Horticultural supply chain network design of small and medium-sized enterprises

Abstract

This study investigates supply chain networks of small and medium-sized companies in the ornamental plants, perennials and cut flowers business in non-auction-driven markets such as Germany, and formulates a mathematical model depicting prevalent network design options. The results are based on an embedded multiple case study featuring in-depth expert interviews with people in charge of corresponding companies. The typical logistics network structures and associated product flows are identified and systematized that represent the supply chains of producers, wholesalers and retailers, as well as their vertical integration. These supply chain networks are analyzed in terms of characteristics and context-specifics and finally transferred to a mathematical model formulation. We find that direct deliveries from producers to retailers are preferred despite production-related lead times of several months or more because of shorter transportation times and therefore better product quality. Wholesalers are mostly used to compensate for product surpluses or deficits, and can offer short lead times. Our results show that the whole sector is dependent on reliable information about the market situation that is needed for accurate planning among the uncertainties the sector faces regarding aspects such as quality fluctuations, pests, trends in demand, and weather impacts on plant growth and final customer demand. This study is the first to provide a systematization and model of logistics systems in the horticulture business. It thereby aims at building the basis for a decision-oriented future stream of research, investigating and optimizing logistics in horticulture in a sustainable manner.