Supplier relationships and performance have become increasingly important in agri-food supply chains. This research aimed to investigate buyer-supplier relationships in the New Zealand red meat industry. Specifically, this meant examining how relationship quality, as well as supplier characteristics and relationship attributes affect supplier performance.
The analysis improved the conceptualisation of relationship quality by bringing together constructs from the relationship marketing and social capital literature. This established that relationship quality and social capital were closely related constructs.
By combining social capital and relationship quality this created a broader measure of the overall strength of the relationship. The findings show that improving supplier performance requires taking into account both supplier characteristics and relationship attributes. Furthermore, relationship quality played a significant mediating role between all the relationship factors and supplier performance.
The implications of this research are that there are specific ways buyers can improve supplier performance. This involves identifying and selecting suppliers who have superior ability, motivation and customer focus. They also need to avoid selecting suppliers with high levels of self-direction. Improving supplier performance also involves influencing relationship attributes and improving the quality of relationships with suppliers. In particular, processors need to ensure that suppliers experience positive value from the supply relationship. Furthermore, they need to manage the interaction between specific assets, dependence and use of coercive power.
How can we get more value from New Zealand beef and lamb exports?
The New Zealand Government’s has an ambitious goal of lifting total exports to 40 percent of GDP and doubling the value of primary exports by 2025. They have stated that this will involve developing stronger relationships with New Zealand exporters and supporting them to add and capture value from existing markets through supply chain integration, brand promotion and brand protection. New Zealand red meat exports play an important role in this as they represent 11% of total merchandise exports.
There is limited scope for increasing the volume of red meat production in New Zealand due to
land and environmental constraints. This means adding value to these exports is the only alternative. A significant proportion New Zealand’s red meat is still exported in commodity form and fails to achieve a premium for the attributes of its New Zealand origin. Changing this however will require a co-ordinated effort from government, exporters and producers.
Market access and promotion of the NZ Inc brand story can create opportunities for New Zealand exporters, however, capitalising on these initiatives requires companies to develop capabilities and strategies to market and deliver these products to demanding international consumers. These consumers are demanding greater variety and quality in the food they eat. They require a consistent year-round supply of high quality, safe food. They also want food that aligns with their own personal values, which includes credence attributes such as environmental sustainability, animal welfare and fair trade, as well as local and organic production.
To deliver this, it is necessary to have farmer suppliers who can produce the right quality of product when the market requires and who are committed to long-term supply relationships. Without this type of integrated value chain New Zealand will fail to break out of its reliance on agricultural commodities. This research has focused on several New Zealand exporters and their suppliers who have developed relationships with high-end retail customers and have a strategy in place to add value to their products.
Consistently meeting consumer demands is difficult within the constraints of New Zealand’s pasture-based agricultural production systems, as production volume and product specifications are highly dependent on climate.
Staying in a 100 year old Bed and Breakfast in Brussels (Le Verger) with Sarah, Olivier and their 3 children gives me the opportunity for some informal research interviews. Interestingly Sarah runs a local food co-op, collecting food from a local farm and delivering it to other families in Brussels.
As I sit down to have my Belgian breakfast of croissants, coffee, cheese, prosciutto and yoghurt, my host Olivier asks me about what I am doing here. After explaining about the research project, he soon tells me that New Zealand has a problem because of the distance of transport. New Zealand is so far away how can sending our food to Europe be sustainable? I explain how the sea freight only makes up a small proportion of the carbon footprint and that the production and road transport make up the biggest share. He seems to understand and mentions the latest National Geographic article on food that comments that “local food” is not that sustainable because it can not be scaled to feed the world.
I ask him what New Zealand food products he is aware of in Belgium. He had to think hard for a while then says of course there is wine in the supermarket, white wine and also can be found in the wine specialty stores. He knows about Zespri kiwi’s because it happens the business he works for uses the same marketing and communications company as Zespri. Because of this he knew quite a lot about Zespri even about the problems with PSA disease.
Apart form that he can’t think of much though he then remembers lamb sold at Easter “Le Gigot d’Agneau Pascal”. All the supermarkets had it
for sale and it was so cheap. Everyone new it was New Zealand lamb though it wast specifically advertised as such. The Easter lamb is traditional so the supermarkets sell it below cost (loss leader) as a way to attract customer so they can make their money on the wine, vegetables and other food they buy. They had contacted a specialist butcher to see if they could get some lamb but he said he couldn’t compete because of the low price the supermarkets were offering.
Interesting start to the research, it seems NZ wine had the strongest brand presence followed by Zespri “Kiwi” fruit. This is further confirmed as I reach for the fruit bowl and selected Zespri branded “kiwi” to finish my breakfast. Notice the difference in quality between the New Zealand Zespri and the Italian KingKiwi fruit
Today I begin three weeks of research interviews in Europe on how to increase the value of New Zealand food exports by communicating the “credence attributes” to consumers (see current research for more information). “Credence” means things like our clean green image, animal welfare, food safety or anything else you can’t experience by consuming the product.
I will try to share some of the experiences that won’t be so easy to describe in a written research report, and also encourage readers to make comments, as many of you will have had your own experiences and thoughts that can add to this.
McDonald’s aims to begin purchasing verified sustainable beef in 2016
The big question is, how do you define sustainable?
The answer to this is being sought by the Global Roundtable for Sustainable Beef (GRSB) a group made up of conservation groups, farmer associations, retailers and companies providing products and services to the global beef industry
GRSB prescribes to the “triple bottom line” approach in defining sustainability, meaning a a sustainable beef system must be environmentally sound, economically viable and socially responsible. This week they have published a draft document outlining “Principles and Criteria for Global Sustainable Beef” The draft document is open for public comment through May 16, 2014.
Natural resources – Global sustainable beef stakeholders produce beef in a manner that identifies and manages natural resources responsibly and maintains or enhances the health of ecosystems.
People and community – Global sustainable beef stakeholders protect and respect human rights, and recognise the critical roles that all participants within the beef value chain play in their community regarding culture, heritage, employment, land rights and health.
Animal health and welfare – Global sustainable beef stakeholders respect and manage animals to ensure their health and welfare.
Food – Global sustainable beef stakeholders ensure the safety and quality of beef products and utilize information-sharing systems that promote beef sustainability.
Efficiency and innovation – Global sustainable beef stakeholders encourage innovation, optimise production, reduce waste and add to economic viability.
These principles are being left somewhat general with the idea that they will be made more specific at a local level.
The importance of supply chain integrity has been highlighted by results that show a year after the horse-meat scandal tests in the UK show that 1/3 of food products are mislabelled.
Consumers are being sold drinks with banned flame-retardant additives, pork in beef, and fake cheese, laboratory tests show
Consumers are being sold food including mozzarella that is less than half real cheese, ham on pizzas that is either poultry or “meat emulsion”, and frozen prawns that are 50% water, according to tests by a public laboratory.
The checks on hundreds of food samples, which were taken in West Yorkshire, revealed that more than a third were not what they claimed to be, or were mislabelled in some way. Their results have been shared with the Guardian.
Testers also discovered beef mince adulterated with pork or poultry, and even a herbal slimming tea that was neither herb nor tea but glucose powder laced with a withdrawn prescription drug for obesity at 13 times the normal dose.