Fresh Fruit and Vegetables Supply Chains’ Evolution Essay

Introduction

During the period of the 1980s-1990s, the approach to organising the supply chain of fresh fruit and vegetables in the United Kingdom and worldwide changed significantly. The reason for changes was the supermarket revolution that transformed traditional approaches to retailing fruit and vegetables in the context of global supply chains. As a result, it became possible to speak about the evolution of this specific supply chain and its progress in the context of certain analytical frameworks. The purpose of this paper is to discuss the supermarket revolution and analyse the evolution or development of the fresh fruit and vegetables supply chain in regard to analytical frameworks associated with the management of these chains.

The Supermarket Revolution

In the 1980s-1990s, supermarkets entered the retail grocery market of the UK and other countries. These giants in the retailing industry became popular among customers because of the effectively used information on their expectations, demand, wide offerings, and successful brand promotions (Burt & Sparks 2003). As a result, the principles according to which supply chains involving retailers were built should have been revised. Supermarkets as retailers received more power and leadership in a supply chain because of developing unique brands, broadening the product range, setting higher standards for food and other products, using information technology to control logistics, and utilising services of more suppliers from different regions of the world (Brunn 2006). It became possible to receive fresh fruit and vegetables from different developing countries using attractive prices and addressing customers’ demand. As a result, while selling fruit and vegetables, supermarkets developed a higher competitive advantage than smaller local retailers did.

Analytical Frameworks

Changes in fruit and vegetables supply chains caused by the supermarket revolution should be discussed in the context of such analytical frameworks as supply chain management, the global commodity chain (GCC), the global value chain (GVC), and the global production network (GPN). Supply chain management is the practice of organising efficient relationships between all participants of a chain, including suppliers and customers. The task is to improve customers’ experiences and reduce associated costs (Christopher 2016). The GCC framework is characterised by explaining relationships with suppliers with reference to a network, each actor of which adds value to the work of the whole system in order to receive the high-quality finished commodity (Henderson et al. 2002). International supply chains can be explained with reference to this framework.

The GCC framework is also known today as the GVC framework because interconnected components of a global supply chain usually add value to the whole process of providing a customer with a product (Gereffi & Fernandez-Stark 2011). It is important to note that the GPN framework is also based on the other discussed models, but the focus is on production rather than on a commodity, and the system is viewed as a network of interconnected players rather than a chain of activities (Henderson et al. 2002). These analytical frameworks are important to support the analysis of the evolution of the supply chain of fruit and vegetables.

The Evolution of Supply Chains of Fresh Fruit and Vegetables

The supermarket revolution resulted in changing practices of organising supply chains. Following the principles of supply chain management, supermarkets and the largest grocery chains began to realise all opportunities in order to find cost-efficient suppliers in developing countries to increase the product range and decrease costs (Competition Commission 2007). In the UK, the market of fresh fruit and vegetables developed an oligopolistic structure during the period of evolving the supermarket revolution. Thus, the “largest six food retailers had captured a 76 per cent share of fruit and vegetable sales by 1997” in the UK (Dolan & Humphrey 2000, p. 148). Changes in supply chain management allowed large retailers of fruit and vegetables to increase their market share by 30%-50% in the 1990s (Burt & Sparks 2003). These tendencies associated with the revolution in distributing fruit and vegetables demonstrated that large retailers and supermarkets could not be viewed as passive actors in supply chains, and their role and power changed significantly.

When large retailers of fruit and vegetables and supermarkets began to improve global supply chains, they also enhanced the used management systems, focused on standardisation and the utilisation of information technologies. Retailers began to realise their leadership potential in influencing relations within supply chains (Burt & Sparks 2003). In this context, Wal-Mart became a leader in organising a supply chain that could address a retailer’s expectations and goals. The strict management of all operations within the chain with the focus on efficient monitoring and logistics allowed the company to reduce costs, improve delivery and quality of products, and attract customers with the help of discounts. The management of global grocery channels allowed leaders in retailing to choose the most appropriate conditions and prices. As a result, Wal-Mart and other supermarkets chose to change product offerings with the focus on fruit and vegetables, revised the number of suppliers, and determined the most preferred suppliers to cooperate with (Brunn 2006). Consequently, the increased position of retailers in a supply chain resulted in the growing suppliers’ dependence.

While discussing these processes in developing supply chains of fruit and vegetables, it is necessary to refer to the GCC/GVC and GPN frameworks. Changes in supermarkets’ choice of suppliers and relations with them can be viewed as a result of developing strong input-output structures according to the GCC/GVC framework because retailers are interested in building relationships with those suppliers who are reliable, flexible, capable, and appropriate in terms of costs (Henderson et al. 2002). It is possible to expect adding value to the whole chain. According to the GPN framework, larger retailers’ approach to developing relationships with suppliers can be viewed as more complex because supermarkets need to monitor the global production of fruit and vegetables, not just commodities. Therefore, retailers’ control of the process becomes accentuated. In addition, they need to organise an effective network, not just a chain, because volumes of demanded fruit and vegetables change regularly, and supermarkets are in a constant process of developing relationships with more suppliers (Henderson et al. 2002). The network should include global suppliers that can address customers’ demands, expected product volumes, and retailers’ plans in any situation.

Conclusion

The supermarket revolution can be discussed as an important tendency in developing the retailing industry in the United Kingdom and globally. This process is associated with the rise of supermarkets that became concentrated on developing strong and effectively controlled global supply chains or networks with the focus on the increased power of large retailers in this context. Thus, it is possible to speak about the evolution of supply chains of fruit and vegetables in the country and globally that can be explained with reference to such analytical frameworks as the supply chain management, the GCC/GVC framework, and the GPN framework.

Reference List

Brunn, SD (ed.) 2006, Wal-Mart world: the world’s biggest corporation in the global economy, Taylor & Francis, New York, NY.

Burt, SL & Sparks, L 2003, ‘Power and competition in the UK retail grocery market’, British Journal of Management, vol. 14, no. 3, pp. 237-254.

Christopher, M 2016, Logistics and supply chain management, 5th edn, Pearson Education, New York, NY.

Competition Commission 2007, The supply of groceries in the UK market investigation, Competition Commission, London.

Dolan, C & Humphrey, J 2000, ‘Governance and trade in fresh vegetables: the impact of UK supermarkets on the African horticulture industry’, Journal of Development Studies, vol. 37, no. 2, pp. 147-176.

Gereffi, G & Fernandez-Stark, K 2011, Global value chain analysis: a primer, Center on Globalization, Governance & Competitiveness, Durham, NC.

Henderson, J, Dicken, P, Hess, M, Coe, N & Yeung, HWC 2002, ‘Global production networks and the analysis of economic development’, Review of International Political Economy, vol. 9, no. 3, pp. 436-464.