The Wholesale Market as the Core of Aquatic Products Supply Chain Management Model 1

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1 The Wholesale Market as the Core of Aquatic Products Supply Chain Management Model 1 FANG Wei, TAN Yangyang Commercial college of Central South University of Forestry & Technology, Changsha, Hunan, P.R.China, Fangwei69@163.com Abstract: In recent years, the aquatic industry develops very fast, and it has become the fasted developing and the most profitable sector of agriculture in China. However, there are many issues in development. The paper had a discussion about aquatic products supply chain management model which lead by wholesale market that based on supply chain management theory, and in hopes of making a little contribution to better development of aquatic industry. Keywords: aquatic product, wholesale market, supply chain management 1 Introduction Aquatic industry has a long history in China, especially; it developed very fast since reforming and opening-up. However, in today's new market environment, competition among modern enterprises has been gradually transformed into the competition among supply chain [1]. It is urgent to develop aquatic product supply chain system, which is the strategic choice to improve Chinese aquatic enterprises competitiveness and to efficiently allocate aquatic resources. I had read a large number of relevant literatures, the research about aquatic products supply chain management can be summarized in the following four categories: (1) Aquatic products processing enterprises as the core of supply chain management. This model is that the aquatic products processing enterprises through their aquatic breeding or fishing, or from the upstream agent, fisheries cooperatives purchase aquatic products, and then categorize, primary or further processing, processing of aquatic products formed by downstream middlemen or retailers supply to consumers [2].(2) Supermarket as the core of aquatic products supply chain management. The model refers to the consumer demand as the center, supermarket chains through investing in the construction of aquatic products supply base or to establish stable relations of cooperation with fishing companies, fish farmers, farming specialized households by fishing associations, through self-built water Product Distribution Center, to provide aquatic products.(3) The third-party logistics enterprises as the core of the aquatic products supply chain management. The model is that third-party logistics company which is able to provide integrated services, signs a contract with aquatic products producers, processors, retailers and so on, requires them to production, sales, service, distribution of benefits and risk-sharing and other rights and obligations, to establish benefit-sharing, risk-sharing partnership, so that to form the aquatic products supply chain management that link to the large modern market and large circulation. (4) The wholesale market as the core of aquatic products supply chain management model. The model is that aquatic products wholesale market connects with the aquatic products supply base, aquatic products distribution company, specialized cooperatives, form a model of integrating aquatic production, acquisition, processing, storage preservation, distribution and provision of market information. 1 Key Research Project of Education Department in Hunan Province (09A107) Foundation item: Social Fund Project in Hunan Province(08YBB012) 411

2 But, at present, in china, the research on aquatic product supply chain management theory has just begun. Some experts and scholars had do research on value chain and industry chain of aquatic product to a certain extent, but lack of research on the aquatic products supply chain management theory. The paper analyzes the current situation of aquatic product supply chain management and learns the foreign advanced experience, then put forward a theoretical framework that the wholesale market as the core of aquatic product supply chain management, which enrich and develop the aquatic product supply chain management theory in China. 2 Why Choose Wholesale Market as the Core of the Aquatic Products Supply Chain These four models have different features and advantages, but which one is more conducive to aquaculture development? I think that the wholesale market as the core of aquatic products supply chain management has an advantage. From three aspects to consider, first of all is "quantity", the proportion of aquatic products in circulation in the whole aquatic products market, about 70% circulation of aquatic products is through the wholesale market [3], in other words, there is great product circulation, information flow rate, capital flows in wholesale market. The second is the position of the "core" in the entire supply chain. Producing and processing enterprises in the most upstream location, away from the end consumer, may lead to that it hard to reach strategic alliances with downstream distributors. The supermarkets, though from consumers most close, consumers can get faster feedback, but supermarkets only can meet the end supermarket retail business, it is very difficult to want supermarkets to take the aquatic products supply chain management. However, the wholesale market access producers, under bear distributors, consumers, just at the critical link in the supply chain. Third, the view from the existing infrastructure, with the continuous development of wholesale markets in recent years, the wholesale market has begun to take a core foundation. Here, the main choice of aquatic products wholesale market as the core of supply chain management model. 3 Analysis of the Situation of Aquatic Products Supply Chain Management Model That Wholesale Market as a Core The wholesale market as the core of aquatic products supply chain management can be largely expressed in the following figure: produce currency currency consume Aquatic product Supplier Aquatic product Producer Production base wholesale market Sales wholesale market Retailer Consumer Logistics Business flow Information flow 412

3 Chart1: The structure of aquatic product supply chain We can see very intuitively from the figure that the whole supply chain is divided into two parts taken by the wholesale market: one is the "production - distribution", means from seafood producer to the wholesale; the other one is the "distribution - consumers ", that is from the wholesale market to the consumers. The reason is that the wholesale market adopted a distribution form that is the most primitive one with business flow and logistics flow together with each other, which blocked the capital flow, and also blocked the information flow of demand and supply of seafood supply chain. The spot trading mechanism determines that there is only pure competition, and can be no cooperation and coordination, this kind of aquatic products supply chain is a broken one, or only partial short one. The characteristics of this type of supply chain are as follows:firstly, market transactions are mainly in wholesale market, that only a short transactions between the upper and lower links, there is little link between the links and the supply chain is not stable; secondly, participants are numerous and dispersed, trading information found difficult and disorderly, price information distortion, easy to product quality supervision difficulties; thirdly, chain link belong to different subjects, although can arouse the enthusiasm of individual participates in the market, but because interest, information acquisition, negotiation skills, supply chain integration as low, weaken the power of the individual concentrated release. 4 Problems in Aquatic Products Supply Chain Management Model That Wholesale Market as a Core From the above analysis of the current situation, China s aquatic product at this stage is only a broken supply chain which is low integrated and inefficient. Supply chain under this state cannot play their competitive advantage, because the full sense of the supply chain is to optimize the integration of various individual sectors to play their overall competitive advantage. There are many reasons for the status; the following will analyze several key issues: 4.1 Aquatic Products Wholesale Market does not play a central role in the supply chain The supply chain fractured at the wholesale market, largely caused by the limitation of wholesale market itself. Although China's aquatic products wholesale markets are great in the face of impressive building, but still lag behind the development of aquatic products industry, still in its infancy. At this stage, China's aquatic products wholesale market infrastructure inferior; market development disorder; management, transaction backward; the market of the main organization is low, management is not standardized; information network lag, poor information dissemination channels [4]. Moreover, the wholesale market and sell to wholesale markets origin separation will inevitably lead to supply chain failure [5]. 4.2 The members of the supply chain does not form a strategic alliance Node enterprises in the supply chain with independent legal person status, and have no administrative affiliation, they each have different interests and ideas, so there is bound to conflict of interests between each other. The essence of supply chain management is try to eliminate the contradictions and conflicts between enterprises, and coordinate the individual interests of participants and the collective interest, in order to made the all trading partners in the supply chain change to the "competition-cooperationcoordination" relationship from simple competition relations [6]. In this relationship, coordination and cooperation is the main, competition for the second, or that the interests of all parties to coordinate the distribution of the main competition for the times, to seeking long-term interests. Such coordination and cooperation do not only to achieve shared interests, but also of risk. 413

4 4.3 Asymmetric information in aquatic product supply chain Information chain is blocked because of high cost of the wholesale market information collection, thus appears the phenomenon of information asymmetry. The influence of information asymmetry is shows in two ways. On one hand, for farmers, given the uncertainty of demand information, resulting in large fluctuation of wholesale market price and this is not good for a balanced supply and demand of aquatic products, and increase the farmers market risk. On the other hand, for consumers, because the uncertainty of supply information, consumers lose confidence in the quality of products. Spot trading to buyers lack sufficient information on product quality, and adverse selection occurs, that is the lowquality products will make high-quality products get out off the market. 4.4 The lack of trust between members Trust plays a main role in coordination to the aquatic products supply chain as soft constraint, if the supply chain members lack the adhesives of node, it will block the coordinating to the supply chain. After the untrusting, the partner feels be used and be deceived, which result in the losses of psychology, even of cooperation among members. This not only make influence on the normal operation of the supply chain which based on the relationship, but also increase the cost in supervision and incentive of the aquatic products supply chain members when they cooperate in future, so as to affect the next round of trust and cooperation between aquatic products supply members, and finally affect competition ability of the whole aquatic products supply chain. 4.5 The interest-distribution mechanism between members is imperfect The main reason for every the supply chain party participate in the alliance parties is the driving of interest. In order to pursue higher profits, the parties go together through a contract or cooperation Therefore, the reason of the forming of the supply chain is interests. If every node member of the supply chains belongs to different ownership, and every member tries to make his maximize benefit, so the targets of different node members may have conflict, this means that each entity only consider their profit margins without considering that of the whole system, which result in the uncoordinated of the whole aquatic supply chain, then result in decreasing of the whole profit [7]. 5 Optimization and Upgrading of the Aquatic Products Supply Chain Management Model Which lead by Wholesale Market 5.1 Wholesale market as the core of the aquatic products supply chain At present, there is much competition between the various participants in the China's aquatic products supply chain, but little cooperation and coordination. This will inevitably lead to the logistics chain, aquatic cut chains, capital flow chain of fault, so it is necessary to integrate the aquatic products supply chain of traditional optimization. 414

5 Supermarket Production base Wholesale Market Consumer Fisherfolk Intermediary organizations market Processing enterprises Guesthouses, hotels, schools, etc Foreign markets Platform of supply chain information management Logistics Information flow chart2:wholesale market as the core of the aquatic products supply chain The model ensure an ample supply, trough the aquatic breeding business between Seafood market and upstream breeding enterprise. The fish farmers are connected by the farmers associations, cooperatives and other intermediary organizations. In the downstream, supermarkets and chain stores achieve the exchange of information, using the pos systems and supply chain management platform. The model timely delivers the market information to the producer, through the trading platform. The cooperation between wholesale and Co-processing enterprises is conducive to the sale of aquatic products. Moreover, the wholesale Provide distribution services for the downstream, not only strengthen the function of markets, but also Increase the income of the market. In addition, connecting with the other provinces, that provides a window for the export aquatic products. 5.2 Strengthen collaboration between partners in aquatic products supply chain The aquatic products supply chain got integration and optimization through the wholesale market as the core, the wholesale market establish stable strategic alliance with production base, protecting the wholesale transactions stable and sustainable. In addition, establishing cooperative relationship between wholesale market and production base to a certain extent, overcoming the problem of uneven distribution channels of interest, safeguarding the interests of fish farmers deserve. Interests of all parties be effectively regulated, can the various participants in the supply chain to achieve true collaboration and synergy to the whole aquatic supply chain to achieve maximum benefit. 5.3 Improve the restraint mechanism of supply chain operation The successful implementation of seafood supply chain management requires a good restraint mechanism. The most important of aquatic products supply chain management is that, each member should fully realize cooperation is the foundation of the overall benefit, so that the supply chain truly becomes a "risk and profit sharing" economic community [8]. Aquatic products supply chain operation restriction mechanism has the following three: 415

6 (1) Market restriction mechanism. By the market supply and demand, competition among market players, price changes and their conversion, reciprocal causation to form a restraint mechanism. (2) The contract restriction mechanism. Individuals under the voluntary, equality and mutual benefit, can be sign a legally binding signing of sales contracts, financial support contracts and the introduction and development of scientific and technological achievement and so on, the contract specified the right and Interest of all parties. (3)Internalization of transaction costs. Through the system of "non-market arrangements", seafood supply chain among various interest bodies within the original transactions in the external market of raw materials, semi-finished and finished goods internalize transactions, thereby reducing circulation, reducing transaction costs, increased the main income. 5.4 Upgrading of aquatic products wholesale market In aquatic products supply chain management leading with wholesale market, the wholesale market as the core enterprise in the supply chain its position is linking production and processing enterprises, and the terminal retailers, take the lead of the entire supply chain. At present, the existing traditional wholesale market in China can not undertake this task, so upgrading the wholesale market is an inevitable trend in development Large-scale wholesale market To wholesale market, the scale means benefits. The supply chain management which lead by wholesale market, order the wholesale market should bring some advantage, such as reduce logistics cost. So this require wholesale market must develop on expand its scale - - especially hang he degree of organization. At this stage, it can call for assistance which from government., and combine the reform of domestic wholesale market, make the few actual strength enterprise can merger, combine, share, hold or link other weak ones, to reach the target, which expand the size, hang degree of organization, and form BIG wholesale market, then expand other business area. On one side, we can exploit own band of wholesale market to control the product area, on the other side, we can combine the retail chain to control channel terminal. Thus strengthen the predominance of wholesale markets in supply chain, refocus and develop the supply chain alliance of whole aquatic product with core of wholesale markets, set up the product circular net in the nation, on which develop to international market based Outstanding logistics capabilities Only have its own core competence, can wholesale markets become the core enterprise in supply chain. The core competence can be the brand, the capabilities of product development and design, the logistics capability, or channel resources, so on. However, the aquatic products character in short life, short warranty, and demand the relatively high storage conditions and transport conditions, so if the wholesale markets want to be the core businesses in seafood supply chain, in addition to coordination, they must strength their core competence, logistics capabilities. The logistics capabilities is the mobile ability of aquatic products with high efficiency, low cost from the supplier to receiver based on the actual need and organically integrate the aquatic transportation, storage, handling, packaging, distribution processing, distribution, information processing and other basic functions Modern information technology support Establish and develop aquatic products supply chain management driven by wholesale market must base on modern information technology, construct with information, build information platform. Because the wholesale markets take on the functions of logistics distribution centers to carry out orders, shipping, billing processing, as well as accessing to storehouses, sorting, classification, packaging, collecting and transferring information, and all these functions will be widely used in computer network technology, modern communications technology, automation technology, modernization, automation management and control. At the same time, establish and improve integrated information system of wholesale, manufacturers and retailers to enable sharing information throughout the supply chain, which is the important condition of efficient supply chain management. 416

7 6 Conclusion The paper analyzes the issues and current situation of aquatic product circulation, then put forward some countermeasure that optimization and upgrading of the aquatic products supply chain management model which lead by wholesale market. So that eliminate the broken chain and improve the efficiency of the whole supply chain. References [1]. Cheng-Lan sun. Aquatic-Products Logistics and Its Development in China[J]. China Business and Market, 2006,1. In Chinese [2]. Chu Ye-ping. Research on China's aquatic products logistics[j]. China Logistics & Purchasing, 2009,1. In Chinese [3]. Edward H Frazele. Supply Chain Strategy[J]. New York: Mc Graw Hill, [4]. Graham C S. Successful Supply Chain Management [J]. Management Decision, 1992,28(8):25~31. [5]. Lamport, D.M.Issues in Supply Chain Management[J].Industrial Marketing Management,2000,29: [6]. Lee H L, Corey B. Managing Supply Chain Inventory: pitfalls and opportunities [J].Sloan Management Review, 1992,33(3):65~73. [7]. LI Ji-fang.On supply chain management of aquatic product in the core enterprise[j].chinese FISHERIES ECONOMICS, 2006,4. In Chinese [8]. Zhan Ming. Analysis on Agricultural Products Supply Chain Based on Core Enterprises[J].LOGISTICS TECHNOLOGY, 2004, 5:86. In Chinese 417