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Supply Chain Design for High Quality Products: Economic Concepts and Examples form the United States

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  • King, Robert P.

Abstract

The food system is undergoing significant structural change at local, national, and international levels. As the food system evolves, some segments along the chain between producers and consumers are disappearing. Others are being transformed. Supply chain concepts are useful for identifying and assessing alternative designs for the reconfiguration of food product production systems. Changes in the food system will require farm managers to adopt new ways of thinking and new perspectives on collaboration with trading partners. They also will require farm management economists to draw on a wider set of economic theories and concepts than we have in the past. This paper begins with brief descriptions of emerging supply chains for high quality food products in the U.S.: (i) a branded product chain, (ii) a genetics-based chain, and (iii) a production-practice based chain. These illustrate the variety of emerging supply chain structures and the challenges firms face in designing new supply chains. The next section presents an overview of key elements of four theoretical frameworks that are helpful in supply chain analysis and design : (i) transaction cost economics, (ii) agency theory, (iii) property rights theory, and (iv) the resource based view of the firm. Concepts from these theories are used to explain structural differences in the three illustrative cases. Looking to the future, key challenges include improving system-wide efficiency through information sharing and logistics management, promoting transparency and trust among trading partners, and designing incentive systems that ensure an equitable distribution of costs and returns.

Suggested Citation

  • King, Robert P., 2002. "Supply Chain Design for High Quality Products: Economic Concepts and Examples form the United States," 13th Congress, Wageningen, The Netherlands, July 7-12, 2002 6951, International Farm Management Association.
    • Handle: RePEc:ags:ifma02:6951
    DOI: 10.22004/ag.econ.6951
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    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    4. Joesph E. Stiglitz, 1975. "Incentives, Risk, and Information: Notes Towards a Theory of Hierarchy," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 552-579, Autumn.
    5. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
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    Cited by:

    1. Chojar, Anil K., 2009. "Factors Affecting Supply Chain Management in Agribusiness: A Review of Key Concepts," BANWA: A Multidisciplinary Journal, University of the Philippines Mindanao, vol. 6(1), pages 1-13.

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