Supplier/Buyer Relationships Incorporating Regional Farms in the Supply Chain Aspen Institute Business Education Symposium October 2014 Deishin Lee Boston College

Small to mid-sized farms Regional market

Where we live

5 Tomatoes CA + FL = 67%

6 Broccoli CA = 90%

7 Lettuce CA + AZ = 98%

DC

Store DC "Breaks bulk"

DC Store DC "Breaks bulk" Economies of scale High volume Low variety Steady processing rate

DC Store Economies of scale High volume Low variety Steady processing rate Regional small and mid-sized farms Low volume More variety Seasonality

DC Store Economies of scale High volume Low variety Steady processing rate Regional small and mid-sized farms Low volume More variety Seasonality Challenges Logistics Retail ordering

DC Store Why should we care? Economies of scale High volume Low variety Steady processing rate Regional small and mid-sized farms Low volume More variety Seasonality Challenges Logistics Retail ordering

Improving Regional Farm Viability Operations and Supply Chain Management: Forecasting (e.g., sharing long-term demand information) Logistics (e.g., backhauling, scheduling) Regional aggregation (e.g., Red Tomato) Overhead functions (e.g., regulations/specifications, packaging, cold chain handling) Marketing Differentiating the product

Segueing into the Classroom Understanding what is challenging Upfront costs vs. Uncertain future benefits Economies of scale vs. Economies of scope Analysis vs. Decision-making

17 © Willy Shih

Economies of scale: Monoculture Economies of scope: “Three sisters” polyculture 18 © Willy Shih

Segueing into the Classroom Understanding what is challenging Upfront costs vs. Uncertain future benefits Economies of scale vs. Economies of scope Analysis vs. Decision-making