1. CHAPTER 2 – COMMODITY
SYSTEM ANALYSIS/SUPPLY
CHAIN ANALYSIS
Ms. Rizzi Angelica T. Dagos
Introduction to Agricultural Commodity Systems
BS Agriculture, 2nd Semester AY 2023-2024
2. Outline of Discussion
a. Input sub-system
b. Production sub-system
c. Processing sub-system
d. Marketing sub-system
e. Support sub-system
3. VALUE CHAIN VS. SUPPLY CHAIN
Value Chain is the process in which businesses receive
raw materials, add value to them through production,
manufacturing, and other processes to create a finished
product, and then sell the finished product to consumers
chain is a set of interrelated activities a company uses to
create a competitive advantage – factors that allow a
company to produce goods or services better or more
cheaply than its rivals
Supply chain represents the steps it takes to get the
product or service to the customer, often dealing
with original equipment manufacturer (OEM) and
aftermarket parts.
involves all parties in fulfilling a customer request and
leading to customer satisfaction
4. VALUE CHAIN (Business Management Perspective)
Pioneered by American academic Michael Porter in his 1985 book
Competitive Advantage: Creating and Sustaining Superior Performance
He used the idea to show how companies add value to their raw materials
to produce products that are eventually sold to the public
Steps in the value chain process:
Inbound
logistics
Operations
Outbound
logistics
Marketing
and sales
Service
Receiving,
warehousing,
and inventory
control
Value-creating
activities/
transformation
of products
Activities
required to get
a finished
product to a
customer
Activities
associated
with getting a
buyer to
purchase a
product
Activities that
maintain and
enhance a
product’s
value, such as
customer
support and
warranty
service
5. SUPPLY CHAIN (Operational
Management Perspective)
Comprises the flow of all information, products, materials, and funds
between different stages of creating and selling a product to the end user
Every step in the process – including creating a good or service,
manufacturing it, transporting it to a place of sale, and selling it – is part of a
company’s supply chain
Primary concerns of supply chain management are the costs of materials
and effective product delivery
Proper supply chain management can reduce consumer costs and
increase profits for the manufacturer
6. Comprises the flow of all information, products, materials, and funds
between different stages of creating and selling a product to the end
user
Every step in the process – including creating a good or service,
manufacturing it, transporting it to a place of sale, and selling it – is
part of a company’s supply chain
Primary concerns of supply chain management are the costs of
materials and effective product delivery
Proper supply chain management can reduce consumer costs and
increase profits for the manufacturer
7. COMMODITY CHAIN ANALYSIS
Used to refer to the overall group of economic agents (or
the relevant activities of those agents) that contribute
directly to the determination of a final product.
Encompasses the complete sequence of operations –
raw material acquisition, or intermediate product, finishes
downstream, after several stages of transformation or
increases in value, at one or several final products at the
level of the consumer
“Chain of Production” – used to mean the group of
agents that contribute directly to the production, then to
the transformation and delivery to the final market of a
single agriculture, or livestock product
Source: Food and Agriculture Organization of the United Nations, 2005
8. CONSTRUCTING THE COMMODITY
CHAIN
The concept of economic agent
❖ “agent”
➢ used to describe an economic actor – basic unit in the economy who
undertakes an activity and makes decisions autonomously
➢ Could consist of a physical person (farmer, trader or consumer) or a legal
entity (a business, an authority, a development organization)
➢ Agent represents a kind of economic “territory”, enclosed by a frontier
Source: Food and Agriculture Organization of the United Nations, 2005
9. Transfer from the production unit to the
consumption unit
Source: Food and Agriculture Organization of the United Nations, 2005
10. Source: Food and Agriculture Organization of the United Nations, 2005
11. Source: Food and Agriculture Organization of the United Nations, 2005
12. How to use commodity chain analysis
Source: Food and Agriculture Organization of the United Nations, 2005
