How do consumers respond to promotions on fresh meat

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Value Chain Management The Pursuit of
Sustainable Competitive Advantage Andrew
FearneProfessor of food marketing supply
chain management Kent Business School,
University of Kentand Adelaide Thinker in
Residence
Barossa Light Regional Development Board March
11th, 2008
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Contents

• Sustainable competitive advantage
• Value chain management
• Value chain analysis
• Conclusions
• QA

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Sustainable Competitive Advantage
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Sustainable competitive advantage

• Allocation and utilisation of resources that is
  hard for others to contest and even harder to
  replicate
• Add more value (effectiveness)
• At lower cost (efficiency)
• Faster than the competition (responsiveness)
• Responsibly (CSR or enlightened self-interest!)
• Environmental
• Economic
• Ethical

holistic and multi-dimensional
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Sustainable competitive advantage?
Value Propositions (as perceived by consumers)
?
?
Service Excellence
Innovation Excellence
Asset Utilisation (Competitors)
Asset Utilisation (Yours)
Cost differential
?
Operational Excellence
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Value Chain Management
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The Value Chain
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Value Chain Management What is it?

• Collaboration within and between businesses in
  the value chain, the purpose of which is to
  improve the competitiveness of the value chain as
  a whole
• Development of new (value added) propositions for
  distinct customers and targeted consumer segments
• What we do output
• Process improvement for existing
  products/services beyond organisational
  boundaries
• How we do it input

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VCM fundamental enablers

• Strategic alignment
• Drives resource allocation and process
  integration
• Value chain visibility
• Information flow (extends the line of sight)

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Value chain visibility
Demand
Demand
Demand
Time
Time
Time
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VCM fundamental enablers

• Strategic alignment
• Drives resource allocation and process
  integration
• Value chain visibility
• Information flow (extends the line of sight)
• Relationships
• Inter-personal (inter and intra-organisational)
• Communication (strategic and operational)
• Trust and commitment (asset specificity)
• Being a trustworthy customer/supplier pays off in
  the long run
• Its not the existence of power that is the
  problem its how it is (ab)used that matters

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VCM fundamental enablers

• Strategic alignment
• Drives resource allocation and process
  integration
• Value chain visibility
• Information flow (extends the line of sight)
• Relationships
• Inter-personal (inter and intra-organisational)
• Communication (strategic and operational)
• Trust and commitment (asset specificity)
• Consumer insight
• Value propositions and value chain design
• Collective responsibility

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Consumer Insight

• Who stands to benefit the most from consumer
  insight?
• Suppliers have relatively few products on which
  their profitability rests and they have been
  making them for years
• Buyers are responsible for hundreds of products
  lines and have been selling them for months!
• Upstream stakeholders need to
• Be more proactive (dont expect someone else to
  do it for you)
• Become more effectively connected to their
  markets

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Value Chain Analysis
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Value Chain Analysis

• Scope for improvement everywhere but often hard
  to see (particularly when nobody is looking!)
• Need to find ways to draw the attention of
  different stakeholders to the opportunities for
  improvement at different stages in the supply
  chain
• Value chain analysis can be an effective way to
  extend the line of sight
• Analytical tool
• Communication tool
• Catalyst for change
• Seeing the whole

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Value Chain Analysis

• Multi-dimensional diagnosis of the current state
• Material flow (what?)
• categorisation of activities (in the eyes of the
  consumer)
• wasteful, necessary, value adding
• Information flow (how?)
• basis for decision-making (strategic
  operational)
• Relationships (why?)
• Trust, commitment, communication (within and
  between organisations)
• Identification of improvement projects (future
  state)
• Implementation is a collective responsibility and
  the benefits must be shared
• Silo solutions will always be sub-optimal and
  will not deliver sustainable competitive advantage

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VCM how do we do it?
Houston's Farm first recipient of Woolworths'
bursary Tasmania's Houston's Farm has been
awarded 100,000 by Woolworths-money it will use
to develop a blueprint for analysing the carbon
footprint of Australian-grown fresh produce.
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Conclusions
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Conclusions

• Status Quo is unsustainable
• Geographic location
• Business structure
• Resource constraints
• The SA food and wine industry is on a journey to
  where?
• Is there a strategic vision that is aligned (with
  whom?)
• Lack of collaboration (trust, commitment)
• Poor information flows (particularly upstream)
• Limited consumer insight

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Conclusions

• There are no blueprints or quick-fixes for
  the lack of profitability upstream
• It is every bit as challenging to extract
  additional value from the market as it is to
  extract extra output from the land or the factory
• Sustainable competitive advantage demands
  co-innovation
• Strategic approach to supply chain management
  shifts the emphasis from internal processes to
  external relationships and the integration of key
  business processes with key customers and key
  suppliers
• potential for co-innovation constrained by
  existing processes

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Conclusions

• Making this happen requires
• Accurate and relevant information, delivered in a
  timely manner efficiently and effectively to all
  stakeholders who a) need it and b) have the
  capacity to exploit it
• Business leaders with strategic vision who
  understand the drivers for change and embrace a
  value chain philosophy
• Investment
• knowledge systems (IT is an enabler not a
  solution)
• people (functional competence, empowerment and
  shared responsibility for continuous improvement)

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• Thank you!