Green supply chain in the food sector: the case of india

GREEN SUPPLY CHAIN MANAGEMENT                                                 IN THE FOOD INDUSTRY

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NAME:                        LENA

SURNAME:                        ROSPAPE        

ACADEMIC YEAR:        PGDM-IB 2016                

TOPICS:                SUPPLY CHAIN MANAGEMENT, TECHNOLOGY

                                                MANAGEMENT & EMERGING COUNTRIES        

BIRLA INSTIUTE OF MANAGEMENT TECHNOLOGY

INDEX

GREEN SUPPLY CHAIN IN THE FOOD INDUSTRY        

INDEX        

INTRODUCTION        

SUPPLY CHAIN IN THE FOOD INDUSTRY        

FOOD INDUSTRY AND CHALLENGES        

SUPPLY CHAIN, NETWORKS AND LOGISTICS        

CONCEPT OF SUPPLY CHAIN        

SPECIFIC CHARACTERISTICS OF THE FOOD PRODUCTION NETWORKS        

LOGISTICS        

GREEN SUPPLY CHAIN AND BENEFITS        

GREEN SUPPLY CHAIN        

DIFFERENCES WITH THE TRADITIONAL SUPPLY CHAIN MODELS        

GREEN LOGISTICS        

GREEN SUPPLY CHAIN IN FOOD INDUSTRY: MAC DONALD’S IN INDIA        

GENERAL ASPECTS OF MCDONALD’S SUPPLY CHAIN MODEL        

SUCCESS IN INDIA        

CONCLUSION        

REFERENCES        

INTRODUCTION

The first report of the Club of Roma, at the beginning of the 1970s, had raised the alarm bell on inescapable exhaustion from our planet’s resources and degradation of our living conditions under the influence of an increasing and unverifiable pollution. Facing the most important challenge of the planet’s history, a “sustainable development” movement took shape on the global scale.

The logistic management took part of this “green” movement as the trades of goods in globalized spaces lead to negative effects (multiplication of transport of long distance, use of modes of routing having a raised ecological print, etc). Since the year 2000, the CO2 emissions at the planet level have increased by 3.1% a year. It is a progression 3 times faster than in the 1990s. Emerging countries, strongly populated for the majority, see their population growing and the urbanization accelerating at the same time as their needs in energy increase.

At companies’ level, the strategic decisions have for a long time been focusing on cost reductions and service level improvement. Today, more and more firms are taking the green turn and make the reduction of waste and pollution one of their main objectives.

Sustainability is a hot topic in the food and beverage industry. As manufacturers seek to reduce costs and maintain customer loyalty, implementing sustainable practices can help to achieve these aims while at the same time ensuring that companies are playing a responsible role in their industry and society in general.

A good amount of companies already launched out a green transformation of their supply chain: what are the main reasons and how do they adopt this technology into their supply chain?

In order to answer this problematic, we will first explain how works the supply chain within the food industry. Then, we will analyze what is the green supply chain and what are its advantages. Finally, we will study the example of McDonald’s, company that succeeded the green transformation of its supply chain in India.

This structure will enable the application of the following topics: SUPPLY CHAIN MANAGEMENT, TECHNOLOGY MANAGEMENT and EMERGING MARKETS.

SUPPLY CHAIN IN THE FOOD INDUSTRY

FOOD INDUSTRY AND CHALLENGES

Recent trends including globalization, urbanization and industrialization of the agriculture, require more and more room, and more organization from the chains and food networks. Chains and food production networks and agribusiness, mainly characterized by the autonomy and independence of their players, evolved towards globally interconnected systems and complex relationships. This also influences the way in which food is produced, processed and delivered to the market. Perishable food products can nowadays be sent worldwide at competitive prices.

Moreover, supply and demand are no longer limited to nations or regions, but turned into true international processes. The global market exerts a dual pressure on agro-food chains by requiring them to better coordinate buyers and sellers as well as come up with continual innovations. These innovations consist in improving information, quality and logistics systems.

Companies must also satisfy more and more requirements from consumers worldwide, those of non-governmental organizations (NGOs) and other actors from agribusiness chains, and must react to changes in governmental regulations. Western companies must nowadays get a "produce and provide license", meaning that the company must accept the conditions in which they produce and supply the goods. In case of use of questionable methods, such as children employment, polluting the environment, etc., their products will not be accepted.

In a global food system, companies must continually innovate in terms of products, processes and forms of cooperation. On the other hand, classic prices and quality issues are more important than ever, given that consumers may now choose from a wide range of products among various competitive chains.

The developing countries are more and more integrated into the food market because of the world supply of the western retailers and food industries and also because of the rising requests of the consumers from western countries, for exotic products over all the year. Thus, a consumer who goes in a supermarket in Italy or in the Netherlands, can find papaws from Brazil, special coffees from Tanzania, Argentinian ox, Indian mangos among many other imported foods from the developing countries. That means however that the developing countries must adapt to the rigorous food standards of quality and public health with the regulations of these markets. They must also exert a better control on their production, trade and distribution of their agricultural products, so that they guarantee its traceability and function in a profitable way, in order to be competitive worldwide.

In this respect, the producers in the developing countries must overcome the important obstacle that represents the absence of institutions, services of support and infrastructures. Thus, many countries are lacking of qualified people, laboratories, as many elements which do not facilitate the management of food quality.

The agro alimentary chains and networks play a significant role in the supply of access to the markets for the producers of the developing countries, like the local and regional markets as well as markets dedicated to exportation. The evolution of agro alimentary systems has an impact on the capacity of the companies to face competition; the small and large companies must reduce their costs and innovate, while being more sensitive to the consumers’ needs.

The increasing integration of the local and international agro alimentary chains can be regarded as being at the same time a threat and a challenge for rural and agricultural development. The farmers in the developing countries have few resources and a limited access to the markets and information. They cope with major constraints when they must adopt technology innovations and can be excluded from the trade.

The economies of scale in the transformation, transport and the distribution lead to requests for increasing volumes of production and stabling delivery capacities as well as homogeneous quality. These requests can be respected better by commercial agricultural companies of great scale. In addition, the production of the small holders could offer advantages in terms of costs for the agricultural companies basing themselves on products demanding strong intensity of work which require a severe monitoring of quality.

With such a competitive advantage, the participation of the family small holders in the world chains of the agro-food stuffs can constitute an acceptable strategy to guarantee a more equitable configuration of the agro alimentary chains.

However, filling the differences between local economic development and integration with the world chain requires the appearance of new institutional and organizational networks which make it possible for the producers of the developing countries to meet requirements and commercial standards. That also requires a fundamental reorganization of the information flows and organizational relations, by providing to the small holders the possibility of adjusting their production to the consumers’ requests, and becoming a recognizable part of the world supply modes.