Thedevelopmentofcustomer-centricsupplychainservice systemfor
smalldairyproducersinThailand
VaraveePunnathee FacultyofArchitectureandPlanning,Thammasatuniversity varavee.pun@dome.tu.ac.thABSTRACT
It cannot be denied that food and agriculture sectors play a vital role in the economy of Thailand since this country has a rich natural resource. In relation to that, the Thai government proposed the BCG model withspecificfocusesonfourindustriesincludingfood and agriculture sectors (Nxpo, 2019). Out of the sub sectors of food and agriculture, this proposal pays particular attention to the ‘dairy industry’, because it is the one of the vital sectorsthatoccupiesthelargestdomesticeconomyofinternationaltradinginThailand(Adul, et al., 2022). Althoughthissectorissupportedbythegovernment,therearemanysmalldairy producers who face challenges due to small revenue, which is increasing by transportation and middlemen cost (Pornthipa, 2015). Therefore, the research question is “How might we develop a customer-centric service system model in a supply chain which canhelpthesmall dairyproducerstoconnectwiththecustomers?”
The approach of this project is to conduct research about the business process and improvement in the Dairy industry To conduct the research project, this project will use a qualitative research approach, which involves interviewing the small dairy producerstogive the feedback insight because this method can collect the root of the problem and the author canseetheemotionfromthemdirectly.
The objective of this project is to comprehend the process of supply chain in dairy products from smalldairyproducerstocustomersintermsofservicesystem.Bydoingso,theresearch is aimed to contribute to the improvement of the supply system that covers a rangefromthe dairy producers to the customers, namely, the development of the service system of the supplychainforsmallsizedairyfarms.
The author considers that the key attribute of creating such a sustainable community is associated with creating a service system that helps producers access to customers easily. connecting service with the ‘digital platform’ between producers and customers. The followingusefulconceptsaresuggested,whicharestudiedbythefollowingthreeresearches:
● BusinessprocessanalysisandimprovementinThailand(Pornthipa, 2015)
● Factorsinfluencingmembershipofdairycooperatives (Jitmun,etal.,2020)
● TheeconomicsofmilkproductioninChiangMai(Otto,etal.,2005)
Dairy industry in Thailand is economically important in the agriculture industry, leading to the government supporting this industry and engaging Thai people to consume milk more (Clement, 1996). As for the supply chain in the industry ,therearevariouswaystotransport the dairy products from individual farms to customers such as dairy farmers' vehicles, retailers, or logistic service providers. Dairy farmers who have their own vehicles, willkeep the milk in an appropriate container and transport it to the collecting center (Pornthipa, 2015). In Thailand, there has the milk collecting centers (MCCs), which is supply chain betweendairyproducersandmilkprocessingandmilkwillretailwiththiscenters.MCCscan reduce time and transportation costs for the dairy producers who apply for membership. Moreover, MCCs has sub organization to organize milk from producers, which are dairy cooperative (DCs) and private organizations (POs). These two organization will be responsible for helping the distinct management structures and support themembertocreate the benefit of goods and service. However, the requirement and restriction of DCs and POs have to be guaranteed byothermembers(Jitmun,etal.,2020)resultinginhardlyjoining.For the domestic milk supply chain in Chiang Mai as a case study, producers will market their milk to MCCs and it will direct sales to the middlemen. When milk go to middlemen, the producers cannot receive the full money, which means that product is deducted the percentageoftheirrevenuefortransportingmilktothecustomers(Otto,etal.,2005).
Servicedesign
This project will use the strategy of Dfs for socio-technical system innovation because this system has the purpose to change product or service without seeing technological change, which links to the digital platform to contribute the easiest way for the producers. Meaning that, this service system aims to transform product and consumptionthroughbusinessmodel innovation(Ceschin,etal.,2016).
Expectedresult
A community for small dairy producers to sell their products through the websites,allowing themtoobtainastablerevenuestream.Thewebsitewillinclude:
● Detailsonthefarm:Showingthebackgroundoffarmandthelocation.
● Milk product : Showing the details of product and the customer who wishes to purchasetheproductcanclicktoviewthemethodofproductimmediately.
● Manufacturing process : Linking with milk product page tomakepeopledecidewhat istheproductthattheywanttobuy.
This left figure shows the diagram ofthesupplychainofdomesticmilkandtheauthorviews that there are many processes and producers are deducting their money to the middlemen.
Therefore, the author generates the diagramofadigitalplatformtomakesmalldairyfarmers connect with customers and receive full money resultinginthelessstepthemoreconnecting withcustomers.
Expectedcontribution
Astheresearchquestionisfindingtheeasiestwayforsmalldairyproducerstocustomers,the right figure above shows the benefit both of producers and customers. The reason is this service system allows producers to sell their product and obtain moneybynotrelyingonthe outsource. For the customers, they will get the cheapest product because producers do not have to add morecostofoutsource.Theauthorviewsthisstakeholderasthekeycontribution ofthisprojectandwantstomakethemthebenefitasmuchastheydeserve.
Reference
Tisdell,C.(1996).AnOverviewofTrendsandDevelopmentsintheThaiDairyIndustry
Jitmun, T., Kuwornu, J. K. M., Datta, A., & Kumar Anal, A. (2020). Factors influencing membership of dairy cooperatives: Evidence from dairy farmers in Thailand. Journal of Co-OperativeOrganizationandManagement,8(1),100109.
Ongkunaruk, P. (2015). Business Process Analysis and Improvement for a Raw Milk CollectionCentreinThailand.AgricultureandAgriculturalScienceProcedia,3,35–39.
Garcia, O., Hemme, T., Rojanasthien, S., & Younggad, J. (2015). The Economics of Milk ProductioninChiangMai,Thailand,withParticularEmphasisonSmall-ScaleProducers.
Sangiorgi, D., Di Milano, P., & Junginger, S. (2015). Emerging Issues in Service Design Design in Practice View project Design for Service Innovation and Development View project.
BCG in Action. (n.d.).OfficeofNationalHigherEducationScienceResearchandInnovation PolicyCouncil|.https://www.nxpo.or.th/th/en/bcg-in-action/
Towards Sustainability of the Dairy IndustryinThailand.(2022,July13).FFTCAgricultural PolicyPlatform(FFTC-AP).
https://ap.fftc.org.tw/article/3090
Ceschin, F., & Gaziulusoy, I. (2016). Evolution of design for sustainability: From product designtodesignforsysteminnovationsandtransitions. Design Studies, 47(47),118–163.
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