Over the last decades food supply chains have rapidly become interconnected systems of highly varied and complex relationships. This is partly prompted by increasing globalisation and a change of focus on the part of the food companies.

The network Food Chain Management have produced a theoretical framework that should enable to better incorporate the characteristics of the food industry in food supply chain modelling and thereby better equip the food industry to improve its competitiveness and meet the demands of the global consumers.

Background
The globalisation of agri-food markets and food production, thanks to the growth of international trade, foreign direct investments and the importance of multinational food companies is now a given. At the same time the focus of the food companies in relation to meeting consumer demands has changed from being purely on the provision of safe and cheap foods towards also meeting concerns about e.g. sustainability, health, ethical working practices and fair trade. Meeting these demands creates a push towards vertical integration of the production chain and an increased co-dependency among the stakeholders. In competitive markets continuous improvement is essential but difficult to achieve when businesses work in a vacuum.
 
Primary product input suppliers often exert considerable influence on production due to increased quality and quantity requirements of animal and crop production. Processors increasingly specify the characteristics of farm products so they can process commodities more uniformly or guarantee particular features required in the manufacturing of branded products. Supermarkets and institutional buyers negotiate agreements or exercise forms of market control that will guarantee them consistent quality and quantity of agricultural products.

In light of these developments the food supply chain becomes both increasingly important to manage and difficult to model.

The food industry has been slow to emulate other industries that have embraced the principles of supply chain management in order to  reduce uncertainty and risk, save time, reduce costs, increase effectiveness and add value in accordance with consumers' and regulatory demands.

This partly stems from the fact that the existing theoretical frameworks do a poor job in modelling the specific characteristics of the food industry vis-à-vis other industries. For instance in the food sector the natural environment plays an important role on the supply of input materials, the sector is overwhelmingly populated by SMEs with a relatively small number of big players and the technological/production issues faced by the industry are highly diverse and impact directly upon public health, safety and environment.

24/04 2007, Dorthe Bjergskov Nielsen [dbn@oresundfood.org]

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