Application of Value Chain Management to Longan Industry

Abstract

Longan plays an important role as an economic fruit of Thailand because of its volume and size in markets, both domestic and aboard. It was generally known that serious problems were encountered in current longan production and sale, especially the increased production cost. To understand the overall situation clearly, longan’s supply chain was evaluated using the Supply Chain Operations Reference (SCOR) model and value chain analysis. In-depth interviews were conducted with 73 supply chain members, covering farmers, middlemen, process operators, transporters and exporters, located in Chiang Mai, Lamphun and Bangkok. Performance of the longan supply chain members were evaluated based on four categories, namely, inbound logistics, operations, outbound logistics and supporting activities. It was found that the exporters had the highest score in every aspect of performance criteria whereas the farmers had the lowest score, especially in the outbound logistics part. The findings also showed that the major problem of this supply chain was due to oversupply of longan. It was therefore recommended that the members in the supply chain should have to manage and control the quantity of longan, so that demand and supply are balanced as well as to add value to the longan products by increasing information share between members. Marketing campaign is also important to boost longan demand. By implementing operational best practice to each supply chain member, 25% reduction in waste may be achieved.