Case study analysis on supplier commitment to added value agri-food supply chains in New Zealand

Abstract

This research identifies what attracts suppliers to be committed to long-term relationships in New Zealand agri-food supply chains where suppliers are required to consistently deliver to high product specifications. It also looks at what factors determine supplier’s ongoing commitment and how to build strong enduring supply chain relationships. Semi structured interviews were undertaken with suppliers from New Zealand agri-food exporting companies. The main factors that attracted suppliers to these supply chains were; increased price certainty, premium prices and relationship quality. Many suppliers wanted to break away from the agricultural commodity cycle, which they saw as disconnected from customer demand, and characterised by price volatility. They saw themselves as better than average producers with the ability to produce high quality products. They valued the relationship with the companies they supplied as this gave them access to premium markets where they felt they would be rewarded for their effort. There was a high level of trust in these relationships and this was built on openness and transparency in communications and confidence in the character of the company personnel. The success of differentiated agri-food supply chains requires capable and committed suppliers. Companies that are developing a differentiated strategy need to identify suppliers who have the ability to produce high quality products and want to be involved in a customer focused supply chain enables them to access to premium markets.