A systems approach to value management and performance improvement: a case study of fresh vegetable supply chains in Nairobi, Kenya

Macharia, John Mwaura (2012). A systems approach to value management and performance improvement: a case study of fresh vegetable supply chains in Nairobi, Kenya PhD Thesis, School of Agriculture and Food Sciences, The University of Queensland.

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Author Macharia, John Mwaura
Thesis Title A systems approach to value management and performance improvement: a case study of fresh vegetable supply chains in Nairobi, Kenya
School, Centre or Institute School of Agriculture and Food Sciences
Institution The University of Queensland
Publication date 2012
Thesis type PhD Thesis
Supervisor Ray Collins
Paul Dargusch
Total pages 379
Total colour pages 28
Total black and white pages 351
Language eng
Subjects 0701 Agriculture, Land and Farm Management
070106 Farm Management, Rural Management and Agribusiness
Formatted abstract
Due to rapid urbanization of cities in developing countries, the role of peri-urban agriculture in providing cheap food, employment and livelihoods has intensified. However, improving the performance of supply chains that link agricultural producers with consumers of their products to deliver what consumers expect while benefitting chain actors and stakeholders, has been problematic. Nairobi, Kenya, a city targeted to become a metropolis by the year 2030, faces such a predicament. About 25% of its fresh vegetables come from peri-urban chains characterized by extensive use of untreated waste water and overuse of pesticides and fertilizers. Actors also face low levels of resources, skills and technologies, and unregulated land use. Markets are congested and dirty, customer service is poor and sharing of market information is inadequate. Due to risks associated with food safety, public health and the environment, policy makers are unwilling to regulate these chains.

This study addresses some of these challenges by adopting a holistic approach to performance improvement of peri-urban fresh vegetable supply chains based on an analysis of value offered to consumers, returns to chain actors, and chains’ external environment. This approach is justified by increasing demands on three fronts: consumers who want cleaner, safer yet affordable vegetables; chain actors who require higher returns from scarce resources; and stakeholders who demand that production and marketing activities should not contaminate food supply and the environment.

Theoretically, supply chain management (SCM) may offer a framework for resolving these challenges. However, its application is beset by barriers to consumer responsiveness and whole-of-chain performance improvement, especially in agri-food chains. Literature shows that inadequate application of SCM has resulted in limited value to consumers, poor utilization of production resources, and adversarial business behaviour. There is no appropriate theoretical framework for integrating the delivery of greater value to consumers, with the improvement of chain performance as a system. Alternative approaches are required so that theory, practice and policy might be improved.

As a constructivist case study of Kale/Spinach supply chains in Nairobi, this research draws its theoretical perspectives from literature on consumer behaviour, supply chain management, performance improvement, value chain management, and systems thinking. Its methodology integrates soft systems methodology and value chain management, with data collected through documents, observations, interviews, discussions, mapping and surveys. Based on varying preferences for product, production and marketing attributes, it was possible to identify different segments of fresh vegetable consumers in Nairobi. Using a multi-step cluster analysis, 418 consumers were classified into four segments (p<0.05) which were named Prestigious Shoppers (25%), Market Enthusiasts (18%), Ethical Crusaders (41%) and Safety Sceptics (16%). Next, thematic analysis of qualitative data revealed patterns of structure, practice and interactions which together drive chain performance, while context analysis was used to map policy settings in which the case study chains operate.

This study advocates that understanding and responding to value preferences of the four consumer segments is the key to sustainable performance improvement in fresh vegetable chains in Nairobi. For example, by using less contaminated waste water and recommended levels of pesticides and fertilizers, a group of actors could produce vegetables that meet consumers’ product quality preferences, while the City Council of Nairobi, traders and stakeholders could collectively improve market conditions and customer service, and reduce market levies. Together, these changes could increase chain responsiveness by satisfying the needs of Market Enthusiasts and Ethics Crusaders (almost 60% of consumers) for cheaper vegetables, cleaner markets and better customer relationships, while simultaneously increasing returns to chain actors.

Use of a consumer-focused approach could also promote chain competitiveness. Groups of actors could utilize scarce land, water and capital at Nairobi’s peri-urban interface more efficiently if extension providers educated such groups on good agricultural practices and researchers developed appropriate technologies whose adoption would be enhanced by improved availability of credit. Collective utilization of resources could generate higher returns due to cost savings, economies of scale and more equitable sharing of profits. This approach could facilitate the supply of clean, high quality produce which satisfies preferences of Prestigious Shoppers and Safety Sceptics for fresher and safer vegetables, though at higher prices, potentially generating more income for chain actors.

Improved chain practices could attract positive policy responses that promote allocation of productive resources to agriculture, provision of effective extension and research services, better waste management, and collective development and regulation of markets. Ultimately, peri-urban agri-food chains may become part of Nairobi’s urban planning processes.

Methodologically, this study develops a framework for integrating consumer value, chain practice and policy responses. The framework provides a basis for system-wide performance improvement in agri-food chains in developing countries through business models based on shared interests among consumers, chain actors and public stakeholders. The study also develops recommendations that could promote better management, enabling policies, and more research and development in peri-urban agri-food chains in Nairobi. These recommendations may prove useful in other developing countries.
Keyword Agri-food supply chains
Cluster analysis
Context analysis
Developing countries
Globalization and urbanization
Performance improvement
Thematic analysis
Value management

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Created: Mon, 05 Nov 2012, 09:30:50 EST by John Macharia on behalf of Scholarly Communication and Digitisation Service