Supplier/Buyer RelationshipsIncorporating Regional Farms in the Supply Chain

Aspen Institute Business Education SymposiumOctober 2014

Deishin LeeBoston College

Small to mid-sized

farms

Regional market

Where we live

Tomatoes

CA + FL = 67%

Broccoli

CA = 90%

Lettuce

CA + AZ = 98%

DC

DC

Store

Store

Store

Store

DC "Breaks bulk"

DC

Store

Store

Store

Store

DC "Breaks bulk"

Economies of scale•High volume•Low variety•Steady processing rate

DC

Store

Store

Store

Store

Economies of scale•High volume•Low variety•Steady processing rate

Regional small and mid-sized farms•Low volume•More variety•Seasonality

DC

Store

Store

Store

Store

Economies of scale•High volume•Low variety•Steady processing rate

Regional small and mid-sized farms•Low volume•More variety•Seasonality

Challenges•Logistics•Retail ordering

DC

Store

Store

Store

Store

Why should we care?

Economies of scale•High volume•Low variety•Steady processing rate

Regional small and mid-sized farms•Low volume•More variety•Seasonality

Challenges•Logistics•Retail ordering

Improving Regional Farm Viability

• Operations and Supply Chain Management:• Forecasting (e.g., sharing long-term demand information)

• Logistics (e.g., backhauling, scheduling)

• Regional aggregation (e.g., Red Tomato)

• Overhead functions (e.g., regulations/specifications, packaging, cold chain handling)

• Marketing• Differentiating the product

Segueing into the Classroom

• Understanding what is challenging

• Upfront costs vs. Uncertain future benefits

• Economies of scale vs. Economies of scope

• Analysis vs. Decision-making

17

© Willy Shih

Economies of scale:Monoculture

Economies of scope:“Three sisters” polyculture

18

© Willy Shih

Segueing into the Classroom

• Understanding what is challenging

• Upfront costs vs. Uncertain future benefits

• Economies of scale vs. Economies of scope

• Analysis vs. Decision-making