Relationships between quality of information sharing and supply chain food quality in the Australian beef processing industry

• Published date: 06 May 2014
• DOI: https://doi.org/10.1108/IJLM-07-2012-0057
• Date: 06 May 2014
• Pages: 85-108
• Author: Ming Juan Ding,Ferry Jie,Kevin A. Parton,Margaret J. Matanda
• Subject Matter: Management science & operations,Logistics

Relationships between quality of

information sharing and supply

chain food quality in the Australian

beef processing industry

Ming Juan Ding and Ferry Jie

School of Business IT and Logistics, RMIT University, Melbourne, Austral ia

Kevin A. Parton

School of Business, Charles Sturt University, Orange, Australia, and

Margaret J. Matanda

Department of Marketing, Faculty of Business & Economics,

Monash University, Melbourne, Australia

Abstract

Purpose – The purpose of this paper is to analyze supply chain practices, and supply chain food

quality performance indicator in the Australian beef processing industry.

Design/methodology/approach – A conceptual model was developed to test how supply chain

practices: strategic alliance, customer focus, information sharing, information quality, Lean system

and antecedent cooperative behavior: trust and commitment impact on food quality. A survey

questionnaire to 600 Australian beef processors was conducted to collect the empirical data for testing

of the formulated hypotheses. The stepwise multiple regression analysis was performed to test the

hypothesized relationships.

Findings – Strategic alliance, information quality and trust and commitment are significantly related

to food quality. In particular, the standardized coefficient shows that information quality has a

significant positive relationship with food quality.

Research limitations/implications – As Lean principles have be en widely adopted in the red meat

industry, strategic alliance becomes even critical for maintaining cost and operation effectiveness in

the beef supply chain. A various approaches in terms of innovative technologies can improve

information quality and promote information sharing in the beef supply chain. To build trust and

commitment among supply chain partners requires perception of mutual long-term goals.

Practical implications – Australian Meat Manufacturers face greater regulator y challenges and

restraints ( product labeling, food safety and carbon tax) over the next five years. Therefore, to tac kle

the challenges, the findings of this research have significant practical implications.

Originality/value – This study intends to fill the research gap and explore how advanced supply

chain systems have a potential to provide contributions to Australian beef processing industry

performance. Vertical integration between livestock producers, meat processors, wholesalers and

retailers provides the opportunities for greater economies of scale in production and distribution.

Keywords Information quality, Food quality, Strategic alliance, Trust and commitment

Paper type Research p aper

1. Introduction

The Australian Red Meat Industry is an important industry composed of

approximately 26.6 million cattle and 68.1 million sheep, which is the fourth highest

commodity export earner in Australian market (ABS, 2011). The red meat industry

employs approximately 173,524 workers at the farm, processing and retail levels

(MLA, 2011a). Australia is the world’s second largest exporter of beef and the largest

exporter of sheep meats. The industry revenue forecast to decreas e by 0.3 percent to

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0957-4093.htm

Received 6 July 2012

Revised 1 November 2012

Accepted 1 March 2013

The International Journal of Logistics

Management

Vol.25 No. 1, 2014

pp. 85-108

rEmeraldGroup Publishing Limited

0957-4093

DOI 10.1108/IJLM-07-2012-0057

85

Australian beef

processing

industry

$13 billion due to lower export demand and appreciation of Australian dollar

between 2011 and 2012. Total revenue for meat processor was decreased by 2.4

percent annum ove r the last five years. H owever, industry reven ue is expected

to grow 3.1 percent annually to reach $15.1 billion over the next five years

(IBISWorl d, 2012). The ma rginal increased volume of red meat production is due

to that Australia c ontinues to rec over from the drough t over the recent year s.

According to Meat and Livestock Australia MLA (2011b), total beef exports

have surpassed 940,000 tons in 2011, the largest volume of beef exports in the past

three years. The largest export markets for Australian beef are Japan, the USA

and South Korea, of which the three countries accounted for approximately 60

percent of Australia’s beef exports.

Over the past fiveyears, the profitabilityof beef processing industry has beenvolatile

due to the fluctuations in sale yard prices for beef, growing transport costs due to

rising oil prices, increased electricity costs and relatively low-capacity utilization due

to low demand and animal availability in some year. The industry tends to operate on

low-profit margins and high volumes of business. In response, industry players have

invested in processing plant upgrades and expansions, such as new slaughter floors,

improved chillers and environment measures (IBISWorl d, 2012). In this type of business

environment, advanced supply chain systems have been observed to have dramatic

impact on the industry. Previous studies (Donlon, 1996; Finch, 2006; Min and Mentzer,

2004) have addressed on the impact of supply, manufacturing/processes, transportation

and demand uncertainty on supply chain performance in manufacturing or retail

industries. However, there are few studies investigating how supply chain practices

impact on food industry, particularly in meat industry (e.g. Desmarchielier et al.,2007;

Rong et al., 2011). Further, most studies were based on a small number of case studies

and research using quantitative methods such as survey questionnaires are rare (e.g.

Aramyan et al., 2007; Mena et al., 2009). This study intends to fill the research gap and

explore how advanced supply chain systems have a potential to provide contributions to

Australian beef processing industry performance. Therefore, the research reported was

focussed on supplychain practices and food qualitysupply chain performance indicator

in the Australian beef processing manufacturers.

Combining knowledge of the rapid changes taking place in the beef industry with

the supply chain management literature, the following problem statement was

formed: How do supply chain practices such as strategic all iance (SA), customer focus

(CF), information sharing (IS), information quality (IQ), lean system (LS) and antecedent

cooperative behavior: trust and commitment affect supply chain perfor mance, as

measured by food quality of Australian beef processors? The next section provides

detailed information of Australian beef processing industry and supply chain

management practices related. Hypotheses linking supply chain practi ces, antecedent

cooperative behavior: trust and commitment and food quality, one of key supply

chain performance indicators, are formulated. The research meth od and findings

are presented in Section 3. Discussion, implications and future research directions are

discussed finally.

2. Australian beef processing industry

Australia produced average 2,154 kilotons of beef annually from 2006 to 2011 (ABARE,

2011) (see Figure 1 and Table I). Beef is the most important meat processed in terms of

both volume and value, but is highly sensitive to weather conditions. The drought

during 2006-2007 increased the cattle slaughter rate. However, a return to favorable

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