Current practice: Inter-firm relationships in the food and drinks supply chain

Key objectives This chapter will provide an understanding of recent developments in supply chain management and their application to the food supply chain. More particularly, it aims to look at: • The development of vertical and horizontal integration within the retail and catering supply chain. The discussion particularly focuses upon the nature of supply partnerships in the retail sector (quasi-vertical integration/vertically integrated networks) and buying groups and marketing consortium in the retail and catering sectors (horizontally integrated networks)

• management and the benefits that this can provide for food and drinks manufacturers. These benefits include those of a better service level and cost savings which can result from the application of Efficient Customer Response (ECR) and Efficient Foodservice Response strategies

• The ways in which major food retailers have exerted and imposed their own control over food and drinks manufacturers in the supply chain. The costs and benefits are discussed with particular emphasis on the challenges posed for these producers and manufacturers

• The arguments for contracting out the supply chain management function to specialist third party operators and in turn, why manufacturers who retain an in-house distribution function should continuously review whether this is appropriate for their future well-being and business development

• The external regulatory, environmental and political pressures, which have to be addressed by food and drink manufacturers and their significance in determining how supply changes are controlled and managed

• The scope for strategic alliances and supply partnerships, in particular between retailers and producers and within the context of a future food retail market, which will see the continued increase in home delivery services

• The continued emergence of horizontal partnerships within the catering and retail sectors.