Value Chain… What’s that?

Way back in 2009 the SA Government engaged Prof. Andrew Fearne as the ‘Thinker in Residence’ to educate SA businesses about the importance of Value Chain principles in long term business ventures where customers are important. The government invested generously with tax-payer dollars to disturb all businesses, especially those involved in primary production, to realise that in today’s global economy, where competition has never been more ferocious, the key message is collaboration. Any business that’s in the game for the long haul, must shift from the nullifying culture of supply chain thinking to the ‘eyes wide open’ sustainable culture of Value Chain behaviour.

 

Riverland Wine invited Prof. Fearne to the region to meet with groups of producers and processors. Many were curious. Yalumba got on board and worked with the State Government and Prof. Fearne to map the supply chain in the ‘Vine to Dine’ project. A feature of that study was the revelation of just how motivated growers became when they understood who the customers were, who purchased their products… over and over, again and again.

It’s not rocket science. Explain to someone why they are important and how they can contribute to their own bottom line by being the best they can possibly be and see just what results can be achieved. Here we are now, seven years on and value chain discussions are not even on the table.

Quite the opposite; the supply chain culture of nullifying grower initiative is hard at work. Making matters worse, there are far fewer liaison officers working with growers to communicate messages. In fact, even the liaison people don’t like what they do any more. Relationships are stained to breaking point. They simply have no good news to deliver! The schoolyard practice of ‘following the leader’ has never been so well played around price announcements. The mid-December ‘call of the card’ has caused more ducking and weaving this year than you’ll see in a DMZ. There has not been one surprise in any of the mid-December-January price announcements. Some wine producers explain in more and more detail, just how tough the market-place is. That’s not news. Everyone knows that.

Value Chain principles will overcome the awkwardness around communications. All members of the chain from the growers and their suppliers, to the customers who keep coming back, will understand what they need to do to manage the relationship. It becomes so much more about relationships. It expects all members along the chain to be open and transparent and importantly, to be accountable! The broken down carrot and stick method, where the carrot keeps disappearing in the bull-dust simply wears everyone down and out. The sticks are also well and truly worn out.

Let’s re-start the 2009 discussions and see if inland regions can rise above the pack once more and deliver high-value wine products that meet customer expectations so we can share some of the joy around all the recent announcements about export success, exchange rates and free trade agreements. The opportunity cost to the regional community and state and national economies of persevering with the busted model does not bear thinking about. Read more if you need a refresher on Value Chain thinking. 

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