In commodity based supply chains products lose their identity. There is no incentive to retain the information about the product through the supply chain; in fact there's a substantial dis-incentive!! The discincentive is that if the information were available to buyers further down the supply chain, parties in the middle may be taken out, removed, rubbed out.
The commodity based supply chain has a number of discrete conversion steps between producer and consumer. Each performs their part of the process in turn, converting the produce into a consumer ready form. The product is carried through from producer to consumer but loses its identity; or all the important information that goes with it. Information such as;
- Who produced it?
- Where was it produced?
- What was their approach to production?
- Was it fair trade or sustainably sourced?
The market-oriented value chain ensures relavent information about the product is carried forward. More and more customers really want this information. Where did the product come from? How was it produced? What's the farmers approach to the environment, or sustainability? Are chemicals used in production? And which chemicals? Equally, in the market-oriented value chain, communication of customer needs back through the supply chain is encouraged.
The best outcome of a marketing oriented value chain is when customers and producers are brought together and the communication becomes face to face. Producers have been robbed of information about what it really is the customer wants. When producers are exposed to customers needs and exposed to price signals, they are encouraged to start producing in line with customers needs.
Developing your product in line with customers needs may be 2nd nature in many industries. The interesting fact is the commodity selling mechanisms used in agricultural selling simply discourage communication.
