Supply chain management in food chains: improving performance by reducing uncertainty

This paper investigates the impact of Supply Chain Management on logistical performance indicators in food supply chains. From a review of quantitative and more qualitative managerial literature, we believe that Supply Chain Management should be concerned with the reduction or even elimination of uncertainties to improve the performance of the chain. The following clusters of sources of uncertainty are identified: order forecast horizon, input data, administrative and decision processes and inherent uncertainties. For each source of uncertainty, several improvement principles are identified. A case study was conducted in a food chain in which a simulation model helped quantify the effects of alternative configurations and operational management concepts. By comparing this simulation study with a pilot study, the model is validated against real data, and organisational consequences are identified. The results of the case study suggest that reduction of uncertainties can improve service levels significantly, although current supply chain configurations restrict possible benefits. The availability of real time information systems is found to be a requirement for obtaining efficient and effective Supply Chain Management concepts.