networking
Working the chain
What'sNewS Issue 2 March 2001 T I
The fact that FAR provides value-added services to RI's food and agri clients around
the world is nothing new. And now, a recent agreement with partner AgroTechnical
Research Institute (ATO), promises an even better offering, planting seeds in the
field of supply chain management.
Tackling Thailand
Indian initiative
Generating business
Working together
Over the past few years, RI and the
Netherlands-based ATO, kept bump-
ing into each other. Both were involved in
important research projects for a cliënt in
Thailand, and recently in India. It became
obvious that the two shared expertise
when it came to supply chain management
of F&A products, but from a different fo
cus. ATO has vast experience with the
technical ins and outs of how such supply
chains function most efficiently, FAR has
the financial services and corporate net-
work necessary to set things in motion.
Putting the two together is a natural way
to generate enhanced value propositions,
leading to better business opportunities,
higher priced products, better market po-
sition and lower risks for all concerned.
It's a collaboration built on past success.
Last year, large retailer Ahold faced the
challenge of supplying its Tops grocery
stores in Thailand with fresh produce, na-
tion wide. No easy task in a place where
warm climate and poor infrastructure re-
sult in 30-40% product loss. As Arjen Si-
rnons, ATO's Director of the Agro &c In-
dustrial Production Chains explains:
'Over the course of 20-50 years of distri-
bution in the Netherlands, Ahold had
solid knowledge of how to best manage a
supply chain there. Our job was to design
a feasibility study, transferring that know
how to conditions in Thailand, in a period
of two to three years.' ATO determined a
produce migration path, recommended es-
tablishing a collection centre, and outlined
criteria for the handling of products
throughout the process. 'RI's contribution
was in procuring investment funds for the
collection centre and organizing local
growers,' says Arend Heijbroek of FAR.
The two are facing similar challenges in
India, in mid-phase of implementing a fea
sibility study for the Indian government,
commissioned by three states there. The
first phase was determining how to raise
the efficiency of the fresh produce chain
from 40% loss to an acceptable 10% loss.
Now, the goal is implementing these
plans, finally facilitating an export market
by designing a network of collection cen-
tres and traders, determining how they
should be managed and financed. 'After
some work on the project ATO has an
idea of how the chain should function ide-
ally, from a product point of view. In or
der for consumers to really benefit, the
study has to be implemented. That's where
RI comes in, identifying the right points of
exit and foreign importers,' says Simons.
'For implementation, you need corporate
problem ownership in such a market,'
adds Heijbroek. 'To this end, RI can lever-
age its network of reliable partners in say,
logistics or end buyers.' Both companies
are active in calculating where the costs
and margins are in the chain. ATO knows
what the cost levels are for the complete
chain, and RI knows how to distribute the
Ri's Arend Heijbroek (left) and ATO's René
Koster, Arjen Simons and Henri Luitjes
costs, profits and risks in such a chain.
The idea is to minimize risk and stimulate
investment by ensuring that profits return
to investors - business which will return to
RI. And because ATO adds value to our
already broad F&A offerings, the collabo
ration improves RI's position when it
comes to growth markets like India.
Given that collaboration was already tak
ing place to some extent, members of FAR
and ATO decided to look deeper into a
more formal agreement, a memorandum
of understanding. Non-exclusive, the
agreement is basically a promise between
the two to team up when beneficial to
both parties. Currently, both are reviewing
projects in their individual pipelines, and
identifying those which could benefit from
the cooperation. Joint efforts could in-
clude acquisition of new clients, project
development and/or execution and pro
motion of each other's activities, if and
when relevant. 'ATO will benefit from
consultancy fees, as will RI, but in the
end, we're looking at creating more busi
ness for RI in terms of primary banking
activities,' says Heijbroek. 'It's an excel
lent fit with a highly credible partner and
the potential to gain long-term benefits.'
ATO, based in Wageningen, the
Netherlands, conducts strategie
and applied scientific research for
manufacturers of food and non-food
products based on vegetable materi-
als. FAR is collaborating with the
business unit 'Agro and Industrial
Food Chains' - ATO's other key ac
tivities inciude Food and Food Pro
cessing, and Renewable Resources.
The BU's research activities focus on
quality of food and non-food raw
items, fresh products (storage, shelf
life, packaging), measurement sys-
tems for in- and extrinsic quality,
process monitoring and control, and
logistics and marketing. Customers
come from the entire business chain,
from grower to consumer, in both
public and private sectors.
