retailers. Producers should make the choice of customer and supply chain carefully and seriously,” he said.
Click here to read Olins' full speech from the Oxford Farming Conference.
No comments yet