Add value to agri-food by-products
In recent years, there has been an increased interest in better u...
Virtual Library
Shorten the supply chain
Background
The supply chains in the food and the bio-based sectors have been developing over the decades. A supply chain could be defined by a network of organisations who through different activities, within and between the organisations, adds value to the product or service, from start to delivery to consumer. In the food and bio-based sectors, this supply chain tends to be long and involves several different organisations. For several reasons, actors have specialised to reach greater competitiveness both on a local and on a global level. However, this has increased the number of middlemen and decreased the traceability through the supply chain. These practices have been questioned lately.
The internet has facilitated a new and direct contact between producers and consumers, and independent transport services now enable “farm to fork” direct delivery. Traceability has become a growing interest, where customers require more information on the production and process methods used. Another raising trend among consumers is the demand of fair and transparent pricing. Indeed, with the recent development of value chains, the role of the middlemen has changed.
Requirements
To shorten your supply chain, you will need to interact with the end consumers, hence you should be interested and have some basic knowledge in marketing and customer service. Before moving forward with direct sales or similar strategies to reduce your supply chain, make sure that there are available customers and a sufficient market share for your business to fill in. In some cases, you will need to have access to a reliable internet connection for marketing and sales purposes. Strong knowledge and experience working with digital tools is becoming a must in most cases. However, there are also successful examples from rural businesses starting new physical marketplaces, even though here again, digital tools can help the marketing activities.
Benefits
As a producer with direct contact with your customers (face-to-face or online) you can better control the sales price and get better paid per sold product. You can sometimes also get better and direct dialogue with the customers, which can be inspiring for you and strengthening your relationship with customers. Via a direct contact with the customers (the end users) businesses will be faster to adapt to changing demands. Another positive aspect with shortening your supply chain is that you can get direct feedback from the customers (the end users) which can help you to improve your business. This direct contact with the consumers is often a real source of motivation for the producers.
Challenges
If you engage in direct sales to individual consumers, instead of relying on wholesale sales to “large middlemen”, you will have less time to work on your production, and it will take you extra time to manage the marketing and sales of your products. If you seek to diversify the daily tasks, this challenge could be seen as an actual benefit, but you should not underestimate the extra time needed for direct sales.
It is time consuming to keep a physical marketplace open long enough to enable customers to buy your products. To overcome this challenge, it is a good idea to collaborate with other local producers to share this burden. An alternative could be to engage with digital marketplace operated by another actor, but which will still allow you to sell directly to customers, allowing you to reach a wider customer basis.
Another challenge is when the producer becomes very engaged in both production and sales. The direct engagement can become a source of success, but also make the producer overworked and/or unfocused. When one person becomes a key resource both in the production itself and in sell- and customer channels this will put too much work and pressure on them, and it is likely that the quality in one or the other area will suffer as a result.
Extra readings
• The Smartchain project studied short food value chains. Have a look at their results and lesson learnt: Smartchain Platform
• SKIN is an ambitious initiative in the domain of Short Food Supply Chain (SFSC), which aims to systematize the existing knowledge, fostering demand-driven innovation, building long-term collaboration among European farmers and cooperatives, facilitate stakeholders engagement and promote innovation through demand-driven research in the short food supply chain domain.
• Sustainable Business Inspiration: Panier Local farm to fork platform
Related Cases
Create new value for specific rural areas
Rural areas are subject to continuous and progressive depopulatio...
New life for rural buildings and lands
Abandoned, unused or under-used buildings and lands have the pote...
Satisfy the customer new needs
Customers’ needs are evolving all the time. Some trends have been...
Let the community be part of your business
Societal development spur more and more discussions about the imp...