CHAPTER 2

FOOD SUPPLY CHAIN

2.1 Food Supply Chain
MANAGEMENT Management
2.2 Evolution of
Technology in Food Supply
Chain Management
2.3 Food Supply Chain
Management Trend
2.4 The Actors in Food
Supply Chain Management
2.5 Types of Food Supply
Chain Management
2.6 Factors Influencing and
Affect The Food Supply Chain
Management
 • Fundamental nature it comprises of assets, information, processes that
provide supply.
• Links of the chain are various interconnected organizations, right from
the raw material and component suppliers, sub-assembly suppliers,
service providers, distribution channels, and finally the consumer or
customer.
• Supply Chain Management as the combination of art and science that
goes into improving the way companies find the raw materials needed
2.1 FOOD SUPPLY CHAIN to make a product or service and deliver it to customers.

MANAGEMENT • Basic components of Supply Chain Management are plan, source,

make, deliver and return. Each component of involves various
organizations and even sections within the organization implementing
progressively. Therefore, a partnership of organizations involved with a
specific supply or value chain of activities could be another definition
of SCM (ISTC 1998). Partnerships in Supply Chain Management are of
two types:
Vertical integration is the term used to describe the consecutive stages
in a marketing chain when they come under single ownership.
Whereas partnerships in the food industry are between successive links
in the food chain (e.g. retailer with processor and processor with
farmer), alliances are, generally, between firms at the same level (e.g.
processor with processor),hence,
termed as horizontal partnerships.
 Manual Processes Big Data and Sustainability and
(Pre-Computer Barcoding and IoT and Analytics Traceability
RFID Sensors
Mid-2010s
Era) 1950s to 1970s 1990s - 2000s 2000s and Solutions 2010s - now
& 2020s
beyond.

Mid-20th 1980s & 2000s & 2010s 2010s - 2020s

century Introduc 1990s Supply 2010s. E- Artificial
Blockchain
tion of Chain commer Intellige
Technology
Comput Manageme ce and nce (AI)
ers nt DTC and
Software Platform Machine
s Learnin
g:

References:
Ahmed, M. (2022, March 25). Evolution of Supply Chain Management and Logistics. SCMDOJO. https://www.scmdojo.com/history-and-evolution-of-supply-chain-and-logistics
 CHAPTER 2
FOOD SUPPLY CHAIN
MANAGEMENT
2.3 FOOD SUPPLY CHAIN MANAGEMENT TREND
• Food Supply Chain Management is
differentiated from traditional Supply Chain
Management (e.g., auto parts) due to an
additional dimension of safety concerns in
addition to quality.
• The Food Safety failures have led to the
development of standards like HACCP (Hazard
Analysis and Critical Control Point), GAP (Good
Agricultural Practice), GMP (Good
Manufacturing Practice) and various protocols
have been introduced by Codex Alimentarius
and International Standard Organization (ISO).
The latest on the list is ISO22000 that directly
associated with the SCM. Meanwhile from the
perspective of Islam – presently which is
considered the most growing market for food
demand in the world – Halal Standard becomes
an important element in Food Supply Chain
Management.
‌
1) The term "food supply chain trend" refers to a prevailing and significant development, shift, or
pattern in the way food is produced, processed, distributed, and consumed within the supply
chain. These trends often emerge in response to various factors such as changing consumer
preferences, advancements in technology, economic considerations, environmental concerns,
and regulatory changes. Food supply chain trends shape the way food is grown, sourced,
transported, and delivered to consumers and can have a substantial impact on the entire food
industry.
2) For example, a food supply chain trend might involve the adoption of technology like blockchain
for enhanced traceability, the increasing demand for sustainably sourced ingredients, or the
growth of e-commerce platforms for direct-to-consumer food sales. Understanding and
responding to these trends is crucial for businesses and organizations operating within the food
supply chain to remain competitive, efficient, and aligned with consumer expectations and
industry standards.
3) Key trends in the food supply chain: i. Demand for food safety and security ii. Cold Chain
Management iii. Predictive Analytics iv. Food waste management v. Efficient food supply for
socioeconomic progress.

Arviem. (2019, January 24). Food supply chain: Trends to know if you are dealing with food logistics. Arviem Cargo Monitoring.
https://arviem.com/trends-food-supply-chain-practices/
ii. Cold Chain Management
Cold-chain management is an essential aspect of many food and beverage operations today.
The basic steps involved in cold chain management can be well understood by following
graphics:
 iii.

● Predictive Analytics becoming central to supply chain operations. By analyzing large datasets, businesses can
better forecast demand, optimize inventory, and reduce food spoilage. Predictive analytics also enhance supply
chain resilience by identifying potential disruptions in advance.

● Predictive analytics can be applied to both real-time and non-real-time decision-making scenarios. In real time, it
enables quick responses to dynamic situations, while in non-real time, it supports strategic planning and
optimization based on historical and batch data. The choice of application depends on the specific business
context and the nature of the decisions being made.

● Predictive analytics in the food industry, whether applied to real-time decisions or non-real-time decisions, plays a
Predictive Analytics - Non Real Time Decision Making
In non-real-time decision-making, predictive analytics is used to analyze historical or batch data to inform
decisions that do not require immediate action. These decisions are typically more strategic in nature and
involve planning and optimization over longer timeframes. Examples include:

1. New Product Development: Food companies use historical market data and consumer trends to inform non-real-time
decisions about new product development. Predictive analytics can identify emerging food trends and preferences,
guiding the creation of new products.

2. Production Planning: Non-real-time predictive analytics is valuable for long-term production planning. It can analyze
historical production data, seasonal demand patterns, and market forecasts to optimize production schedules and
resource allocation.

3. Quality Improvement: Over time, predictive analytics can analyze historical quality control data to identify areas for
quality improvement in food processing. Manufacturers can use this information to implement process changes and
enhance product quality.

4. Waste Reduction: By analyzing historical data on product returns and unsold inventory, food companies can make
non-real-time decisions to reduce waste. This may involve adjusting production quantities, optimizing packaging, or
revising expiration date labeling.

5. Pricing Strategy: Predictive analytics can inform non-real-time decisions about pricing strategies. By analyzing
historical pricing data and market conditions, food retailers can set competitive prices and promotions.
 iv. Food Waste Management
• Food Waste Management addressing food waste is a growing priority. Innovative
approaches, such as surplus food redistribution, composting, and waste-to-energy
solutions, are being adopted to reduce the environmental and economic impact of food
waste throughout the supply chain.
• Businesses can make a huge difference in reducing food waste. The food waste in the
transition mainly occurs due to poor transportation networks, lack of preservation
techniques, improper temperature and humidity conditions, unplanned longer routes and
delays in transit.
• The globalization, the global food supply continues to grow in volume and complexity
thus the supply chain in the food industry needs special attention to minimize food waste.
Why Food Waste Need To Control
● Ethical and Social Responsibility: Food waste is a global issue, while millions of
people worldwide suffer from hunger and food insecurity. Ethically, food businesses
have a responsibility to minimize waste and contribute to food security efforts.

● Regulatory Compliance: Many regions and countries have regulations and laws
aimed at reducing food waste. Compliance with these regulations is essential to
avoid fines and legal repercussions.

● Consumer Expectations: Consumers are increasingly conscious of food waste and

sustainability. Businesses that actively reduce waste and adopt sustainable practices
are often viewed more favorably by consumers, leading to increased brand loyalty
and positive public relations.
● Operational Efficiency: Controlling food waste can lead to more efficient
operations. Better inventory management, reduced overproduction, and improved
portion control all contribute to smoother and more cost-effective foodservice
operations.

● Supply Chain Efficiency: Efficient supply chain management, including proper

inventory control and transportation optimization, can minimize food waste along
the entire supply chain. This not only reduces costs but also enhances the overall
sustainability of the supply chain.

● Innovation and Resourcefulness: Food businesses that focus on reducing waste

often drive innovation in product development and packaging. They find creative
ways to use surplus or imperfect ingredients and reduce packaging waste.
According to the FAO data, one-third of food produced for human consumption is lost or wasted globally,
which amounts to about 1.3 billion tons per year. World Resources Institute also indicates that throughout
the entire supply chain, food worth $750 billion is either lost or wasted each year.
 ● Malaysia generated 17,000 tonnes of food waste per day in 2020. According to data from landfill operator
SWCorp Malaysia, of this figure, 24%, or 4,005 tonnes, are still edible (Meikeng, 2022).
● During Ramadan 2022, a total of 252,521 tons of solid waste was collected by SWCorp, with 44.5 percent of
it being food waste (equivalent of around 112,000 tons) (Wong, 2023).
Reference:

Meikeng, Y. (2022, June 6). M’sians continue to waste food. The Star. https://www.thestar.com.my/news/nation/2022/06/06/msians-continue-to-waste-food
Wong, D. J. (2023, April 10). Around 112,000 Tons of Food Wasted During Ramadan 2022, Says Malaysian Deputy Minister. Mashable SEA | Latest
Entertainment Trending.
https://sea.mashable.com/life/23083/around-112000-tons-of-food-wasted-during-ramadan-2022-says-malaysian-deputy-minister#:~:
text=Deputy%20Minister%20%2D%20Life-
Strategies Control Food Waste
1. Inventory Management
2. Portion Control
3. Menu Planning
4. Food Preservation
5. Quality Control
6. Donation Programs
7. Staff Training
8. Technology Solutions
9. Customer Engagement
10. Waste Tracking and Analysis
11. Sustainable Sourcing
12. Composting and Recycling
13. Regular Review and Adaptation
14. Educate Customers
Strategies To Achieve An Efficient Food Supply For Socioeconomic
Progress
1. Sustainable Sourcing and Production
2. Efficient Supply Chain Management
3. Technological Integration
4. Optimize Inventory and Demand Forecasting
5. Emphasis on Quality Control
6. Invest in Employee Training and Development
7. Implement Sustainable Packaging Solutions
8. Support Local Communities and Farmers
9. Food Recovery and Donation Programs
10.Engage in Community Outreach and Education
11.Collaborate with NGOs and Government Initiatives
12.Measure and Track Progress
v. Efficient Food Supply for Socioeconomic Progress

● Efficient food supply for socioeconomic progress refers to the optimization and effective management of
the processes involved in the production, distribution, and consumption of food to contribute positively to
the economic and social development of a region, country, or community.

● This concept emphasizes the importance of a well-functioning food supply chain in driving economic
growth, creating employment opportunities, reducing poverty, and improving overall living standards. It
recognizes that a reliable and efficient food supply system is a fundamental pillar for sustainable
development and the well-being of a society.

● The concept of "Efficient food supply for socioeconomic progress" within food supply chain trends
emphasizes the need for a supply chain that not only drives economic growth but also supports social
well-being. It aligns with trends focused on sustainability, traceability, technology adoption, and
regulatory compliance in order to achieve this balance.

● Efficient Food Supply for Socioeconomic Progress: The food supply chain plays a critical role in economic
development and addressing food security challenges. There is a growing emphasis on making the supply
chain more efficient and inclusive, ensuring that food reaches underserved populations and supporting
local economies.
 i Producers
2.4 THE ACTORS ii. Processors and Manufacturers
IN FOOD SUPPLY
CHAIN iii. Retailers and distributors
MANAGEMENT

iv. Hospitality sector

v. Consumers
 The actors
in a food
supply chain
2.5 TYPES OF
i. Commodity- and
FOOD SUPPLY producer-focused chains
CHAIN
MANAGEMENT
ii. Consumer-driven
value chains
i. Commodity- and producer-focused chains
• The output from farms moves downstream in two formats, either directly as fresh produce to the consumer
(fresh fruit and vegetables, milk, grain and so on) or in bulk as a raw material within food processing plants.
The bulk purchase of raw food material can be done through strategic partnerships with the producers,
through traders or by buying it as a commodity item. A commodity is an item that is subject to futures
contracts. In a future contract the two parties in the deal sign a contract to buy or sell an item (in this case
food, for example cocoa) for a (future) price agreed today, with delivery and payment happening in the
future. The buyer speculates whether the price of the food item will go up or down in the future and hedges
the risk by signing a contract in the present for a future price. This process is conducted at the ‘futures
exchanges. The commodity chains deal in products such as palm oil, cocoa, coffee, sugar, cereals, grains and
so on. The supply chain model works with few buyers and many sellers. The process works as a spot market,
and price determines the movement of the product. Commodity systems keep information flow between
trading partners to a minimum. The processors, when buying in bulk, utilize this to buy quickly, reduce costs
by hedging and maintain flexibility in product availability. Since the purchasing between the processor and
producer does not happen directly but through the futures contract, the demand signals from consumers
cannot be sent to the producers as there is a disconnect in the relationship. The prices of major commodities
are influenced by climate change and uncertain weather patterns, variations in global demand and supply,
and political processes such as trade agreements. Demand and supply volatility provides the required
incentive to the futures trading environment. Traders tend to use flexibility in having diverse sources of the
products to gain some profit, as profit margins are low. Volumes in bulk will tend to provide the returns
rather than the actual trading price.
ii. Consumer-driven value chains
• Food traceability and identity are very important within consumer driven chains, as this is the last
stage of the food supply chain and has a direct impact on the well-being of the consumer. Food
products within the retail environment are processed, branded and work effectively on the basis
of uniformity in processing and high quality. Products traded in the commodity market, for
example coffee, are now moving into the retail environment as branded, gourmet coffee, with
close cooperative relations between processors and suppliers. Unlike the commodity chain, the
consumer-driven chain is more regulated, sometimes vertically integrated, and works more on
the principle of cooperation and collaboration. The consumer-driven chain has barriers to entry,
such as ‘voluntary’ standards, codes and benchmarks, international regulations and phytosanitary
certification, which can affect the entry to markets. There is a need for consistency, which is
achieved through processing and on-time delivery. The application of management systems for
quality (for example, ISO 9000) or environment (ISO 14000) or production system (for example,
organic) helps to maintain the credibility of the food supply chain. Tracking and tracing are very
important, and technology insertion is required in the chain for this to be effective. Stringent
traceability and intense scrutiny by retailers are conducted through production site visits. It is
necessary to check compliance with buyer codes and standards and especially sustainability
performance.
 Industrial Factors

2.6 FACTORS THAT Seasonality

INFLUENCE AND
AFFECT THE FOOD Technology
SUPPLY CHAIN
MANAGEMENT Economic Factors

Social Factors

Political Factors
 Agriculture Production

These Involvement of Various Governmental/Non-

complexities Governmental Actors

in the food Processing and Maintaining Quality

supply chain Consumer and Market Choices

are derived
from within a Local Authorities

number of
Logistics Companies
areas
A Host of Other Small Companies Actively Involved in
This Food Supply Chain and Providing Secondary Value
ii. Collaboration
● Collaboration among the various stakeholders along the food value
chain is extremely important.
● The interdependencies between stakeholders in the chain and the
wider network should be considered as potential locations of
collaboration.
● The recent global cases of food recalls, food safety and traceability
have become a major concern within the food sector.
● Collaboration between the entities in the chain provides the entities
with confidence in the sourcing, handling and quality control of
food. Collaborative platforms help supply chain partners to have an
end-to-end view of the chain.
● Collaboration between producers and processors (with the use of
appropriate technology) can help reduce post-harvest food losses.
 The world around us is constantly changing.
Technological innovations, new business
models, globalization and the movement of
2.6 FACTORS people have made food supply chains rethink
fulfilment and effectiveness parameters.
INFLUENCING AND Innovations in processing and transport have
AFFECT THE FOOD made products more suitable for global
distribution, and innovations in management
SUPPLY CHAIN and information and communication
MANAGEMENT technologies (ICT) have allowed supply
chains to become more responsive to the
increasingly sophisticated food demands of
consumers.
Some other factors that influence and
affect the food supply chain are as
follows:
i. Consideration as value chains
ii Collaboration
 1. The Input Suppliers To The Food Production Process
2. The Producers Involved In Growing Food
3. The Processors, Both Primary And Value-Added, Involved
In Processing, Manufacturing And Marketing Food Products
4. The Distributors, Including Wholesalers And Retailers,
i. Consideration as Involved
value chains 5.
In Distributing, Marketing And Selling Food
The Consumers Involved In Shopping For And
Consuming
Food
6. Government And Non-Governmental Organizations
(NGOs)
Involved In Creating Policies And Programmes For Food
Sustainability And Security
7. Regulators Involved In Monitoring And Regulating The
Entire
Food Value Chain From Producer To Consumer
8. Logistics Companies Involved In Moving, Storing And
Managing Food Throughout The Value Chain
9. Financial Organizations Involved In Providing Funding To The