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Towards efficient distribution of local agricultural products : implementing a logistic framework at PuurDichtbij

Valk, J.P. van der (2014) Towards efficient distribution of local agricultural products : implementing a logistic framework at PuurDichtbij.

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Abstract:In the last years, more awareness has risen on the origin, safety and quality of our agricultural products, and by extension our foods in general. Environmental responsible treatment of our food, and the consequences of consumption, are very relevant issues. Awareness is mainly caused by recent food scandals, considered to be caused by mass production and distribution of foods on a global scale. Laws and regulation in the sector decreases the compensation for the producers of crops, the farmers. Consequently, this trend forces farmers to upscale the size of their agricultural organization to mass-production facilities, in order to survive. Large organizations, and a long supply chain result in reduced process and origin transparency of crops. Other consequences of mass-production and transport are: (i) reduced food quality, (ii) lower product freshness due to a high travel distance, and (iii) worse product taste because of crops vulnerability characteristics. This year, the Dutch organization PuurDichtbij (Dutch for Pure Close by) started their initiative, striving to let as many people as possible enjoy affordable, and responsibly produced food from regional origin. Using an online platform, PuurDichtbij enables customers to order locally produced food directly from farmers. This process is facilitated in collaboration with local communities like schools, enabling customers to pick-up their order in their own neighborhood at a pre-determined location. Because of a short supply chain directly from farmers to customers in the same region, cost benefits and lower customer product prices are obtained, while famers receive a fair price for their product. Increasing the simplicity of the distribution process, also leads to higher process transparency and high quality, healthy, fresh products. The only link in the supply chain is the distribution by a PuurDichtbij transport vehicle. PuurDichtbij facilitates the distribution, the online platform where supply and demand meet, and shows the product-farmer relation. As a result the farmer loses his anonymity. The purpose of this research is threefold: (i) to organize the logistic processes of PuurDichtbij efficiently, (ii) to support logistic decision making for the distribution of foods on multiple hierarchical levels, (iii) and to increase insights in expansion of their initiative in the future. The overall objective of this research to accomplish this, is: “To design a logistic framework for the PuurDichtbij initiative”. This framework provides insight in the current logistic processes, comes up with tools how to optimize routing policies, and supports PuurDichtbij in the decision making process during the organizational expansion phase. We make a very clear distinction in this research between the current start-up phase of PuurDichtbij facilitating only one region, and the growth and expansion phase where more regions are established. In this research we search scientific literature that supports this research, and obtain previous research results in these subjects. Lessons learned and insights from literature supports our statements made during analysis, research results and recommendations given. We answer the following main research question in this research: “How to design a logistic framework to increase insight and to support decision making on multiple managerial levels for PuurDichtbij?” We formulate short term research results and solutions, immediately applicable by PuurDichtbij. During the currently running startup phase of their organization, these research results are implemented at the pilot region and already used during logistic operations. Amongst these results are the following:  A routing and scheduling application to enable efficient routing and scheduling of vehicle capacity and personnel  Optimized materials handling processes around the truck, like the customer order pick-up process flow. Linked with this process is an increased insight in the relationship with customer waiting time and utilization.  A quantitative supplier selection algorithm to evaluate a farmers’ added value for PuurDichtbij, based on multiple criteria. For the growth and expansion phase from a logistics perspective, recommendations for PuurDichtbij are given from this research in order to efficiently organize logistic processes. We assume that the organizational structure, financial resources, data storage, and ICT support are capable of handling these organizational decisions. A scalable organization is required in order to expand and realize sustainable growth. We come up with the following research recommendations leading to more efficient distribution, support decision making and increase insight in logistic processes. These recommendations must be executed by the management of PuurDichtbij when organizational growth and expansion to more regions commences in the coming year:  Separate the crops collection and distribution process using a transshipment location  Continuously review and optimize total supplier portfolio network  Optimize weekly supplier visit frequency across regions  Obtain a robust fleet management acquisition strategy  Implement an accurate inventory control system for the reverse logistics of crates process  Set a maximum customer arrival rate for each truck type during the customer order picking process at the pick-up location, to guarantee an optimal customer flow We recommend further research, outside the scope of this report, on the implementation of a separate business to business supply channel. This enables PuurDichtbij to also facilitate hotels and restaurant to use locally grown foods from participating farmers. Research can be done on demand forecasting using historical data per region, like item type, seasonality’s and customer type. Obtaining accurate forecasts enables PuurDichtbij to predict future revenues, and supports capacity allocation decision making. Moreover, the separation of the collection and distribution of crops process can be investigated, using different specialized vehicle types, seeking opportunities in the optimization of these processes and design. This also requires research on the consequences of future depot characteristics. Finally research from a financial perspective on the logistic decisions posed in this research can be done. Including financial aspects in the current setting for PuurDichtbij support the relationship with investors and future investments. Financial research provides insight in the added value of an efficiently organized logistic function.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:58 process technology
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/66411
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