Quality-based pricing: A catalyst for collaboration and sustainable change in the agrifood industry?

Peter Hines, Mark Francis, Kate Bailey

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

Purpose – To establish learning points on how an alternative to traditional standard costing and inter-company transfer pricing mechanisms can be developed and implemented for non-engineered (agrifood) products such as primary farm produce that acts as a catalyst for inter-firm collaboration as a part of a supply chain-wide Lean change initiative. This approach is termed holistic quality-based pricing (QBP) because it incorporates criteria that incentivise responsiveness to customer demands in addition to (narrower) product quality criteria that are a feature of most existing QBP schemes. Design/methodology/approach – An action research-based, 18 month longitudinal exploratory case study of Lean change initiative called “The Perfect Pineapple Supply Chain Programme” at an Australian canned pineapple supply chain. The focal company was the processing plant called Golden Circle. The case also involved fieldwork with four representative pineapple growers; three key suppliers of cans, cartons and pallets; and Australia's leading grocery retailer (Woolworth). Data collection instruments included observation of workshop activity, semi-structured interviews and access to key company documentation. Findings – This paper explains the development and evolution of the holistic QBP scheme that was used as a key catalyst for change within the Perfect Pineapple programme. It also suggests how the scheme could be used with other enabling approaches such as supplier development and factory gate pricing to progress down a Lean improvement path. Originality/value – This paper characterises six critical success factors for practitioner firms considering the implementation of such a scheme as part of a supply chain-wide Lean change initiative. It also provides a new decision support framework for informing how such an holistic QBP approach or adaptation might be applied to a range of primary produce environments.

Original languageEnglish
Pages (from-to)240-259
Number of pages20
JournalThe International Journal of Logistics Management
Volume17
Issue number2
DOIs
Publication statusPublished - 01 May 2006
Externally publishedYes

Keywords

  • Agricultural products
  • Pricing
  • Quality

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