The analysis of a vertically integrated organic rice company : a case study in Thailand

Ongkunaruk, P.; Prasertwattanakul, Y.

The analysis of a vertically integrated organic rice company : a case study in Thailand

2018

Ongkunaruk, P. | Prasertwattanakul, Y.

Vertical integration is one of the corporate strategies implemented in large companies in several industries, such as oil, cement, IT and food. Our objective is to analyse the supply chain ofa medium-sized vertically integrated organic rice company, comprising a farm, a rice mill, a packing house and retail stores. Due to the limited number of vertically integrated organicrice stakeholders in Thailand, we scale our study to a single case. An in-depth interview was performed to collect data so that we could analyse the business process using Integration Definition for Function Modelling (IDEF0) and suggest improvements. We compare keyaspects such as quality, supply quantity, reliability, cost and lead time between general and vertically integrated elements of the organic rice supply chain. A vertically integrated companyhas the advantage of the ability to control the quality and quantity of organic rice throughout the supply chain, however, a medium-sized company has less economy of scale and less flexibilitycompared to large vertically integrated companies in Thailand. The company is obliged to contact a group of farmers to source the organic rice from an external chain. The company should then centralise the information so that it can be shared and a traceability system can be implemented.

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