Managing Biomass Supply Chains: The Importance of Strategic Leadership

Managing Biomass Supply Chains: The Importance of Strategic Leadership

Victoria Muerza (University of Zaragoza, Spain), Luca Urciuoli (Department of Industrial Economics and Management, KTH Royal Institute of Technology, Stockholm, Sweden & MIT International Logistics Program, Zaragoza Logistics Center, Zaragoza, Spain), E. (Bert) Annevelink (Wageningen Food and Biobased Research, The Netherlands), J.C.M.A (Joost) Snels (Wageningen University & Research, The Netherlands) and Jan E. G. van Dam (Wageningen Food and Biobased Research, The Netherlands)
DOI: 10.4018/978-1-7998-2867-9.ch001

Abstract

This chapter explores the feasibility and advantages of integrated biomass logistics centres (IBLCs). These are centres aiming to collect residues from farming activities and transform these into new intermediate bio-products. Operations in these IBLCs aim to achieve economies of scale through integration of resources and business lines, while creating technical and environmental advantages for firms and societies. The experience from one agro-industry case study in Spain (fodder production) highlights the importance of leadership roles to manage the newly created supply chains, through the identification of strategic objectives and the coordination of operational activities. Hence, the scope of this chapter is to review the concept of IBLCs under the lens of supply chain management leadership. Thereafter, it will discuss the potential to transfer the IBLC concept to emerging markets, with examples for African agricultural crops.
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Introduction

The concern about the environment has boosted the trend towards the circular economy, based on a “recycling society”. It has initiated a transformation in different industries and sectors, where residues are used as an input in new processes “closing the cycle” and taking advantage of the existing resources in terms of machinery and knowledge (Geissdoerfer, Savaget, Bocken, & Hultink, 2017). In this context, a new concept has been coined for the agroindustry within the AGROinLOG project: the Integrated Biomass Logistics Centre (IBLC) (Annevelink et al., 2017). IBLCs aim to increase the use of existing facilities of an agroindustry taking advantage of idle periods, allowing a diversification of the business activity.

The feasibility of IBLCs should be studied from a social, environmental and economic standpoint (Muerza, De la Cruz, & Urciuoli, 2019): social viability refers to the creation of employment derived from the diversification of the company's activity. Environmental viability is related to the emissions derived from the collection of the raw material (residues from agribusiness), until the transformation in the IBLC and the distribution in the markets of the new product compared to the reduction of emissions due to the substitution of fossil-based products by biobased products. Economic viability considers the calculation of logistics costs and processing costs, related to the configuration of the supply chain. This strategy is linked to several of the agribusiness leaders’ seven top strategic priorities identified in a survey to 200 companies (SpencerStuart, 2015): (i) pursue joint ventures, alliances, acquisitions; (ii) expand presence in international markets; (iii) develop new products; (iv) develop cooperative relationships with farmers, suppliers and customers; (v) develop new sales channels; (vi) build upstream/downstream capabilities to increase vertical integration, and (vii) dramatically reduce costs. Furthermore, the World Council for Sustainable Development system has pointed out the need of deeper collaboration between diverse stakeholders across sectors and the “use the circular bioeconomy to alleviate resource supply risks, shift from fossil-fuel and non-renewable resources to sustainable, renewable biomass, repurpose agricultural waste and recycle nutrients” (Morrison, 2019).

Current research is exploring both feasibility and advantages of these IBLCs in three agro-industries in Europe: fodder (Spain), olive oil production (Greece) and cereal processing (Sweden) sectors. The experience from these three demos in Europe highlights the importance of leadership roles in order to manage optimally supply chains, through the identification of strategic objectives and the coordination of operational activities. In this sense, the configuration of the logistics chain must be optimized as it directly impacts on the economic viability of the IBLC (Muerza et al., 2019). The logistic solutions to adopt will depend on the type of final product based on a certain type of residue. The transformation processes will be different both in the IBLC and in terms of supply: raw material size, transport, use of intermediate warehouses, etc.

Leadership in Supply Chain Management (SCM) is of great importance as it affects the optimal integration of people and logistics systems, facing challenges in several stages of the supply chain, e.g. optimal coordination of material and flows in global and uncertain environments (Mentzer et al., 2001). The supply chain leader analyses market trends and selects appropriate information systems, making decisions and promoting innovation to support company growth.

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