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'Long-term relationships' needed for food supply chains

17 March 2013

The traditional model of food supply chain relationships is not able to absorb the impact of changing dynamics and the growth of new external influences.

This is according to a new report from Rabobank, which said the food and agri industry urgently needs to transform the way supply chains are organised by adopting longer-term supply agreements. 

Under the current model, supply chains are structured "in a linear fashion, in which suppliers, processors and retailers form short-term partnerships independent from the influence and interests of other members of the chain", the Dutch financial services firm said.

Rabobank envisaged a new model, known as a dedicated supply chain structure, in which information is shared along the length of the chain to benefit all members.

"Closer cooperation of this sort will transform the nature of food and agricultural partnerships from transactional ones that are centered around chasing price, to a system focused on creating value," said global strategist Justin Sherrard.

The bank said the benefits of adopting such a supply chain structure will include reduced risk, improved productivity, enhanced reputation and access to new markets.

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Categories: Commercial, Procurement & Supply Chain

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