Food Value Chains Redux

2014-02-BlogCDC

This month as we look at the Co-op Distribution Center’s activity, we revisit a topic touched on in our first installment—food value chains. Part of what makes the CDC unique is their approach to their suppliers and to their customers. Rather than simply moving commodities from point A to point B (the basic definition of a supply chain), the CDC actively works with local and regional producers by paying attention to every step a particular food item takes from farm to fork. Further, they work with their partners at every step of the way to ensure each party’s values are respected, and needs are met. Or in other words, they use a value chain approach to make the CDC, its suppliers, and its customers successful. They recognize that to succeed, their partners need to succeed also.

Regional distributors like the CDC must compete with national and multinational companies—and often customers’ expectations are based on the standards and services these larger companies can provide because of their volume of business. Regional distributors like the CDC must find ways to create a valuable experience for their customers and their suppliers based on a different set of expectations. Where a large company might be able to discount their goods because of volume, the CDC might add value for a customer by providing information about where and how it was grown, and a producer profile. In turn, this information might mean that a restaurant can advertise a dish as local or humanely raised and charge more based on the value added from the details about the food’s origin.

The relationship the CDC has with each partner in processing an item helps them identify where value might be added. For example, a restaurant loves the Kyzer Farm pork chops is gets from CDC, but uses sausage in more of their dishes and only offers pork chops as a weekly special. The CDC then works with its meat processor to create the cuts and products the restaurant wants. This means the CDC will be able to use more of the whole animal, which means they will make more per animal, and their customers get what they need. Ultimately, this makes it a more sustainable program.

In addition, for the CDC making the most per pig means that they can pay top dollar to the farmer and the processor. It also means they can work with Kyzer on his feed program and the processor on their food safety regimen. Ultimately, everyone is able to uphold high quality standards and good ethics when in comes to food production.

Because the CDC has relationships with most of its suppliers and customers, they are able to facilitate a dynamic market that adapts more quickly to customer and supplier needs based on direct feedback, collaboration, and more communication.  In addition, this adaptability is at the heart of how regional distributors and distribution networks not only create and add value to their goods and services, but also help each other build more sustainable businesses.

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