Niche agribusiness supply chains and the channel coordinator’s role in their creation and management

Abstract

The aim of this research is to understand how niche chains in the New Zealand meat industry structure themselves, why they implement particular structures, and what the role of the channel coordinator is in these chain structures. This research is of value as New Zealand’s meat industry accounts for a large percentage of the country’s economy, and to date, there has been very little research analysing the role of channel coordinators and supply chain structure in this area. Four specific research questions are investigated. Firstly, what co-ordination structures are used by niche agribusiness chains in the New Zealand meat industry? Then, what is the role of the channel coordinator in niche agribusiness chain structures in the New Zealand meat industry? Finally, what strategies does the channel co-ordinator employ with respect to the coordination of niche agribusiness chains in the New Zealand meat industry; and what factors influence the strategies that the channel co-ordinator employs with respect of the management of niche agribusiness chains, and hence their structures? A literature review was conducted and from this a model and associated propositions were developed. This model was then operationalised using the case study methodology. Five case studies were constructed, each based on an in-depth interview with the channel coordinator of a supply chain that fitted the profile of supply chains that are the focus of this research. This research found that the supply chain structures of all five case studies are different. This was surprising, given that they shared a number of similarities, such as their marketing of a branded, consistently high quality meat product. It was concluded that these differing supply chain structures resulted from differences in the vision, motivation and strategy of the channel coordinator, which in turn were influenced by the environment (that is, factors external to the supply chain, such as the target market) and resource issues (that is, the resources used to create a product offering, such as a meat processing plant). The environment was found to be the main influence on the channel coordinator’s vision and motivation, while resource issues were found to have a strong influence on the strategy chosen by the channel coordinator, and hence, on the supply chain structure. This is because resource issues determine what resources the channel coordinator requires, and whether he can vertically integrate those resources or will have to partner with another organisation to gain access to the function that they perform. The key to the structure of a supply chain is the role played by the channel coordinator, as he is the actor that brings all of these influencing factors together. The channel coordinator manages his supply chain in order to ensure that he creates the product attributes required by his target market and that these product attributes reach the targeted market niche intact. To achieve this, the channel coordinator ensures that all the actors involved in the supply chain work in concert to consistently produce the product envisioned by the channel coordinator. The channel coordinator implements strategies to achieve this, usually relying on incentives to motivate the other actors. The results showed that the supply chain structure is critical to the successful implementation of the channel coordinator’s management of these niche agribusiness supply chains. Of particular note is the fact that functions that the channel coordinator considers critical and/or a source of competitive advantage are internalised or, when this isn’t possible, monitored as closely as possible, given his resource limitations, and if necessary, controlled through the utilisation of incentives.