ABSTRACT NUMBER – 002-0401

SUPPLY CHAIN METRICS: A CASE STUDY IN AN AGRIFOOD CHAIN IN BRAZIL

Second World Conference on POM and 15th Annual POM Conference, Cancun, Mexico,

April 30 - May 3, 2004.

Susana Carla Farias Pereira

Doctor in Business Administration at Fundação Getúlio Vargas, São Paulo – FGV-EAESP

Professor of the Production and Operations Department at FGV-EAESP

Rua Aimberê no. 1775, Apt. 62, Sumaré, São Paulo – SP 01258-020 Brazil

Fone/Fax: 5511-32817780 E-mail: sfpereira@fgvsp.br

João Mario Csillag

Doctor in Business Administration at Fundação Getúlio Vargas, São Paulo – FGV-EAESP

Professor of the Production and Operations Department at FGV-EAESP

Av. Nove de Julho, 2029 10º andar, São Paulo – SP – Brasil . CEP: 01313-902

Fone/Fax: 5511-32817780 E-mail: csillag@fgvsp.br

ABSTRACT

The purpose of this project is to further understand supply chains metrics, using the

managerial perspectives and concepts presented in the literature about supply chain management,

analyzing agro-industry, more specifically, the so-called poultry chains.

Allow us to consider the small accumulated and systemized knowledge about

management, and more specifically, about the appraisal of the performance of chains, especially

in Brazil, which gives us the foundation of this study that is based on qualitative research,

through an exploratory method. Having this considered, the research design adopted was

exploratory, by means of using the case study method.

The supply chain, object of analysis, was mapped and delimited using a company that

represents the industrial macro-segment, denoted as a focal company. After elaborating the

protocol of the case study, semi-structured interviews were conducted with directors, managers

and technicians of the focal company. A total of 38 semi-structured interviews were tape-

recorded, adding up to a total of 30 hours of recordings.

1. Introduction

The meat market in Brazil and the world gets more and more competitive and

complex. This complexity results especially from the life cycle and perishableness degree of the

product; from requirements of strict sanitation control; and from the growing demand for

diversification and value adding, even in the case of a market whose main product is, essentially,

a commodity.

A competitive and complex market such as the poultry market requires continuous

association of technical knowledge to managerial competence to meet growing consumer

concerns about health, contamination risks, indiscriminate use of antibiotics and residue

destination.

Brazil is one of the biggest food producers in the world, especially in grain and

animal protein production. The Brazilian meat market got more important in the last decade, and

this tendency was observed especially in the poultry meat market. Poultry meat production in

Brazil has grown considerably in the last twelve years, varying from a total of 2,055,287 tones in

1989 to 6,735,696 tones in 2001. From this total, 5,486,408 tones were directed to the internal

market, and 1,249,228 for the export market. The major special slaughtering poultry meat

importers from Brazil, such as the deboned chest, are the United Kingdom, Holland and

Germany (Avicultura Industrial, 2003).

Poultry meat is gaining a lot of space in the international market, but the favorite

meat in Europe is still pork. In Brazil, poultry meat, since production cycle is smaller and has a

reduced cost, besides being a tasty meat, tends to gain space quicker than pork meat.

Nonetheless, to keep the position accomplished and even advance towards new

markets, Brazilian companies that participate in the agrobusiness of meats and industrialized

poultry products have to invest and enhance their managerial competencies. Among managerial

competencies necessary to Brazilian agrobusiness development, one deserves special attention:

the capacity to manage and assess supply chain performance, integrating suppliers and clients.

Trying to understand the performance management and assessment is itself a tough

task in individual organizations, but the understanding and application of these concepts in

chains, or among a series of companies individually considered, presents itself as a challenge

both for the academy and the business practice.

Supply Chain Mmanagement (SCM) arises as an integration methodology for the

whole supply chain through collaboration between the many actors of what is called the value

chain. All activities need to be approached according to their participation in the processes

responsible for organization outflow and its interaction with other chain members.

Considering the issues and tendencies exposed herein on the immediateness and

relevance of the studies on Supply Chain Management and Agrobusiness for the national

economy; and considering the premises that: (1) SCM happens through relationship management

and; (2) supply chain performance assessment is an integrating part of SCM, the study

problematics proposed for analysis in this paper is unfolded in the following specific component:

What are the criteria or performance indicators used in meat and poultry

industrialized products supply chain assessment in Brazil?

Considering the problematics previously proposed, this research aims at identifying what

the criteria or performance indicators used in meat and poultry industrialized products supply

chain assessment in Brazil are.

3 – Supply Chain Management: theoretical foundation and concepts

SCM arose in response to the need to integrate the different action areas and participants

of a supply chain, setting an evolution of business management systems that transcends the

company's borders and starts to approach the chain as a whole.

Supply chain management represents a change to the paradigm that extends the

cooperation and competition concepts, according to which cooperation is no longer seen as a

process between a set of commercial partners, but as a process that happens along the whole

network (SPEKMAN et al, 1998). The result of these cooperation connections is a network of

interconnected and interrelated companies with the purpose of obtaining competitive advantage

for the whole network.

We should add that Spekman et al (1998) go further when they state that

cooperation, in spite of having become necessary, is only a starting point for SCM. For them, the

next step towards building a SCM is coordination, through which previously established flows

and information are shared in order to allow implementation of just-in-time systems, electronic

data interchange (EDI) and other mechanisms for direct connection between companies.

The characteristics related to SCM, according to Cooper and Ellram, 1993 (quoted by

SKJOETT-LARSEN, 1999) are the following:

- Inventory management encompassing all channels (channel wide).

- Efficiency in network cost as a whole.

- Long or indefinite time horizon.

- Joint planning, information sharing and monitoring.

- Coordination of multiple channel levels.

- Shared vision and compatible corporate culture.

- Reduced supplier basis and focus on relationship development with key suppliers.

- Fair risk and reward division.

When adopting an SCM philosophy, companies have to set forth managerial

practices that enable guiding actions and behaviors according to this philosophy (MENTZER et

al, 2001). According to these authors, the activities necessary to SCM philosophy

implementation are many: integrated behavior; information sharing; risk and reward sharing;

cooperation; same objective and focus on customer service; integrated processes; and also

standards for building and keeping long-term relationships.

Bowersox and Closs (2001, p. 99) state that the basic principle that fundaments

supply chain management, through which we aim at accomplishing and improving efficiency, is

information sharing and joint planning. According to these authors, SC perspective depends on a

coordinated effort, oriented to efficiency improvement and greater competitiveness. Actually, the

purpose of building cooperation relationships in the network aims at increasing competitiveness,

based on the understanding that cooperation reduces risk and increases efficiency of the whole

process, making it possible to eliminate duplicate and useless work, as in the case of inventories.

3.1 Supply Chain Performance Assessment

Research indicates that companies have not yet been able to operationalize, and some

even to completely understand the supply chain management concept. The result of the research

done by Spekman et al (1998) indicates that the participants of a supply network do not share the

same values and believes concerning GRS advantages. According to the results, partners in a

network do not have the same vision, and do not react to the same set of performance metrics.

Van Hoek (1998) points out that supply chain management is characterized by the

control based on relationship network and process integration between functional, geographic

and organizational interfaces. According to the author, this change in the form of supply chain

control - which is no longer based on propriety and vertical integration to be based on a

relationship network between interfaces - indicates the relevance of developing supply chain

performance assessment systems research.

Van Hoek (1998) defends that the new characteristics configuring supply chains have

effects over performance assessment of the activities developed in them. According to the

author, traditional performance measures may not be applicable to this new reality, and it is well

possible that traditional approaches to performance measurement have to be eliminated to allow

new performance assessment measures and systems for developed supply chains.

According to Beamon (1999), research on the subject is generally focused on the

analysis of performance measure systems that are being used in supply chain analysis, and

performance measures are divided and studied in categories. Starting from these categories,

general rules or models are built, through which performance measure systems may be

developed for different types of system.

Gilmour (1999), on his turn, states that supply chain performance study is

traditionally marked by the emphasis on logistic activities, but the fact that companies are

becoming more customer-oriented is causing migration of the focus on study and logistic

activities performance measures to the focus on the capacity of generating value to the consumer.

We point out that this focus change does not intend to deny the need to use operational measures

connected to logistic performance, but it points out the need to develop a new set of metrics that

enable assessing how supply chain processes contribute to delivering value to the consumer.

Van Hoek (1998) presents three steps that may be fundamental to the development of

a new supply chain measurement and control approach: extension of chain definition;

development of new measures and benchmarks based on these measures; and development of

tools that may help implementing a new measurement approach.

Beamon (1999) presents two ways of analyzing and assessing performance

measurement system efficiency, which are: through the existence or not of some characteristics;

and through benchmarking. The characteristics that, according to the author, are found in

efficient performance measurement systems and that may be used to assess these systems are (a)

inclusion capacity, in that all pertinent aspects are measured; (b) universality, which allows

comparisons under different operational conditions; (c) measurement capacity, necessary data

may be measured; (d) consistency, which implies knowing whether measures are consistent with

organization objectives.

Caplice and Sheffi, 1994 (quoted by MCINTYRE et al, 1998) state that good metrics

presents the following qualities: (a) validation, if reflected by the measured process; (b)

soundness, if resulting from its wide acceptance; (c) usefulness, if easily understood; (d)

integration, if promoting coordination between functions; (e) economy, if adding more value

than cost; (d) compatibility with other existing information systems; (e) enough detail level; and,

(f) behavioral soundness, as it aligns people's actions to organizational purposes.

3.2 Supply Chain Performance Measures

Quantitative performance measures are frequently used to replace qualitative

measures in the analysis of a system's performance. This happens because qualitative

performance measures are indefinite and difficult to use, while quantitative measures are

available and have been used for a certain time. We also point out that quantitative measures not

always describe a system's performance adequately, and they may become indefinite and

difficult to use just like qualitative measures (BEAMON, 1999).

Research developed by the Council of Logistic Management (1995, p. 220) identified

that the number of indicators customarily used by world class companies to assess logistic

performance has increased along the years, and there is a tendency to set measurement systems

that encompass five performance areas: assets, cost, consumer service, people quality and

productivity; and equipment.

Beamon (1999) arguments that choosing performance measures is a critical step to

the project and assessment of any system. The bigger and more complex a system is, the bigger

the difficulty in choosing a performance measure adequate to analyze a chain, due to the

complexity inherent to this system.

Research done by the Council of Logistic Management (1995, p. 237) identified that

world class companies are developing metrics to assess supply chain performance approaching

other dimensions different from cost, quality and customer service. It is worth registering that the

research mentions only a few measures such as cash to cash cycle, total chain inventory, total

inventory days of supply and consumer sales level.

Different organizations are proposing common measures for chain performance

assessment. An example of this initiative is a set of metrics proposed by a consortium between

industries and professors with the purpose of facilitating communication between chain partners

(CLM, 1995, p. 239).

According to Beamon (1999), although different types of performance measures are

being used in supply chain modeling, two are predominantly used in SC models: cost and cost

combination; and response to consumer. These performance measures have been used in the

models as purposes that may be minimized or maximized, according to the different operational

restrictions.

Table 3 - Performance measures used in Supply Chain modeling

Measures Authors (Year) Cohen and Lee (1988) Cohen and Lee (1989) Cohen and Moon (1990) Lee and Feitzinger (1995) Pyke and Cohen (1993) Pyke and Cohen (1994)

Cost

Tzafestas and Kapsiotis (1994) Cost and Activity time Arntzen et al. (1995)

Altiok and Ranjan (1995) Christy and Grout (1994) Cook and Rogowski (1996) Davis (1993) Ishii et al. (1988) Newhart et al. (1993) Towill (1991) Towill et al. (1992)

Cost and Response to consumer

Wikner et al. (1991) Response to consumer Lee and Billington (1993) Flexibility Voudouris (1996)

Source: based on BEAMON, 1999

According to Beamon (1999), other performance measures have already been

identified for supply chain analysis, but due to its qualitative nature they have not yet been used

in chain modeling research. For an example, we cite: consumer satisfaction, information flow,

supplier performance, and risk management.

Beamon (1999) points out some limitations of the measures used to assess supply

chain performance:

- using a single measure: although it is simple, it will not likely result in an adequate

performance system description, because it ignores the interaction between different

SC characteristics and the critical aspect of strategic purposes. On the other hand, it is

important to register that although using many performance measures is common in

practice, it is not common in supply chain modeling.

- using cost as only performance measure: although cost is an important performance

measure, many studies point out limitations concerning its use as the only

performance measure. The authors also arguments that existing supply chain models

are restricted to traditional cost measures and do not use SC cost strategic

management advantages.

- inconsistency with strategic purposes: although strategic purposes are usually directed

to many performance measures, which are not always clearly defined, it is vital that

performance measures be related to the organization's strategic purposes.

- not considering uncertainty effects, which result in incapacity of the system to adapt

to changes.

4. Empiric Research Methods and Procedures

Yin (2001, p. 23) states that research strategies may be used for three purposes:

exploratory, descriptive or explanatory. Considering this statement, it is possible to infer that

there may be exploratory, descriptive or explanatory case studies. Research strategy is defined as

the "(...) different manner of collecting and analyzing empiric evidences, according to its own

logics", (YIN, 2001, p. 21).

The research design adopted for this research was the explanatory, through use of the

case study method. The decisive factor that led to choosing explanatory research was the fact that

the theme was recent and not much contemplated in the literature.

The purpose of the case study may be to describe, test or develop a theory

(EISENHARDT, 1989). In the present case, the case study is used with the purpose of

contributing to build a theory. According to Eisenhardt (1989), building a theory is a core

activity in organizational research, directed to develop hypotheses that may be tested or else to

develop a theory that may be generalized.

4.1 Case Study Components

Yin (2001) presents five components that are supposed to compose a research project

that adopts the case study method: study questions, propositions, analysis unit, proposition data

and result interpretation criterion; all components are individually explained as follows.

This research started from two premises:

P1: Supply chain management happens through relationship management.

P2: Supply chain performance assessment is an integrating part of supply chain

management.

These premises were the basis to contextualize the approach to the research question

and to formulate specific research issues. The specific component of this research is: what are the

criteria or performance indicators used in meat and poultry industrialized products supply chain

assessment in Brazil?

The analysis units considered in this case study were relationship management and

performance assessment of a meat and industrialized slaughtering poultry products supply chain

in Brazil. The analyzed supply chain was mapped and delimited by a company representing the

industrial macro-segment, herein denominated focal company (MÖLLER and HALINAM,

1999).

We also have to register that the focal company, when accepting to collaborate in

interviews and allow access to its industrial facilities and information, requested its name, brand

and logo to be omitted, which is the reason why we have adopted the fantasy designation

"Company F" or "focal company", as a means of origin identification and description of the data

and information collected in the field research mentioned in this thesis.

The case study protocol was prepared based on the different factors related to supply

chain performance management and assessment. The factors considered reflect a variety of

issues related to SCM that are presented in the literature.

After preparing the case study protocol, a series of semi-structured interviews was

done with directors, managers and focal company technicians. A total of 38 non-structured

interviews were done, the majority of which was tape-recorded. There is a total of 30 hours of

recording. All interviews and visits were done from October of 2002 to April of 2003.

The data analysis was done in two steps. In the first step, an internal case analysis

was done, which, according to Eisenhardt (1998), is the heart of theory building starting from

case studies. The second step of data analysis was done under different perspectives aiming at

increasing the theory's accurateness and trustability. The tactics were adopted for data

interpretation in this second phase and selection of categories or dimensions according to the

research issue; and, based on the theoretical structure of this research, identification of concepts

and variables applicable to data understanding.

All recorded interviews were transcribed, and after the transcription, the interviews

were reviewed, and the first edition was carried out, in which the notes done by the researcher

during interviews were inserted. In a second moment, a new interview edition was done,

grouping the different data collected according to the themes analyzed that were part of the case

study protocol. Afterwards, a third edition was prepared with the purpose of grouping and

comparing the different interviews, aiming at identifying standards among the responses. Thus, a

database was built according to interview, type of interview and number of questions. The

answers to the same questions were grouped to build a single answer.

5. Empiric Research Results

This item was prepared based on the primary data collected in the interviews,

observations and notes done during the visits; and on the secondary data obtained in the reports

and documents supplied by the company. Also, some general information contained in the sites

of the focal company and of the different associations connected to the slaughtering poultry

chain has been considered. As detailed in the chapter on the methodology adopted, for the

purposes of this research, the relationship network was mapped based on a company representing

the industrial macro-segment, herein denominated focal company, and also Company F. This

study encompassed different levels and types of relationship in the supply network, which were

delimited based on the focal company: Company F. The study supply chain is composed of the

vertical relationships existing in the focal company network identified in this research.

It is necessary to make clear that this research did not cover all vertical relationships

existing in the analyzed meat and industrialized poultry products supply chain. We have

presented only the relationships identified as strategic or essential by the focal company. Results

were obtained from the analysis of the data collected in the interviews done with different focal

company employees, some of the focal company partners, a distributor and a logistics operator.

5.1 Focal Company and Company F's Meat and Poultry Industrialized Products Supply

Chain

The analysis unit of the present study is a meat and poultry industrialized products supply

chain in Brazil. The study chain was mapped based on a company representing the industrial

macro-segment, the focus company. The company chosen was Company F, a company focused

on production, processing and distribution of poultry and pork meat and its byproducts.

The company's operation is integrated to independent rural products that act as direct

integrated members and collaborators. The company has over 3,500 integrated members and

over 11 thousand employees in its 12 industrial units, in that 6 are exclusively aimed at poultry

production and 2 have poultry and pork operations. Each industrial unit is composed of the

following operations: Animal Food Facility, Central Poultry Breeding Farms, Incubation and

Slaughter. Only two units have Industrialization operation, in that the first is exclusive for

poultry processed products, and the second for poultry and pork processed products.

The company also has its own offices in Singapore, Asia; Buenos Aires, Argentina;

and Amsterdam, Holland. It also exports for countries in Africa, Southeast Asia, the Middle East,

Europe and Latin America. In Brazil, the company has commercial regional offices with head

offices in the states of São Paulo, Rio de Janeiro, Santa Catarina and the Northeast of Brazil. The

company also counts on the only private terminal of frigorific load of the sector. The company's

portuary facilities were the first and only private portuary facilities in Brazil, and it assures

competitive logistics for the company's exports.

In 2001, the company counted on 3,500 rural poultry and pork producers; total

production of 17.2 million poultry per month, or 43 thousand tones; and slaughter 123.5

thousand heads of swine, which corresponds to 11,500 tones per month. The decentralized

production in different states contributes with an additional advantage for productive chain

sanitation control, for the distance between the different poultry batches located in different

states sets natural sanitation barriers. In case the batch is contaminated with some virus, the

sanitation barrier avoids this contamination to spread to other batches and units. The concern

about sanitation determines even the flow of visitation to the chain operations. Visitations begin

in the processes that require more care concerning disinfection.

Operations between industrial units do not differ significantly. Thus, for the purposes

of this research, we have sought to visit the units where there was the possibility of having access

to all types of operations and products related to the poultry chain.

Another care to certify research trustability when choosing the units to be visited was

that of choosing at least one unit of each superintendence (the company is divided into

superintendences and each one is responsible for the management of two productive Units).

5.2 The poultry productive chain of Company F

The company acts as a great integrator of the major part of the operations within the

supply chain, denominated by the company itself the slaughtering poultry productive chain of

Company F. The productive chain of Company F is vertically integrated. The majority of the

operations is private in food, egg production, slaughter and industrialization processes. The

productive chain of Company F is composed of 7 private Animal Food Facilities; 52 Central

Poultry Breeding Farms, in that 6 are private; 10 incubation facilities, in that 6 are private; 1865

integrated aviaries, 7 private slaughter facilities and 2 private poultry processing and

industrialization facilities (Figure 1).

Figure 1 - Productive chain of company F

1.865 Integrados6 próprias

46 Integrados6 – próprios4 - terceiros

GranjasMatrizes Incubatório Aviários Abate/corte

Fábrica deRação

Processamento

7 plantas própriasLinhagem

Terceiros

7 – plantas próprias

2 – plantas próprias

Source: PEREIRA e CASILLAG (2003)

The company believes that a verticalized and integrated production guarantees

quality, sanitation and productivity. The company invests on state of the art creation and

production technology, and on a rigid sanitation control in all chain processes.

During the interviews it became clear how the employees of the analyzed company

themselves separate the productive chain and other supply chain liens. Actually, when they refer

to the poultry chain, they are considering only productive chain activities, that is, the parcel

corresponding to cattle farming and that ranges from central poultry breeding farms to slaughter.

Thus, the definition of all interviewed people about products and market is given according to

the part of the process for which he/she works. Nonetheless, even having the right perception

about the products or the outputs of each process, perception involving the definition or

encompassment of a chain is limited to the so-called productive chain. In the case of employees

working in the industrialization process, slaughtering poultry chain is also represented by the

liens that build up productive chain, ending at slaughter, but slaughter products are the raw

material of these employees, and product definition, in spite of being clearly established and

understood by everybody, does not have any relationship to the so-called productive chain. There

is the impression of a breach and the chain finishes at slaughter and from this moment on

isolated and independent companies start to exist.

5.3 Meat and Poultry Industrialized Products Supply Chain Performance Management

and Assessment of Company F

In order to increase trustability in the theory building process, we present herein the

results of the analysis carried out under the perspectives of the categories or dimensions

identified in the field research and based on the theoretical models and concepts that have

oriented this research.

The purpose is trying to establish a comparison between the emerging theory and the

existing literature, comparing those presenting similar results to those whose results are

incompatible. This strategy has to be adopted in building a theory by means of case studies with

the purpose of increasing result trustability and contributing to a theory with strong internal

validity, that may be generalized and that has high-level concepts (EISENHARDT, 1989).

5.3.1 Performance criteria or indicators used in the assessment of meat and poultry

industrialized product supplying chains in Brazil.

According to the research results, one can affirm that there are indicators set up for

the various steps of the productive chain (from the animal food part to incubation; of operational

abattoir costs; and of the commercial part, where CD is included). Indicators are grouped and

classified by Company F in the following categories: operational indicators, variable cost

indicators; productive performance indicators; and cattle farming indicators (linked to cattle

lineage and management characteristics).

There is a great number of operational indicators set up throughout the productive

chain, most of them being known by all their upstream links and controlled by the focal

company. Naturally, the indicators are tied to one another.

In the cattle farming case, there is a variety of performance indicators to help finding

a final indicator of the productive chain. Most part of the indicators used by cattle farming are

cost and conformation quality indicators. Quality indicators are, in great part, technical

specifications linked to the product and to the process biosafety. When referring to poultry, the

principal indicators are as follows: operational cost and fixed operation cost; feed conversion;

productivity (that is, availing rate of what is in natura raw material); quality; and integrated

payment.

Indicators are split out in order to comprise the different steps of a process, but the

individuals on a higher level in the hierarchy will not use all these technical indicators, but will

instead evaluate the most important among them, or new indicators that are a mixture of two or

more prior indicators.

In the case of the supplyimg chain part coordinated by the focal company, from

breeding farms to distribution, it is possible to verify that there are operational indicators,

normally linked to product quality and productivity in every step; and financial ones, focusing on

the productive process costs (Chart 1). The use of operational and financial indicators confirms

references in the researched bibliography, about performance evaluation system evolution,

mostly highlighted by addition of operational indicators to those already set up, and extensively

used, financial indicators. The principal indicators linked to the product and analyzed by the

focal company are: poultry cost, food conversion, mortality, daily weight increase, broilers per

lodged hen, average weight, condemned, and partner payment.

Chart 1 – Principal performance indicators in each link of the productive chain analyzed

Link Key Indicators Classification Criteria Central poultry breeding farms

Biosafety; Average weight; Uniformity; Mortality; Food conversion; Technical service.

Operational

Production breeding farm

Biosafety; Average weight; Uniformity; Mortality; Food conversion; Crackled eggs; Broken eggs; Production; Hatching; Technical service.

Operational

Incubation facility

Biosafety; Area contamination; Egg contamination; Hatching.

Operational

Aviaries Average weight; Productivity; Mortality; Food conversion.

Operational

Slaughter Inventory; Utilization of parts; Production cost.

Financial Operational

Processing Cost; Inventory; Delivery reliability; Quality; Request service.

Financial Operational

Storage Direct costs; Inventory; Product life term; Fleet.

Financial Operational

Distributor Product rotation; Delivery term; Cost. Financial Operational

Source: elaborated by the authors

According to collected data, it is possible to see that, the more upstream in the

productive chain (especially in links where the company acts with partnerships) the greater the

emphasis on operational indicators and smaller the emphasis on financial indicators. This

occurrence seems to result from the payment model developed by the focal company, linking the

integrated payment to productivity, and consequently to operational performance. In the case of

operations that are the focal company “ownership” and use employees hired by it, the emphasis

given to financial associated with operational indicators is also explained by the payment model

defined by the focal company – employee payment is variable, depending on targets

accomplished.

There are many indicators, especially in cattle farming, which permit a comparison

among the company’s units: service by the technician, hatching rate, mortality rate, “calo de pé”

(foot corn), etc. However, financial performance is considered by all the interviewed individuals

– except the technicians, who give more emphasis to biosafety matters – as the fundamental and

decisive item for the productive chain.

Formal connection between operation and financial parts is done weekly on every

Monday. Information such as inventory working rotation, and inventory existing in the chain, is

exchanged. Decisions are made based on this information, as for instance an increase in

inventory working rotation capital.

Cost is the indicator, which makes easy the operation leading and handling, in

accordance with all the interviewed individuals. The approach of the focal company is headed on

the cost and every unit‘s discipline contemplates this aspect. Justification is that the company

needs to be competitive at every moment. Indeed, cost relevance for the company has been

highlighted in all accomplished interviews and visits. In all the hierarchic levels, the language

has been uniform and single: competition based on cost.

6.Conclusions and Suggestions

The results obtained in this study indicate that the chain management model adopted

by the principal slaughter poultry producers, besides implying good results obtained by the

industries in our country, also reflect positively in the international market. The chain, strongly

coordinated upstream, allows a huger and better control on the whole producing process and

vitalizes communication and decision making among the chain participants. The consequent

results become evident in quality, sanitation, cost reduction and trackability criteria.

The results obtained find ressonance and support in supplying chain literature; here

the main benefits of an integrated management are: cost reduction and efficiency enhancement of

the productive process throughout the whole chain. There are signs that the slaughter poultry

supplying chain studied has already reached these objectives, but only in the part called as

productive chain -- that, even though it encloses most of the traditional operations of value

addition throughout the chain (for it is here that the transforming processes of raw material into

products occur), it is not able to meet all the market requirements, mainly those where the

modern companies search for sustainable competitive benefits: value addition by means of

intrinsic services and attributes.

This research has had two main premises, the first of them is that the supplying chain

management is done by means of the administration of the different relationship degrees among

the various components in a more encompassing network of relationships. The second one

affirms that the supplying chain performance evaluation depends on the implementation of a

supplying chain management philosophy.

The research results signal that the supplying chain management philosophy has not

yet been totally implemented in meat and poultry industrialized product chain in Brazil.

Actually, there are evidences that SCM philosophy seems to exist, in great part on the side of

chain supplying , or upstream of the focal company including especially the part of the supplying

chain called by the focal company as productive chain.

Nevertheless, the results signal that, downstream of the focal company, the main

factors (which characterize the administration of the supplying chain presented in item 3 of this

research) do not seem to exist. Some actors located upstream of the supplying chain act in most

of the time in an isolated and not integrated manner, searching for better results individually for

their respective businesses. Existing relationships among the companies, which act as

distribution channels in the inner market, are mostly marked by transactions done at each new

order and characterized by intensely irritated negotiations.

It is possible to imagine that the non-existence of an orientation aiming at the

integration proposed is necessary for the implementation of a supplying chain management

philosophy; it is not possible to set up a performance evaluation that may measure the actual

supplying chain performance. In this case, the performance evaluation is fragmented, presenting

a partial view of the supplying chain results, especially the performance focused on the

productive operations and on the value addition that occurs since the input supplying, up to the

industrialization steps.

Based on the results and on the premise adopted in this research, it is possible to

make a hypothesis (that the implementation of a supplying chain performance evaluation system

requires the prior existence of relationship management in accordance with the philosophy

presented by SCM). Based on the relationship management existing in the network, it will be

possible to set up indicators, which allow the evaluation of the supplying chain as a whole,

aiming at the generation of value for the final consumer of the various chain products.

Indicators are numbers that allow for improving and adjusting the system, this is not

just the case of any direct relationship between two variables. In case of supply chain, the

indicators should lead to improving the system as a whole and not just a part of it.

Actually, many companies that make up the analyzed chain already managed to

identify and set up a series of indicators for the several activities and processes carried out

internally in the organization. Moreover, what the companies should look for, actually, is the

final result, not just related to their internal processes or the activities under its responsibility, but

the final results measured thorough perception of final consumer's value.

In case of supply chain for meats and industrialized poultry products, the business is

not measured by the egg eclosion rate or by the food conversion. At the end, what really matters

is what was sold and the performance appraised by the consumer. The supply chain performance

is the result arising from the performance concerning all the previous stages that are being

connected to producing and providing the final product / service to the market. The first

evaluation is to know whether the attributes requested by the customer correspond to the choices

and actions in each supply chain stage.

7. Research Limitations

The largest limitation to this study arises from the essential nature concerning the

studied organization type, and supply chains, considering the amount of organizations and people

to be included in the data collection and their geographical dispersion. Even when treating a field

research developed during several months, that covered several chain operations, and that

interviewed a large number of people, there are still many actors that were not considered in the

study and a lot to be studied.

A second limitation to the study, in a certain form arising from the first one, is the

fact that a large part of data arises from the perception of focal company, collected through

interviews with their directors, managers, and employees. Even in case of interviews carried out

with the integrated, exclusive dealers and the logistic operator, the influence of the focused

company was evident and present in the provided information. It would be really enlightening to

try to include a larger number of interviews with owners, managers and employees from other

organizations pertaining to the supply chain that were not so under the focal company

coordination.

8. Suggestions for Future Researches

There are still some subjects that need to be answered in what refers to the

administration and evaluation concerning the supply chain performance, in order to allow those

evidences to be tested and proven. Future studies could seek to evaluate and compare the form of

coordinated management that prevail upstream to the chain, in which the industrial segment

manages and determines the actions, with the downstream management, in which the influence

and the force of companies pertaining to the industrial segment are not outstanding to the point to

ensure them the chain’s leadership and coordination with relation to all the distribution channels.

Future researches could seek to understand the relationships in full details downstream to the

chain, whose operations and relationships still do not show the characteristics required for

managing supply chains. Considerations on power movement in the so-called distribution

channel, from industry to retail because of a larger proximity to the final consumer, would bring

an opportunity to move forward and to understand the importance of GCS for the network as a

whole; and also for discussion on who should exercise or undertakes the network’s direction:

The industry, retail or some external agent.

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AVILCULTURA INDUSTRIAL. Disponível em: <http://www.aviculturaindustrial.com.br>

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