Contemporary Logistics Chain Management Model

Contemporary Logistics 12 (2013) 1838-739X
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Contemporary Logistics
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The Wholesale Market as the Core of Aquatic Products Supply
Chain Management Model
Wei FANG, Yangyang TAN
Commercial College of Central South University of Forestry & Technology, Changsha 410004, Hunan, P.R.China
KEYWORDS
Aquatic product,
Wholesale market,
Supply chain management
ABSTRACT
In recent years, the aquatic industry develops very fast, and it has become the fastest
developing and the most profitable sector of agriculture in China. However, there are many
issues in development. The paper had a discussion about aquatic products supply chain
management model which led by wholesale market that based on supply chain management
theory, and in hopes of making a little contribution to better development of aquatic industry.
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1 Introduction
Aquatic industry has a long history in China, especially; it developed very fast since ‘reforming and opening-up’. However, in
today's new market environment, competition among modern enterprises has gradually transformed into the competition among
supply chain[1]. It is urgent to develop aquatic product supply chain system, which is the strategic choice to improve Chinese aquatic
enterprises’ competitiveness and to efficiently allocate aquatic resources.
I had read a large number of relevant literatures, the research about aquatic products supply chain management can be summarized in
the following four categories: (1) Aquatic products processing enterprises as the core of supply chain management. This model is that
the aquatic products processing enterprises through their aquatic breeding or fishing, or from the upstream agent, fisheries
cooperatives purchase aquatic products, and then categorize, primary or further processing, processing of aquatic products formed by
downstream middlemen or retailers supply to consumers[2]. (2) Supermarket as the core of aquatic products supply chain
management. The model refers to the consumer demand as the center, supermarket chains through investing in the construction of
aquatic products supply base or to establish stable relations of cooperation with fishing companies, fish farmers, farming specialized
households by fishing associations, through self-built water Product Distribution Center, to provide aquatic products. (3) The thirdparty logistics enterprises as the core of the aquatic products supply chain management. The model is that third-party logistics
company which is able to provide integrated services, signs a contract with aquatic products producers, processors, retailers and so
on, requires them to production, sales, service, distribution of benefits and risk-sharing and other rights and obligations, to establish
benefit-sharing, risk-sharing partnership, so that to form the aquatic products supply chain management that link to the large modern
market and large circulation. (4) The wholesale market as the core of aquatic products supply chain management model. The model
is that aquatic products wholesale market connects with the aquatic products supply base, aquatic products distribution company,

Corresponding author.
E-mail: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI:10.5503/J.CL.2013.12.005
41
specialized cooperatives, form a model of integrating aquatic production, acquisition, processing, storage preservation, distribution
and provision of market information.
But, at present, in china, the research on aquatic product supply chain management theory has just begun. Some experts and scholars
had done research on value chain and industry chain of aquatic product to a certain extent, but lack of research on the aquatic
products supply chain management theory. The paper analyzes the current situation of aquatic product supply chain management and
learns the foreign advanced experience, then puts forward a theoretical framework that the wholesale market as the core of aquatic
product supply chain management, which enriches and develops the aquatic product supply chain management theory in China.
2 Why Choose Wholesale Market as the Core of the Aquatic Products Supply
Chain
These four models have different features and advantages, but which one is the most conducive to aquaculture development? I think
that the wholesale market as the core of aquatic products supply chain management has an advantage. From three aspects to consider,
first of all is "quantity", the proportion of aquatic products in circulation in the whole aquatic products market, about 70% circulation
of aquatic products is through the wholesale market [3], in other words, there is great product circulation, information flow rate, capital
flows in wholesale market. The second is the position of the "core" in the entire supply chain. Producing and processing enterprises
are in the most upstream location, away from the end consumer, this may lead to that it is hard to reach strategic alliances with
downstream distributors. The supermarkets, for consumers they are closest, consumers can get faster feedback, but supermarkets only
can meet the end supermarket retail business, it is very difficult to want supermarkets to take the aquatic products supply chain
management. However, the wholesale market access to producers, under bear distributors, consumers, just at the critical link in the
supply chain. Third, from the view of the existing infrastructure, with the continuous development of wholesale markets in recent
years, the wholesale market has begun to take a core foundation. Here, it is the main choice of aquatic products wholesale market as
the core of supply chain management model.
3 Analysis of the Situation of Aquatic Products Supply Chain Management
Model That Wholesale Market as a Core
The wholesale market as the core of aquatic products supply chain management can be largely expressed in the following figure:
Produce—currency
Aquatic
product
Supplier
Aquatic
product
Producer
Currency—consume
Production
base
wholesale
market
Sales
wholesale
market
Retailer
Consumer
Logistics
Business flow
Information flow
Chart 1 The structure of aquatic product supply chain
We can see very intuitively from the figure that the whole supply chain is divided into two parts taken by the wholesale market: one
is the "production - distribution", means from seafood producer to the wholesale; the other one is the "distribution - consumers", that
is from the wholesale market to the consumers. The reason is that the wholesale market adopted a distribution form the most
primitive one with business flow and logistics flow together with each other, which blocked the capital flow, and also blocked the
information flow of demand and supply of seafood supply chain. The spot trading mechanism determines that there is only pure
competition, and can be no cooperation and coordination, this kind of aquatic products supply chain is a broken one, or only partial
short one.
The characteristics of this type of supply chain are as follows: Firstly, market transactions are mainly in wholesale market, that only a
short transactions between the upper and lower links, there is little link between the links and the supply chain that is not stable;
secondly, participants are numerous and dispersed, trading information is found difficult and disorderly, and price information is
distortion, easy to product quality supervision difficulties; thirdly, chain link belong to different subjects, although can arouse the
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enthusiasm of individual participates in the market. Because interest, information acquisition, negotiation skills, supply chain
integration as low, weaken the power of the individual concentrated release.
4 Problems in Aquatic Products Supply Chain Management Model That
Wholesale Market as a Core
From the above analysis of the current situation, China’s aquatic product at this stage is only a broken supply chain which is l ow
integrated and inefficient. Supply chain under this state cannot play their competitive advantage, because the full sense of the supply
chain is to optimize the integration of various individual sectors to play their overall competitive advantage. There are many reasons
for the status; the following will analyze several key issues:
4.1 Wholesale Market of Aquatic Products does not play a central role in the supply chain
The supply chain fractured at the wholesale market, largely caused by the limitation of wholesale market itself. Although China's
aquatic products wholesale markets are great in the face of impressive building, but still lag behind the development of aquatic
products industry, still in its infancy. At this stage, China's wholesale market infrastructure of aquatic products is inferior; market
development is disorder; the market of the main organization is low, management is not standardized; information network lag, poor
information dissemination channels[4]. Moreover, the wholesale market and origin separation will inevitably lead to supply chain
failure [5].
4.2 The members of the supply chain does not form a strategic alliance
Node enterprises in the supply chain with independent legal person status, and have no administrative affiliation, they each have
different interests and ideas, so there is bound to conflict of interests between each other. The essence of supply chain management is
try to eliminate the contradictions and conflicts between enterprises, and coordinate the individual interests of participants and the
collective interest, in order to made the all trading partners in the supply chain changing to the "competition-cooperationcoordination" relationship from simple competition relations [6]. In this relationship, coordination and cooperation is the main,
competition for the second, or that the interests of all parties to coordinate the distribution of the main competition for the times, to
seeking long-term interests. Such coordination and cooperation do not only to achieve shared interests, but also of risk.
4.3 Asymmetric information in aquatic product supply chain
Information chain is blocked because of high cost of the wholesale market information collection, thus appears the phenomenon of
information asymmetry. The influence of information asymmetry is shown in two ways. On one hand, for farmers, given the
uncertainty of demand information, large fluctuation of wholesale market price will be emerged. And this is not good for a balanced
supply and demand of aquatic products, and increase the farmers’ market risk. On the other hand, for consumers, because the
uncertainty of supply information, consumers lose confidence in the quality of products. Spot trading lacks sufficient information on
product quality and adverse selection occurs, that is the low-quality products that will make high-quality products get out off the
market.
4.4 The lack of trust between members
Trust plays a main role in coordination to the aquatic products supply chain as soft constraint, if the supply chain members lack the
adhesives of node, it will block the coordinating to the supply chain. After the untrusting, the partner feels will be used and be
deceived, which result in the losses of psychology, even of cooperation among members. This not only make influence on the normal
operation of the supply chain which based on the relationship, but also increase the cost in supervision and incentive of the aquatic
products supply chain members when they cooperate in future, so as to affect the next round of trust and cooperation between aquatic
products supply members, and finally affect competition ability of the whole aquatic products supply chain.
4.5 The interest-distribution mechanism between members is imperfect
The main reason for every participate of supply chain party in the alliance parties is the driving of interest. In order to pursue higher
profits, the parties go together through a contract or cooperation. Therefore, the reason of the forming of the supply chain is interests.
If every node member of the supply chains belongs to different ownership, and every member tries to make his benefit maximization,
so the targets of different node members may have conflict, which means that each entity only consider their profit margins without
considering that of the whole system, which result in the uncoordinated of the whole aquatic supply chain, then result in decreasing
of the whole profit [7].
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5 Optimization and Upgrading of the Aquatic Products Supply Chain
Management Model Which Lead by Wholesale Market
5.1 Wholesale market as the core of the aquatic products supply chain
At present, there is much competition between the various participants in the China's aquatic products supply chain, but little
cooperation and coordination. This will inevitably lead to the logistics chain, aquatic cut chains, capital flow chain of fault, so it is
necessary to integrate the aquatic products supply chain of traditional optimization.
Supermarket
Consumer
Production
base
Market
Wholesale
Processing
enterprises
Fisherfolk
market
Intermediary
organizations
Guesthouses,
hotels,
schools, etc
Foreign
markets
Platform of supply chain information management
Logistics
Information flow
Chart 2 Wholesale market as the core of the aquatic products supply chain
The model ensure an ample supply, trough the aquatic breeding business between Seafood market and upstream breeding enterprise.
The fish farmers are connected by the farmers associations, cooperatives and other intermediary organizations. In the downstream,
supermarkets and chain stores achieve the exchange of information, using the pos systems and supply chain management platform.
The model timely delivers the market information to the producer, through the trading platform. The cooperation between wholesale
and co-processing enterprises is conducive to the sale of aquatic products. Moreover, the wholesale provide distribution services for
the downstream, not only strengthen the function of markets, but also Increase the income of the market. In addition, connecting with
the other provinces, that provides a window for the export aquatic products.
5.2 Strengthen collaboration between partners in aquatic products supply chain
The aquatic products supply chain got integration and optimization through the wholesale market as the core, the wholesale market
establish stable strategic alliance with production base, protecting the wholesale transactions stable and sustainable. In addition,
establishing cooperative relationship between wholesale market and production base to a certain extent, overcoming the problem of
uneven distribution channels of interest, safeguarding the interests of fish farmers deserve. Interests of all parties be effectively
regulated, can the various participants in the supply chain to achieve true collaboration and synergy to the whole aquatic supply chain
to achieve maximum benefit.
5.3 Improve the restraint mechanism of supply chain operation
The successful implementation of seafood supply chain management requires a good restraint mechanism. The most important of
aquatic products supply chain management is that, each member should fully realize cooperation as the foundation of the overall
benefit, so that the supply chain truly becomes a risk and profit sharing economic community [8]. Aquatic products supply chain
operation restriction mechanism has the following three :
(1) Market restriction mechanism. By the market supply and demand, competition among market players, price changes and their
conversion, reciprocal causation to form a restraint mechanism.
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(2) The contract restriction mechanism. Individuals under the voluntary, equality and mutual benefit, can be sign a legally binding
signing of sales contracts, financial support contracts and the introduction and development of scientific and technological
achievement and so on, the contract specified the right and Interest of all parties.
(3) Internalization of transaction costs. Through the system of non-market arrangements, seafood supply chain among various
interest bodies within the original transactions in the external market of raw materials, semi-finished and finished goods internalize
transactions, thereby reducing circulation, reducing transaction costs, increased the main income.
5.4 Upgrading of aquatic products wholesale market
In aquatic products supply chain management leading with wholesale market, the wholesale market as the core enterprise in the
supply chain position is linking production and processing enterprises, and the terminal retailers, take the lead of the entire supply
chain. At present, the existing traditional wholesale market in China can not undertake this task, so upgrading the wholesale market is
an inevitable trend in development.
5.4.1 Large-scale wholesale market
To wholesale market, the scale means benefits. The supply chain management which lead by wholesale market, order the wholesale
market should bring some advantages, such as reduce logistics cost. So this require wholesale market must develop on expanding its
scale - - especially hang the degree of organization. At this stage, it can call for assistance which from government, and combine the
reform of domestic wholesale market, make the few actual strength enterprise can merger, combine, share, hold or link other weak
ones, to reach the target, which expand the size, hang degree of organization, and form BIG wholesale market, then expand other
business area. On one side, we can exploit own band of wholesale market to control the product area, on the other side, we can
combine the retail chain to control channel terminal. Thus strengthen the predominance of wholesale markets in supply chain, refocus
and develop the supply chain alliance of whole aquatic product with core of wholesale markets, set up the product circular net in the
nation, on which develop to international market based.
5.4.2 Outstanding logistics capabilities
Only have its own core competence, can wholesale markets become the core enterprise in supply chain. The core competence can be
the brand, the capabilities of product development and design, the logistics capability, or channel resources, so on. However, the
aquatic products character in short life, short warranty, and demand the relatively high storage conditions and transport conditions, so
if the wholesale markets want to be the core businesses in seafood supply chain, in addition to coordination, they must strength their
core competence, logistics capabilities. The logistics capabilities is the mobile ability of aquatic products with high efficiency, low
cost from the supplier to receiver based on the actual need and organically integrate the aquatic transportation, storage, handling,
packaging, distribution processing, distribution, information processing and other basic functions.
5.4.3 Modern information technology support
Establish and develop aquatic products supply chain management driven by wholesale market based on modern information
technology, information construction and building of information platform. Because the wholesale markets take on the functions of
logistics distribution centers to carry out orders, shipping, billing processing, as well as accessing to storehouses, sorting,
classification, packaging, collecting and transferring information, and all these functions will be widely used in computer network
technology, modern communications technology, automation technology, modernization, automation management and control. At
the same time, establish and improve integrated information system of wholesale, manufacturers and retailers to enable sharing
information throughout the supply chain, which is the important condition of efficient supply chain management.
6 Conclusion
The paper analyzes the issues and current situation of aquatic product circulation, then puts forward some countermeasure that
optimization and upgrading of the aquatic products supply chain management model which lead by wholesale market. So that
eliminate the broken chain and improve the efficiency of the whole supply chain.
Acknowledgement:
1
Key Research Project of Education Department in Hunan Province (09A107)
Foundation item: Social Fund Project in Hunan Province (08YBB012)
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