Exploring alternatives for milk quality improvement and more efficient dairy production in a smallholder farming context – case study: Mantaro Valley (Peru)

Consumer demand is revolutionizing the way products are being produced, distributed and marketed. In relation to the dairy sector in developing countries, aspects of milk quality are receiving more attention from both society and the government. However, milk quality management needs to be better addressed in dairy production systems to guarantee the access of stakeholders, mainly small-holders, into dairy markets. The present study is focused on an analysis of the interaction of the upstream part of the dairy supply chain (farmers and dairies) in the Mantaro Valley (Peruvian central Andes), in order to understand possible constraints both stakeholders face implementing milk quality controls and practices; and evaluate “ex-ante” how different strategies suggested to improve milk quality could affect farmers and processors’ profits. The analysis is based on three complementary field studies conducted between 2012 and 2013. Our work has shown that the presence of a dual supply chain combining both formal and informal markets has a direct impact on dairy production at the technical and organizational levels, affecting small formal dairy processors’ possibilities to implement contracts, including agreements on milk quality standards. The analysis of milk quality management from farms to dairy plants highlighted the poor hygiene in the study area, even when average values of milk composition were usually high. Some husbandry practices evaluated at farm level demonstrated cost effectiveness and a big impact on hygienic quality; however, regular application of these practices was limited, since small-scale farmers do not receive a bonus for producing hygienic milk. On the basis of these two results, we co-designed with formal small-scale dairy processors a simulation tool to show prospective scenarios, in which they could select their best product portfolio but also design milk payment systems to reward farmers’ with high milk quality performances. This type of approach allowed dairy processors to realize the importance of including milk quality management in their collection and manufacturing processes, especially in a context of high competition for milk supply. We concluded that the improvement of milk quality in a smallholder farming context requires a more coordinated effort among stakeholders. Successful implementation of strategies will depend on the willingness of small-scale dairy processors to reward farmers producing high milk quality; but also on the support from the State to provide incentives to the stakeholders in the formal sector.

Designing tools that enhance communication and understanding between multiple stakeholders: the case of mobile payment value networks

The pervasive use of mobile technologies has provided new opportunities for organisations to achieve competitive advantage by using a value network of partners to create value for multiple users. The delivery of a mobile payment (m-payment) system is an example of a value network as it requires the collaboration of multiple partners from diverse industries, each bringing their own expertise, motivations and expectations. Consequently, managing partnerships has been identified as a core competence required by organisations to form viable partnerships in an m-payment value network and an important factor in determining the sustainability of an m-payment business model. However, there is evidence that organisations lack this competence which has been witnessed in the m-payment domain where it has been attributed as an influencing factor in a number of failed m-payment initiatives since 2000. In response to this organisational deficiency, this research project leverages the use of design thinking and visualisation tools to enhance communication and understanding between managers who are responsible for managing partnerships within the m-payment domain. By adopting a design science research approach, which is a problem solving paradigm, the research builds and evaluates a visualisation tool in the form of a Partnership Management Canvas. In doing so, this study demonstrates that when organisations encourage their managers to adopt design thinking, as a way to balance their analytical thinking and intuitive thinking, communication and understanding between the partners increases. This can lead to a shared understanding and a shared commitment between the partners. In addition, the research identifies a number of key business model design issues that need to be considered by researchers and practitioners when designing an m-payment business model. As an applied research project, the study makes valuable contributions to the knowledge base and to the practice of management.