Abstract
The primary objective of this dissertation is to perform an analysis of the South
African beef supply chain ‘from farm to fork’. This will contribute towards a better
understanding of the beef supply chain, aiding collaboration, transparency and
supply chain strategies to enhance national industry competitiveness. Currently, the
industry, and the supply chain is facing pertinent challenges such as globalisation,
the declining consumption of beef, the disconnection of the farmer from the supply
chain, illegal slaughtering, a lack of quality and inadequate hygiene practises in
some lower throughput abattoirs, the rising food safety concerns (BSE, E.coli, and
FMD), and the competitiveness of substitute products (chicken, pork, etc.). A simple
and systematic approach is used to analyse the South African beef supply chain
‘from farm to fork’. The information has been discussed with industry experts, via
interviews and discussion, to ensure the analysis reflects reality.
It is evident that the South African beef supply chain is long, complex and involves
various handoff points between role-players and industry governing bodies, as well
as various permutations of this supply chain. The red meat industry evolved from a
highly regulated environment to a totally deregulated one. The deregulation
changes the ‘rules of the game’, and the ‘new rules of the game’ result in additional
complexity within the current chain. The supply-side issues play a critical role in
creating a sustainable competitive advantage, against substitute products. This
highlights the importance of having accurate cattle herd numbers to facilitate proper
supply chain planning, in an industry with a cyclical nature and a dependence on
uncontrollable factors, such as natural forces and biological factors. This is indeed
an issue of concern for the industry. Demand-side issues are influenced by the
income of consumers, the availability and price of substitute products, consumer
taste and preferences, and consumer expectations. In addition, the effect on
demand, of price and income elasticity, and per capita expenditure by different
population groups, adds to the complexity of the South African beef supply chain
operation.
viii
The beef supply chain cost analysis -- the weaner cost model -- aims to assign cost,
and resources, to each role-player to understand how value and margin is added,
within the South African beef supply chain. The analysis revealed some interesting
facts, regarding the ‘margins’ and ‘mark-up percentages’. This highlights, in
simplistic terms, that some sectors are making more money than others, and
examined together, with the cyclical nature of the industry, it is a given that supply
chain management principles (collaborations, integration, contracting, etc.) will play
an ever increasing role in the future of food supply chains.
Eight supply chain management strategies are discussed, to initiate and kick-start
the change process to transform the local beef supply chain into a leading-class
player. The strategies are: (i) Crafting a supply chain vision; (ii) Traceability,
transparency and quality assurance; (iii) Knowledge management and the learning
supply chain; (iv) Transformation and AGRIBEE; (v) Measuring performance: supply
chain metrics and diagnostics; (vi) Concepts of collaboration in food supply chain
management; (vii) Synchronising operations and uncovering hidden opportunities;
and, (viii) National agribusiness framework and red meat framework.
The South African beef supply chain no longer has an option: it must ‘adapt to
survive’. Benefits, in non-food systems, are well documented, with the
implementation of supply chain management principles. The analysis concludes by
summarising the strategies into meaningful and manageable options recommended
for implementation. The recommendations are:
· Create a national and red meat agribusiness structure and craft a local supply
chain vision
· Ensure product quality and establish a positive red meat message that drives
demand
· Implement productivity gains across the South African beef supply chain
· Share market information across the South African beef supply chain
· Promote innovation across the South African beef supply chain
· Implement research and development initiatives for success.
Prof. J.H. du Plessis