The Organic Foods Supply Chain

In 2002, I was involved with a thesis about the organic supply chain. In many ways this was innovative research and touches upon the interplay between 1) marketing efficiency, 2) marketing services, and the 3) supply chain in general.

A short article that summarizes the research appeared in Logistics Review; Industry Focus: The Organic Foods Supply Chain.

Below are the various elements of the thesis study. At the end is a link to a paper that resulted from the thesis. I think any industry effort aimed toward regional agricultural systems should focus on these and other areas.

Vertical Integration - In light of the anecdotal evidence indicating the importance of vertical integration, we systematically studied the extent of vertical integration in the organic foods industry and the impact on supply chain efficiency. We sought to answer the question of if and how vertical integration can better meet consumer demands while protecting the organic integrity of the product.

Scope of the Industry – We studied the nature of firms that market organic products in terms of the scope of their involvement in this industry. We attempted to discover what proportion of firms that sell organic goods also engage in conventional business, and to what degree these “hybrid” firms are organic.

The Supply Pipeline - We investigated the supplier pipeline for firms in this industry. Sourcing channels, methods, and effectiveness were identified and evaluated. The existence and prevalence, or lack therefore, of long-term relationships and strategic alliances with suppliers for all players along the supply chain – farmers, cooperatives, shippers, manufacturers, distributors, and retailers – were studied and major reasons for formation of such relationships identified.

The Marketing Chain – We also studied the marketing chain in terms of selling channels, methods, and effectiveness. Customer characteristics were examined from the perspective of purchase patterns and behavior. The paper attempts to discover whether firms can respond to buyer requirements, and if so, to what extent. As with the study of the supplier network, this section also examined the role that business alliances and relationships with long-term customers plays in helping firms to satisfy demand more efficiently and achieve other mutual benefits that last well into the future.

Information Systems – Finally, we studied the degree firms in the organic foods industry adopted supply chain management information systems and processes that enable the sharing of information and coordination among firms up and down the supply chain. The paper identifies reasons for the lack of such systems and discusses how individual firms as well as the entire industry could benefit from successful adoption and implementation.

Chang, Mary Woei-Jiun, Schuster, Edmund W., 2003. Understanding the organic foods supply chain: challenges and opportunities from farm gate to end consumer. Unpublished Manuscript.