Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 1
Supply Chain Management
Postharvest Technology of Horticultural CropsShort Course – June 17-21, 2013
Msc. Joost Snels BBE
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 2
Joost Snels
Background in● Logistics
● Supply Chain Management
● Business Economics
Worked for private company (paper trading) and the government (Ministry of Transport, Public Works and Water Management)
13 years for Wageningen UR Food & BiobasedResearch (Fresh Logistics / SCM)
The Netherlands known for:
Soccer / Hockey teams
Flowers & windmills
Water management
Gateway to Europe: it’s all about (agro) logistics
2nd largest agricultural exporter in the world (next slides)
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 3
Top 2 export locations
USA = 9.629 kkm², Population: 314 M, Density: 33 p/km²Netherlands = 38 kkm², Population: 17 M, Density: 405 p/km²
%‐growth %‐growth %‐growth
Country 2009 2010 2011 2012 2009‐2010 2010‐2011 2011‐2012
1 United States 111.717.085.425 132.219.645.729 157.993.873.676 161.764.508.987 18 19 2
2 The Netherlands 77.124.713.215 80.530.805.517 101.351.907.226 97.824.614.822 4 26 ‐3
3 Germany 75.764.737.000 79.061.787.318 93.693.916.345 88.021.110.382 4 19 ‐6
4 Brazil 55.800.765.460 64.872.961.311 83.088.554.667 84.187.772.290 16 28 1
5 France 64.273.460.251 68.563.093.761 82.541.549.055 76.616.058.427 7 20 ‐7
6 China 40.482.931.734 50.620.601.271 62.203.568.833 64.405.806.242 25 23 4
7 Canada 38.868.311.056 44.800.964.084 52.198.088.763 55.669.118.045 15 17 7
8 Spain 37.730.722.475 39.313.467.202 45.005.014.602 46.442.486.984 4 14 3
9 Belgium 38.999.132.427 39.873.293.408 46.381.479.927 45.245.344.294 2 16 ‐2
10 Argentina # # 45.596.494.604 43.515.868.532 # # ‐5
Source: UN Comtrade databases http://comtrade.un.org/db/
# not present in list Top 10 countries
Top 10 exporters of argricultural products (in US $)
International position Netherlands
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 4
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
Goal
What is Supply Chain Management?
How is it translated in de ‘western’ food supply chains?
What new technologies / concepts can be found?
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 5
What is Supply Chain Management?
“Demand and Supply Chain Management (DSCM) is the management of a network that links customers and suppliers as one 'single entity' with the objectives to create value and reduce waste through the voluntary integration and coordination of the objectives of three or more - ideally, all the -independent parties in the network”
W. Ploos van Amstel & A.R. van Goor
Supply Chain Management
Aim of SCM:
●Balance between●High customer service (results;
revenue growth)● Elimination of waste (offers; cost
reductions)●Create competitive advantage (long
term)
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 6
Supply Chain Management
Supply chain is a single integrated entity, a system. As a system it has shared objectives Each tier should understand its customers:
● Delivery● Quality and cost requirements● Customers markets● Processes, ● Constrains ● Organizational cultures
What is a supply chain?
2nd tiersupplier
1st tier (main)supplier
Retailer
Customer
Original EquipmentManufacturerthe supply chain Distributor
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Supply Chain, Demand Chain, Value Chain
ConsumerSupplier
Wholesale Retail
Product, Information
Money, Information
Product quality driven chain or network
From Chains to Networks
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Supply Chain Complexity
Complexity is related to● Numerical aspect (e.g. product coding)● Uncertainty aspect (e.g. forecasts)● Type of products perishables
Understanding of Complexity is based on ● Numbers of entities;● Their relations;● Nature of these relations.
Decision Making Unit
Fresh Logistics as part of SCM
“Fresh Logistics is that part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of fresh goods and related information from the point-of-origin to the point-of-consumption in order to meet customer requirements and satisfies the requirements imposed by other stakeholders such as the government, the society (NGO’s) and the retail community”
J.G.A.J. van der Vorst
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 9
Fresh Logistics as part of SCM
Fresh Logistics concerns all activities in the supply chain to match product supply from the farm with market demand for perishable products It aims at getting the right agro-product, at the right
place, at the right time, according to the right specifications (including quality and sustainability requirements) at the lowest cost Actors in these types of chains understand that
original good quality products might be subject to quality decay because of an inconsiderate action of another actor
J.G.A.J. van der Vorst & J.C.M.A. Snels
My situation?
How does my chain look like and what is the complexity?What are the activities related to Fresh Logistics?
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 10
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
Who is in charge in the value chain?
Perishables The one who interacts with the CUSTOMER!● WAL MART
● Proctor & Gamble
● Nike
The one who has the unique feature in the PRODUCT or SERVICE!● Intel
● Fedex
Supermarkets
Traders / Producers
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 11
Supply Chain Management
End of chain Decision making unit (DMU)● Product specifications
● Logistic performance indicators
● Customer service
Supply Chain
DMU
In the world of ‘fresh’, DMU = Supermarket
My situation?
What is the Decision making unit in my chain?
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Fresh rules: Consumer trends
Consumer perception
Fresh = tastier and healthier
Fresh rules: retailer
Best differentiator category for retailersEnabler of retailer profits
Shift from dry, frozen, canned to fresh and convenient
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Retail policy
Minimum of preferred suppliers● Comply with rigid specs: safety, quality, ethics● Food certificates: GlobalGap, HACCP, BRC, Organic
Last minute ordering● short lead times, no out of stock
Optimized logistics● low replenishment frequency● year round, high quality produce
Closed supply chains● T&T, eliminating links, costs
Contribute to Retailers Added Value
● Convenience
● Health claims
● New products: size, colour, seedless, etc.
● Organic
● Sustainability: e.g. carbon footprint, Fair trade
● Shelf life elongation
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 14
My situation?
What is my added value in relation to the Decision making unit / consumer?
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 15
Global supply chains: Fruits
Global supply chains: Vegetables
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 16
Global supply chains: Flowers
The challenge
PerishablesSupply chains become longer
Better quality, better service against the same costs using new concepts and/or technologies
(Shown) less waste and environmental pressure within the whole supply chain
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 17
My situation?
Do I face the same challenge, even when my supply chain is ‘shorter’?
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 18
Postharvest quality and logistics
Qua
lity
FenotypeGenotype
Growingconditions Postharvest &
Logisitics
Quality decay model (generic)
Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Acceptance level
Quality decay model (generic)
Chain conditions
Temperature
Distribution[days] 8°C 10°C 12°C 18°C
9 ++ ++ + ---
11 ++ + + ---
14 + + --- / + ---
17 + --- / + --- ---
19 --- / + --- / + --- ---
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Longer shelf life = innovation
Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Acceptance level
11
Logistic choice: different modality / storage
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Transport modality shift
Standard transport modality: air freight● Fast transport times ● High tariff; fuel surcharges● Flexible volumes
Alternative marine (Reefer) transport: ● Longer transport time ● Closed cool chain● Lower costs ● Large capacity● Large volume
per shipment● Sustainable
Marine transport is a sustainable method
Fuel consumption and CO2 emission*
Ctr. Vessel** Train (Electric)
Train (Diesel)
Truck Boeing 747
Energy(kWh/tkm)
0.023 0.043 0.067 0.18 2
CO2-emission(g/tkm)
10.5 44.1 17 50 552
0
10
20
30
40
50
60
Boeing Truck Train Ctr.Vessel
km per kWh/ ton cargo
*Data from Network for Transport and Environment
A large container vessel carries a fully loaded container 35 km using 1 litre
fuel
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Example: Bell pepper supply chain
Schapleven en houdbaarheid in verschillende ketens
0
2
4
6
8
10
12
0 2 4 6Tijd ->
Ho
ub
aarh
eid
bij
8C
/95%
RV
->
boot keten
vliegtuig keten
schapleven schapleven
109
51
107
39
boot vliegtuig
% afname van houdbaarheid in keten per schakelen aantal dagen resterend schapleven
schap
modaliteit
vrachtwagen
teler
%%
%
%%
%
0,7 dag1 dag
Boat chain
Air chain
Boat AirShelf life Shelf life
Shelf
modality
Truck
Grower
% decline of shelf life in the chain and number of days of remaining shelf life
Shelf life and keep ability in different supply chains
days
hours
hours
hours
hourshours
hours
hours
Boat chain Air chainTime TimeRH RH
Boat chainChain part time temp. [C] Rh [%]
22 7018 10 875 8 95
18 75
Air chainChain part time temp. [C] Rh [%]
3 22 7012 10 873 25 656 18 753 25 65
18 75
Grower
TruckBoatShelf
3 GrowerTruck
AirplaneAircraft platform
Aircraft platform
Shelf
Keep the ‘cold chain’ closed!
Drs. Ing. J.C.M.A. Snels 14/06/2014
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Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Acceptance level
11
Quality choice: better quality for the customer
Avocado: ready-to-eat or ripe-on-arrival
Opslag en Transport Houdbaarheid
Acceptatiegrens
Coping with differences in quality
0
2
4
6
8
10
12
0 2 4 6 8 10 12 14 16
Time (days)
Qu
ali
ty s
co
re
Acceptance level
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 24
Manipulating ripeness
0
2
4
6
8
0 5 10 15 20
time (days)
eth
yle
ne
pro
du
cti
on
ON
OFF
-20
0
20
40
60
0 5 10 15 20
time (days)
Co
lor
OFF
ON
Avocado
Tomato
Banana
My situation?
What chain aspects influence my product quality?Am I able to influence these?
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 25
This presentation
Introduction
What is Supply Chain Management?● The Chain● Decision Making Unit retailer● The challenge
SCM innovations● Optimizing distribution chain using product quality
● modal shift / chain re-design
General conclusion
General conclusions
Quality starts with the intrinsic potential of a plant (genes)
The postharvest chain can only slow down quality loss, the chain is not a hospital
Understanding and knowing quality loss gives many possibilities● Low hanging fruit: start with chain monitoring
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 26
General conclusions
Not Chains but Networks Networks need Supply Chain Management
The consumer, represented by the retailer, is the decisive factor in modern demand driven supply chains● Retailer knows the consumer needs and demands
best
Quality control is essential: is a retailer condition
General conclusions
Quality of fresh produce needs total chain approach● Transparency needed between every link
Appropriate technology can then be selected to maintain quality● A single factor approach only leads to sub-optimal
results
Fast is not always better, slow can be the optimal solution
Drs. Ing. J.C.M.A. Snels 14/06/2014
© Wageningen UR Food & BiobasedResearch 27
For more information:[email protected]
Thank you
Questions?