Restructuring the supply chain to better serve rural farmers: A case study of Thailand’s mango supply chain

This study addresses one of the Thai Governments key goals related to its food production policy; namely, to create a more inclusive operating environment for rural farmers to improve their transport efficiency and ensure that they remain competitive. Original primary data were gathered on the production of mangoes by rural farmers across Thailand and used to develop a business-as-usual logistics case along with alternative operating scenarios using a range of collaborative logistics options. The Clarke and Wright (CW) saving algorithm was used to quantify the benefits of different potential operating scenarios involving (i) farmers sharing vehicles through a farmer’s co-operative, and (ii) using a third-party vehicle to make milk-round collections. An important aspect of the collaboration is the decision on how benefits are to be shared, and how the transportation costs should be distributed fairly among the group. To investigate these issues, two different cost allocation methods were used: the proportional method, based on volume and stand-alone cost, and the Shapley value method, based on co-operative game theory. The results of the collaborative logistics scenarios suggested that farmers who shared their vehicle loading capacity through efficient collection routes reduced the number of vehicles needed and vehicle visits to farms by 40%. This would also reduce transportation costs by 36%, distance travelled by 36% and the total CO2 emission by 28%. Even in the worst-case, where the large-scale farmers were not willing to cooperate, the vehicle sharing concept realised a 39% a reduction in vehicles needed and 36% on vehicle visits to farms, resulting in a 35% reduction in total transportation cost. The second scenario suggested that assigning a third-party supplied mixture of refrigerated vehicles could reduce the total number of vehicles needed by 62% and 70% on the number of visits to farms, while environmental benefits were 57% reduction in distance travelled and 23% on total CO2 emissions. Other advantages of a third-party refrigerated vehicle scenario were the likely reduction in product wastage during transit. Although the specific transportation cost increased by 190%, the overall cost reduced by 64% when product wastage was considered. Using a third-party vehicle to make milk-round collections offers the greatest opportunity for the rural farmers. In addition, three different cost allocation methods were investigated. The results suggested that the Shapley value appears to be the most appropriate cost allocation for addressing fairness in a shared fleet concept to assist rural farmers manage that collaboration