Operating Models of Chinese Agricultural Cold Chain Based on System Dynamics

Xin Shen, Qiao Liu, Dawei Zhao
2017 International Journal of u- and e- Service, Science and Technology  
This study aims to establish current main Chinese agricultural-product cold chain (ACC) models and compare the efficiency based on system dynamic analysis. In China, the operating model for ACC falls into three categories, namely, SWR model (wholesaler dominant), SS (supermarket dominant) and SDC (supplier dominant).We analyze the three models' framework and relevant practices in China, particularly describe detailed flowcharts of SWR model and SS model because SDC model is not yet mature in
more » ... ot yet mature in China. Based on the two models, we apply system dynamics theory to compare the bullwhip effects and relevant inventory level of them under stochastic demand information. Simulation results show that comparing with SWR model, SS model has competitive advantages in lower inventory, less fluctuation and bullwhip effect. Thus agricultural product cold chain driven by retailers (supermarkets) proves to be more efficient and cost-effective. efficient and cost-effective agricultural product cold chain (ACC) has become a hot issue of the whole society in China. The perspective of ACC may well be a useful organization method to regulate circulation of fresh items [3] . According to the definition of logistics and supply chain from the Council of Supply Chain Management Professionals (CSCMP), we tend to propose the definition of ACC: ACC encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities of the perishable produce under suitable condition for the purpose of meeting customers' demand. More importantly, ACC also includes coordination and collaboration with channel partners, which can be a chain structure with suppliers like farmers, intermediaries like processing companies, wholesalers and all sorts of retailing terminals, third party service providers like logistics companies, and the end customers. An efficient operation of ACC would be good at planning, implementing and controlling the flow and storage of fresh produce, service and related information from a point of origin to a point of consumption, say, from farmland to dining table. Like supply chain of non-perishable items, there are core enterprises in ACC, which could be any members in the chain. However, as far as current China concerned, few efficient ACC has taken shape, which fail to exert quick response strategy to meet the consumers' demands [4] . Some scholars [5-6] assert ACC based on the core leadership of supermarkets, in this model, terminal retailers such as supermarkets or food markets would proactively seek to cooperate with fewer and strategic suppliers in order to maintain a stable relationship. This model is partly proved its efficiency of timeliness [6] . Also some literature focusses on system dynamics or game theories to analyze complicated systems including supply chain [7, 8] , their results direct to an important observing indicator, inventory level of the chain, in which bull-whip effect take on and we would like to shed light on the referent. The best way to solve the bullwhip effect is to shorten the whip, and then such changes also will be small [9] . Through efficient supply chain management system, bull-whip effect can be reduced, directly minimizing the operating costs of enterprises to achieve the ideal of real-time response to customer demand [10] . Similarly, efficient integration of ACC solution is considered to be the most effective weapon. But some traditional operation models have to be changed to achieve such efficiency. We believe that the key problem is not lying on how many cold facilities are applied but how they are organized and operated for the cold chain, especially on the distribution and inventory management methods. In this study, we aim to apply systematic dynamics theory to analyze the operation models of ACC as it has the recognized basic characteristics of complexity and dynamics. Before that, we would describe the relationship of different inventory levels and random demand information according to different models in order to determine which model is comparatively efficient and effective. Primary Models of ACC Before analyzing the systematic dynamics of ACC, it is necessary to shed light on the primary models in China. Currently, Chinese ACC has three primary models in which key chain member dominate chain efficiency. The first model is called SWR model, where S, W and R respectively means suppliers, wholesalers and retailers. This model is controlled by the middle link, say, wholesalers. The second one is named as "SR model", where S and R are the abbreviation of suppliers and retailers, in which the supplier is subordinated to the retailer. The third one is SC model, where S represents supplier and C means consumers. The plots of the fluctuating demand look like a whip, which is why the name for the effect called the bullwhip effect. The further from the originating signal, the greater the distortion of the wave pattern. In a similar manner, forecast accuracy decreases as move upstream along the supply chain [14] [15] . This signal becomes more and more chaotic and unpredictable as moving away from consumer purchasing behavior [16] [17] . SWR model consists of three agents, namely, supplier, wholesaler and retailer. There are only two agents in SS model, supplier and supermarket. For the system interface of them both model begins from the supplier and end at end user.
doi:10.14257/ijunesst.2017.10.6.08 fatcat:hxumkntgfvhhzezpa4d6puj7ny