Alignment between chain quality management and chain governance in EU pork chains

A transaction-cost-economics perspective

By Mark Wever, Co-authors: Nel Wognum, Jacques Trienekens, Onno Omta

 

Inter-firm coordination of quality management systems is increasingly important for meeting end-consumer demands in agri-food chains. The governance structures needed to coordinate quality management systems, especially those applying to two or more stages of food supply chains, are not well studied, though. This work was performed to fill this gap, because proper alignment between governance structures (GS) and quality management systems (QMS) is expected to positively impact supply chain performance and lower transaction costs.

 

A peer-reviewed article was recently published (Wever et al. (2010), Meat Science, 84, 228-237) in which the relation between QMSs and GSs is empirically examined for pork supply chains. Trans- action-cost-economic theory is used to develop propositions about the relation between three aspects of QMSs – ownership, vertical scope and scale of adoption – and the use of different types of GSs from market type structures to hierarchies. To validate the propositions seven cases are examined from four different countries.

 

Different choices of GS-QMS relationships

It appears that different circumstances require different choices of GS - QMS relationships. In Northern Europe we find mostly private chain-wide QMSs, like IKB (Integrated Chain management), QS (Quality Standards – German Qualität und Sicherheit), VPF (French Pork meat) and GQS (Danish quality management system) combined with market-type GSs. These chain-wide systems can be considered as industry standards that have been adopted by the largest part of actors in pork supply chains in the respective countries. Such supply chains also tend to be very large with mostly intensive farming. In Southern Europe, on the other hand, we find more integrated GSs for the intensive supply chain without a chain-wide QMS. For example, the upstream part of the fresh meat supply chain in Spain is coordinated by the feed company. Several QMSs can be found, covering different parts of the supply chain.

 

In Europe, also public chain-wide systems can be found, like PDO (Protected Designation of Origin) and PGI (Protected Geographical Indicator) systems. PDO and PGI systems are QMSs that are based on EU legislation and approved by EU government. Such systems require contracts with a coordinating board in which both government and supply chain actors are represented. only part of the supply chain, often only two stages. An example of such QMSs is the Guijelo PDO supply chain of Iberian Ham in Spain.

 

Finally we have found small specialty chains with a private chain-wide QMS on top of the industry standard. An example of such a chain is the Eichenhof chain in Germany. The GS is characterized by long-term commitment by the chain actors, while the quality level is claimed to be very high. There is a coordinating agent in this chain, which is the farmers’ organization. The retailers or butchers are not comprised in the quality system arrangements.

 

The aim of the research

With the research we aim to develop new theory on GS-QMS relationships that apply to different contexts and their impact on supply chain performance. In addition, we aim to develop advice for policy makers and industry for facilitating public and private investments, improving performance management and adaptation of quality management systems when quality demands change.