michigan state university, 2013 agriculture logistics and supply chain: enabling opportunities for...

Michigan State University, 2013

Agriculture Logistics and Supply Chain: Enabling Opportunities for Economic Development, Including Food Processing

Blue Water Corridor Conference: A Bi-National Approach to Innovation and Collaboration

Frederick A. Rodammer, Ph.D.

The Eli Broad College of Business

Michigan State University

June 11, 2014

Michigan State University, 2013- 2 -

Blue Water Corridor Conference– Presentation Outline

• The complexity of supply chains and the end to end supply chain

• Current issues associated with Agriculture logistics and supply chain

• Agriculture supply chain assessment and food processing opportunities project

• Example scenario of supply chain improvements enabling economic development for food processing


FARMINPUTS

ANIMALPRODUCTION

CROPPRODUCTION

FARMPRODUCT

ASSEMBLERS

INGREDIENTPROCESSORS

END-PRODUCTPROCESSORS

WHOLESALERS

RETAILERS

CONSUMERS

seedfeed

fertilizerpesticides

meat & poultrydairy

fish & seafoodeggs

grainsoil seeds

fruitsvegetables

grain elevatorsshippersfeed lots

millingslaughtering

crushingstarches

flavorings

fresh productsprepared products

general homespecialty productsfood service

supermarketsconvenience stores

co-oprestaurants

hotelsschools

hospitalsmilitary bases

vendingfarmer’s markets

community feeding

T

T

T

T

T

TT

T

T

T Transportation of products betweenstages in the system.

MULTIPLE FARMSOURCES

MULTIPLE FARMSOURCES

STORAGE

T

T

Example: Complexity In The Food Supply ChainExample: Complexity In The Food Supply Chain

Adapted from Bruce Hope, (April 13, 2005), “Identifying Research Needs for Risk Assessment of U.S. Food Supply Security,” Society of Toxicology - Risk Assessment Specialty Section (RASS) Monthly Teleconference.


Food System Complexity

Prepared by Shaun Kennedy – Do Not Reproduce Without Permission


baking sodawheat glutencalcium propionate enzymes

bleached wheat flour mono- and diglyceridesmalted barley flour diacetyl tartaric acid estersthiamine ethanolriboflavin sorbitol Niacin polysorbate 20folic acid potassium propionatereduced iron sodium stearoyl lactylateWater corn starchcorn syrup ammonium chloridesesame seeds ammonium sulfatesoybean oil calcium peroxideYeast ascorbic acidSalt azodicarbonamidecalcium sulfatecalcium carbonatecalcium silicatesoy flour

USDA inspected beef

Milk milkfatWater creamsodium citrate saltsodium phosphate sorbic acidartificial color cheese cultureacetic acid soy lecithinEnzymes starch Special SauceSoybean oil picklesdistilled vinegar wateregg yolks HF corn syrupsugar onion powdercorn syrup spicespice extractives saltxanthan gum mustard flourprop. glycol alginate sodium benzoatepotassium sorbate mustard brangarlic powder hydrolyzed proteinscaramel color paprikaTurmeric calcium disodiumEDTA

CucumberswaterVinegarSaltcalcium chlorideAlumnatural flavoringspolysorbate 80turmeric

Grill SeasoningSaltPeppercottonseed oilsoybean oil

Food System ComplexityOne Burger Contains:

lettuce dehydrated onionsPrepared by Shaun Kennedy – Do Not Reproduce Without Permission


End-to-End Integrated Supply Chain Model

SUPPLYNETWORK

Information, Product, Service, Financial and Knowledge Flows

MATERIALS

Capacity, Information, Core Competencies, Capital and Human Resources

Relationship Management

Procurement

Manufacturing

END

CONSUMERS

INTEGRATEDENTERPRISE

MARKETDISTRIBUTION

NETWORK

Logistics

Order

Administration


End-to-End Integrated Supply Chain Total Cost Analysis Approach

Cost Components

Sourcing +

Production +

Handling +

Inbound Transport +

DC Handling +

Inventory +

Customer Transport +

Duties and Taxes

____________

Total CostDealers


Michigan Agriculture Supply Chain Project

• Purpose: Complete an overall end-to-end supply chain assessment of key commodity segments of Michigan agriculture, identify major infrastructure constraints, and provide recommendations and rationale for critical investments to improve Michigan’s economic competitiveness and job creation opportunities.

• Commodities: Bean, Corn, Wheat, Soybean


Project Stakeholders

• Michigan Soybean Promotion Committee• Corn Marketing Program of Michigan• Michigan Wheat Program• Michigan Bean Commission• Michigan Farm Bureau• MSU Department of Supply Chain Management • MSU Product Center• MDARD• MEDC• MDOT


Current Issues (Opportunities for Improvement)

• Fertilizer Price Increase• Need for Food/Feed processing Sites• Need for Animal Processing Sites• Border Congestion• Transportation and Logistics• Exports and Value Chain• Information Technology and Decision Aids


Project Scope: End to End Supply Chain

Purchase & Application

Harvest

Transport & Movement

Processing I – Food/Feed

Processing II – Animal Processing

Sale – Domestic and Export

End to end supply chain begins with the purchase and application of fertilizers, continues with the harvest and the movement of products from the field to processing locations, continues with food/feed processing, and ends with the sale of processed product for animal livestock or the end consumer.


• Reduced cost or cost avoidance for all stakeholders• Improve service by reducing cycle times and delays for

transport and processing• Reduced supply chain risks for all stakeholders• Creation of new bi-national jobs • Prioritize infrastructure and policy recommendations

impacting the agriculture industry

Anticipated Project Outcomes


Cropland Distribution Across Michigan


Cropland with Freeway Distribution Across Michigan


Rail Distribution Across Michigan


End-to-End Integrated Supply Chain Model

SUPPLYNETWORK

Information, Product, Service, Financial and Knowledge Flows

MATERIALS

Capacity, Information, Core Competencies, Capital and Human Resources

Relationship Management

Procurement

Manufacturing

END

CONSUMERS

INTEGRATEDENTERPRISE

MARKETDISTRIBUTION

NETWORK

Logistics

Order

Administration


End to End Supply Chains: Volumes, Costs and Cycle Times Data


Harvest

Elevator

Crushed Bean

Soymeal

DistributorExport

Farm Retail

Soybean – Process Map

Soyoil

Production

Storage and Distribution

Processing

Product Distribution

Retail

Farm Storage


Soybean Production

Production goes to 98 elevators in the state of Michigan

Two Largest:Michigan Ag CommoditiesCitizens Elevator

81M bushels (97.3%) of total soybean production is transported to elevators by truck

Unit: Bushels


Soybean Farm Producers and Processors

Zeeland is Michigan’s onlyprocessor and has no rail system

10.0 M bushels (12%) of Soybeans move from elevators to Zeeland processor by truck

Due to capacity issues, therest is transported fromelevators to out of stateProcessors.

Unit: Bushels


Project Phases and Completion Date

Phase I Project Charter, Work Plan,

ResourcesRelevant

Workshop Date:

Phase 2 Data Collection (Ongoing) Workshop #1February 21, 2014

Phase 3 Analysis & Process Modeling Workshop #2April 17, 2014

Phase 4 Develop SCM Recommendations Anticipated:September 2014

Phase 5 Validate Recommendation Anticipated:November 2014

Phase 6 Implementation Planning Project Completion 2Q, 2015

LEVERAGE RESULTS: Recommendations for will be shared and leveraged to other Michigan agriculture crops.


Blue Water Corridor Conference– Presentation Outline

• The complexity of supply chains and the end to end supply chain

• Current issues associated with Agriculture logistics and supply chain

• Agriculture supply chain assessment and food processing opportunities project

• Example scenario of supply chain improvements enabling economic development for food processing


Example: Supply Chain Improvement Concepts

• End to end supply chain optimization results in cost and cycle time reductions for all stakeholders

• Supply chain asset deployment – Additional food/feed processor(s) in the Blue Water Corridor– Increase in animal processing would create captive demand

for soybeans and corn – Intermodal assets will further optimize the end to end supply

chain


Food Processing – Progressive Processing LLC Example

• Subsidiary of Hormel Foods Corp.• Dubuque, Iowa• State-of-the-art 348,000 SqFt, $89M facility• Employees ~90, can expand capacity for 300 employees• Leadership in Energy and Environmental Design (LEED)

Certified– First of any refrigerated food operator

• Utilizes 25% less energy & water than industry standards

• Constructed with 36% recycled material• Deploys Environment Friendly Technology

– Improves operational efficiency– Minimizes waste


State of the Art Food Processing – Preventative Measures

Benchmarking and Goal Setting• Ex: Reduce number of hours for interruptions

Defining Roles and Responsibilities• Must ensure that roles are clearly defined

Measure Costs and Time• Maintenance is necessary, but is it being performed efficiently?

Planning and Tracking• The time allotted for a process should match the actual time spent

on it• Individuals who are causing a bottleneck need to take action


State of the Art Food Processing – Example Features

Use of Appropriate Materials• Sustainable and LEED certified

Onsite Waste Water Treatments• Waste water may be reused for irrigation, refrigerator system, or source of energy• Urban communities may have extra capacity of wastewater treatment

Flooring• Protective concrete to maintain floors structure integrity with heavy

items/equipment

Sanitary Designs• Facilities should include complete separation

of areas the have raw and ready-to-eat foods• Installing of reliable mechanical systems

to control humidity


Potential Supply Chain Improvement Scenarios

https://umanitoba.ca/faculties/management/ti/media/docs/CTRF03_Bottleneck.pdf

Bottleneck Causes

Infrastructure RegulatorySupply Chain Dysfunctions

Chronic

Perceptions

Temporary Direct Indirect Labour

Corporate

Information


• Reduced cost or cost avoidance for all stakeholders• Improve service by reducing cycle times and delays for

transport and processing• Reduced supply chain risks for all stakeholders• Creation of new bi-national jobs • Prioritize infrastructure and policy recommendations

impacting the agriculture industry

Future State Outcomes

Michigan State University, 2013

Agriculture Logistics and Supply Chain: Enabling Opportunities for Economic Development, Including Food Processing

Blue Water Corridor Conference: A Bi-National Approach to Innovation and Collaboration

Frederick A. Rodammer, Ph.D.

The Eli Broad College of Business

Michigan State University

June 11, 2014

michigan state university, 2013 agriculture logistics and supply chain: enabling opportunities for...

Documents

food supply chain

food supply security

food processing slide

complexity of supply

supply chain current

permission slide

risk assessment of

agriculture logistics