|| Home || SEARCH|| Contact || Free Research Publications  ||  Eshop || Privacy Statement ||

Exporting Wildflowers to Japan - 
Developing a supply chain for a new rural industry

by Lilly Lim-Camacho, Ray Collins and Tony Dunne

January 2008

RIRDC Publication No 07/173  RIRDC Project No UQ-120A

Executive Summary
What the report is about
New rural industries have long been recognised as a significant contributor to Australia’s rural economy. Their development is based on the success of the firms within them, and previous research has identified that not only do individual firms impact on this success, but also the supply chains that they are part of. In Unlocking successful new rural industries: Is supply chain management the key? (RIRDC project no. UQ-89A), three types of new rural industry supply chains were identified: Achievers, Idealists and Operators. These types of supply chains were identified on the basis of a conceptual framework identifying factors necessary in successful supply chain management. Case study supply chains in the Australian wildflower industry were classified as Achievers and Idealists. This research extends the results of the previous study to investigate changes in the supply chains featured.

In addition it brings together the importance of market characteristics to the success of such supply chains.

Who is the report targeted at?
This study identifies how the level of implementation of supply chain management strategies impacts on the way firms in a native flower supply chain meet their customers’ needs. By providing a better understanding of the real needs of the biggest market for Australian cut flowers in Japan, and what is required of supply chains to meet these needs, this study will be able to provide firms in the Australian native flower industry with a strategy to improve and sustain their competitive advantage.

Background
Japan is an important market for Australian wildflowers and foliages. It is a complex market that is still not widely understood by a large majority of the Australian flower industry. The Japanese flower supply chain, made up of importers, auction markets, wholesalers and florists, can be an entangled web for Australian products if they are merely ‘sold’ as opposed to being ‘marketed’. In order to market Australian products better into the Japanese flower market, the characteristics and requirements of customers need to be understood.

Aims/Objectives
The main objective of this research is to evaluate the performance of three Australian native flower supply chains over a prolonged period of time and assess how these chains are able to meet their consumers’ needs and therefore maintain a competitive advantage. It focuses on the changes in supply chain relationships in the Australian export flower industry, and how the management of these relationships impact on the way selected supply chains meet their market’s needs.

Methods used
The report addresses the issue of meeting the needs of target markets from two perspectives: (1) understanding the characteristics of the market being served, in this case, the Japanese floral market, and (2) understanding the characteristics of the firms supplying the market, in this case, Australian growers and exporters and their Japanese importers.

To understand the workings of the Japanese floral market, a description of the floral supply chain from importer to florist was provided. Following this, a market segmentation approach was used to identify the characteristics of the Japanese floral market for Australian wildflower and foliage products. Three segments were identified on the basis of their purchasing habits: auction loyals, nakaoroshi (intermediate wholesaler) loyals and trailblazers. The first segment, as the name suggests, are heavy auction purchasers. On the other hand, nakaoroshi loyals prefer to purchase from intermediate wholesalers, with the advantage of being able to inspect the product prior to purchasing. The third segment of the market, trailblazers, are florists who use a combination of methods in purchasing products. The internet and purchasing directly from growers are part of these purchasing processes.

The degree of change that they have gone through in four years, and assessing their level of supply chain management. The degree of change was significant in all three cases, and supply chain analysis showed how one supply chain maintained its Achiever status based on its ability to sustain a competitive advantage by collaborating with its customers and creating and sharing value. The two other supply chains were classified as Idealists and Operators. Idealist supply chains are those that have a supply chain orientation, but are unable, for various reasons, to implement supply chain strategies to their own and their partners’ advantage. Operators are firms who do not intend to implement supply chain strategies because they do not see the benefit in partnering with firms in a specific chain.

Results/Key findings
It was identified that Australian wildflower supply chains need to work on the following issues in order to meet the needs of the Japanese floral market:

• consistent quality and standards
• reliable supply
• reasonable prices
• reliable information
• standardised fumigation practises
• improved bunching
• more information on product characteristics and care instructions (if required).


Three factors identified for success in supply chain management were: relationship management, information management and value creation. The cases showed that:

• Relationship management is important in creating value that leads to competitive advantage. This is because relationships are difficult to imitate.
• Information management is critical in developing relationships. It is also critical in conveying the value created by the chain to their target customers.
• Creating value, not only for end customers, but also for firms within the chain is essential in fostering the development of collaborative relationships.


However, the results do not discount the importance of other factors such as a supply chain orientation and operations and logistics management in creating a competitive advantage. This validates the conceptual framework developed in UQ-89A.

Recommendations and implications
It is important to note that while the needs of these segments may be different; meeting the needs of all segments is based on the concept of focussing on the customer and understanding what their needs are.

This research shows that by understanding their markets better, firms and their chain partners can better meet specific needs if they are able to target segments of the market that they can serve given their capabilities. Firms must be flexible and adaptive to the changes in their internal and external environments in order to cope with these needs. Responsive and flexible chains are better off than firms who work on their own.

 


Site map Contact us Feedback Links Disclaimer Privacy Statement