Strong partnerships in cereal supply chain engender financial gains
In 2009 the HGCA established a framework to thoroughly explore the dynamics of the supply chain in the cereals industry.
Five key themes were identified in the chain: cost and price; communication and collaboration; duplicate testing; new product development; and transport. These areas emerged from the work of the Cereals Industry Forum (CIF), headed-up by the HGCA and the Food Chain Centre.
With reference to the 'communication and collaboration' phase, Professor Hughes, Emeritus Professor of Food Marketing at Imperial College London, recently commented in an interview with the HGCA: "There is not over-supply of raw materials and as a result there is strong interest from both suppliers and customers to build longer term relationships."
The benefits of partnerships
Soaring commodity costs in 2008 saw prices for key raw materials like corn and wheat reach unprecedented figures. This put intense pressure on company balance sheets, and pushed governments across the globe into emergency huddles in a bid to get a handle on rocketing food prices.
But the remarks from Professor Hughes, which appear in an interview on the HGCA's Supply Chain Partnership website, suggest a positive outcome could arise for businesses operating with strong partnerships.
"Those that coordinate and are willing to work directly with partners, with suppliers and with customers, are financially more successful than those who just play the market," he said. Adding that he was 'optimistic that we are seeing change and I hope a more sustained change' for 'partnership building.'
Further, the HGCA cites Professor Hughes who commented how work he conducted some years ago showed 'that particularly in more volatile markets, it is all about coordination and supply chain partnerships.'
These views are echoed by HGCA's crop marketing director Alastair Dickie: "We have now started to see examples in the cereals industry of companies in the supply chain joining together to provide branded products with clear provenance, and this is one of the opportunities provided by collaboration."
Dickie adds that the work of the Cereals Industry Forum has “clearly shown that better communication and collaboration can drive improvements throughout the chain” from boosting new product development and innovation, to a reduction in testing and an improvement in transport.