CREATING JOINT EFFICIENCIES

Web-enabled supply chain services for rural communities

S. M. Muniafu, A. Verbraeck

Systems Engineering Section, Delft University of Technology, Jaffalaan 5, Delft, The Netherlands

Keywords: Web-enabled services, supply ch

ain, rural logistics, ICT, Studio

Abstract: Currently, about half the population of the world lives in rural areas, and they are disadvantaged regarding

access to the basic technical knowledge to exploit the expanding Internet infrastructure. They lack readily

available supportive tools, methodologies, and the capability to take advantage of the newly developed

technologies to integrate their supply chains. This paper identifies the need for support environments in the

development of web-enabled supply chain services for rural areas, based on the concept of a so-called

design studio, which uses simulation models and collaboration technology to facilitate the design. The

practical applicability of the concept in creating joint efficiencies is discussed before concluding that the

conceptual model presented may provide a much-needed solution to some of the failures and problems

faced when trying to put supply chains in rural areas onto the web.

Exploratory cases are being carried out

to prove and validate the applicability of the concept

1 INTRODUCTION

Currently, about half the population of the world,

particularly in the developing and transition

countries, still lives in rural areas (UN, 2004). In

comparison to urban areas, most of the rural areas

are heavily underdeveloped and perpetually

characterised by physical remoteness from basic

amenities, poor infrastructure, fragmented and

chaotic distribution systems, problems with cash

flow, low supply chain volumes, long distances to

markets, high unit transportation prices, and cases of

multi-tiered middlemen, among other issues

(UNCTAD, 2003). These conditions mean that there

are currently very few efficient supply chains, and

that although improvements may take time, there is

still hope that things can be done better especially if

carried out through the web.

However, rural people are disadvantaged

rega

rding access to the basic technical knowledge to

use the expanding Internet infrastructure effectively

(Klein and Jang, 2003). They usually do not have

readily available tools and methodologies to assist in

effectively accessing or “organizing” new value-

added or niche markets for their products. They lack

the capability to take advantage of the newly

developed technologies in ICT to participate in those

supply chains that reduce their vulnerability to risk

while increasing their direct profit. In many cases,

new supply chains should be created that are geared

to the specific situation in the rural areas, such as

bad accessibility, lack of planning, and dependency

on external influences such as weather.

Given this situation, there is need to create

odels to help illustrate, simplify and manage

supply chain operations for rural areas (UNCTAD,

2003). One of the basic ideas is to use web-enabled

technologies and portal technology (Boyson et al.,

2004) to make the services accessible and easy to

use from remote areas. The aim of this paper,

following on (Janssen, 2001) is to show that the

development of web-enabled supply chain services

for rural areas using a support environment is more

effective than when such services are developed

without a support environment.

The paper highlights the need to provide support

r coordinated development practices in the

development and exploitation of web-enabled

supply chain services, and outlines a practical set of

interventions that can be deployed as part of the

support environment. It provides an example model

and concludes with a prognosis of the potential

impacts of the solution in terms of the establishment

of practices to create repeatable local solutions.

127

M. Muniafu S. and Verbraeck A. (2005).

CREATING JOINT EFFICIENCIES - Web-enabled supply chain services for rural communities.

In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 127-134

DOI: 10.5220/0002555301270134

 SciTePress

1.1 Need for a support environment

for web-enabled services

development

The lack of supportive models to analyse decisions

for creating web-enabled rural supply chains might

be part of the reason for the low rates of technology

absorption and chaotic situations that exist in

attempts at improving rural supply chain operations.

Many rural areas possess large amounts of data

that is both of local and national importance, and

very little is done to provide the (rural) stakeholders

shared access to it. The result of this is that the

typical rural person does not have the capability to

utilise the available information so as to realize the

necessary efficiencies of industrialized agriculture

(Klein and Jang, 2003). It is important that we

design re-usable approaches for developing our

service architectures, which can be easily modified

by using a directly available and relevant approach,

embodied in a support environment. Such an

approach would ideally consist of methodologies

that allow us to scale up or out as required by the

pertinent situation.

A support environment (Sol, 1992) should

enable decision makers to focus on the relevant

design issues and treat context specific issues from

various points of view. Decision-making (Keen and

McDonald, 2000) is still too much viewed in terms

of technology. Current theories, frameworks, and

planning tools are incomplete and of limited use

(Kambil and Short, 1994) in helping decision

makers understand and manage the complexity of

these emerging, interdependent, networked

environments. Based on this, we therefore need to

develop a support environment (Janssen, 2001)

aimed at helping the stakeholders to identify

opportunities and evaluate the business values of

their decisions.

Indeed, rural areas have many assets arising

from their peculiar environmental, social and

institutional conditions, their position and valuable

countryside features including natural habitats,

scenic landscape and farming practices, limited

infrastructure, etc. (Savoldelli and Innocenti, 2001)

and in a way the use of the web is seen as being able

to assist in overcoming some of the disadvantages of

dispersion. Given that the main activity of rural

areas is agriculture, it is assumed that web-enabled

services could provide the means for improving the

delivery of inputs, enhancing access to markets as

well as enabling the interaction between farmers and

agricultural institutions (UNCTAD, 2003).

The United Nations’ General Agreement on

Trade in Services (GATS) recognizes that web-

enabled services in which service delivery is done

across borders (UNCTAD, 1998) are eligible

substitutes for other modes of service delivery, and

we believe that supply chains fit into this category.

The provision of support for the development of this

mode of service is the focus of this paper, in which

the phrase ‘across borders’ has been loosely

extended to include borders within countries.

However, access to telecommunication networks is a

key issue for the development of web-enabled

supply chain services, and access initiatives need to

be stimulated.

1.2 Web-enabled Services

These are services made possible with the help of

web-based technologies, mostly used when referring

to services delivered over telecommunication

networks or the Internet to a range of business areas

and verticals (McGraw, 2001, MIT, 2003). The

technology is used essentially as a tool or enabler to

provide the services, in which most of the functions

tend to be human-intensive and the processes and

services may be outsourced in order to derive a cost

advantage without sacrificing quality and efficiency.

Web-enabled services cover the entire range of

services that exploit the web for empowering an

organization with improved efficiency or types of

services that may not be possible to be rendered cost

effectively without the web. The web-enabled

services (Glass, 2000) are built upon another level

called web services, which is defined as a collection

of functions that are packaged as a single entity and

published to the network for use by other programs.

Web services (Turban et al, 2004) expose or

consume functions or content programmatically via

the Internet and can be viewed as building blocks for

distributed systems.

For rural areas (UNCTAD, 2003), exploitation

of the web for provision of supply chain operations

is highly desirable given that their commodity

supply chains involve many intermediaries, with the

result that the export earnings are shared by a

multitude of traders and processors, and producers

receive only a small share of the final consumer

price. The concept of providing support for their

development is particularly relevant for identifying

areas in which potential bottlenecks may arise and

designing commodity-specific support services. The

support offered to the developers will be at a higher

level above the basic functionality of the supply

chain itself. Using some basic

characteristics

adopted from (Easton, 2003), the situation of a

supply chain in a rural area is presented next, to set

the pace for the discussion related to the

development of a support environment

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2 A RURAL SUPPLY CHAIN

2.1 Characteristics and constraints

2.1.1 Geography

The interior parts offer the most significant

development opportunities for web-enabled services

given that large sections of the population live there.

However, the challenges are higher due to poor

access to the hinterland and the general lack of good

infrastructure (Conyers, 1993, Easton, 2003, Smyre,

2000). The rural communities have to travel long

distances and over generally rough terrain to get to

the markets to sell their goods, which means that

they carry less and therefore make less money due to

the low volumes and high cost of shipment (Naude,

2004).

2.1.2 Infrastructure

In most rural areas, there is a general lack of proper

road, rail, warehousing, and logistics capabilities.

The most common method of transport for goods is

by road, which also seems to be the most preferred

(and cheap) option for moving goods to the market.

In general, road transport is thought of as offering

the most flexibility and control over delivery times

and the delivered condition of goods. In most cases,

the road transport network is not entirely well

developed and consists of very few tarmacked or all

weather roads, which are barely passable in times of

heavy rain (Conyers, 1993, Smyre, 2000).

On one hand, small and privately owned vehicles

dominate the road transport industry, and high

amounts of empty miles and high unit transportation

costs are a common characteristic. Given the low

level of infrastructure development and low

incomes, there is very little use of containerisation

and inter-modal operations. On the other hand,

coupled therewith are the high trucking costs and

relatively low security of goods in transit (Easton,

2003).

2.1.3 Production

In many cases, the rains come at specific times of

the year, which directly translate into planting times

for the farmers, who in turn tend to grow the same

kind of crops determined by the area their farms are

located in. Given that the weather patterns generally

remain the same for the same area, it means that

everything that goes into production of the farm

produce is done at the same time by all the farmers

e.g. planting, spraying, weeding, harvesting, etc. As

a result, all of them harvest their produce at the same

time and because storage facilities are not well

developed most of them have to sell their goods

immediately after harvest. This means that they

cannot bargain for better prices, and that they cannot

defer their selling so as to wait for when the market

is at its best (Naude, 2004).

2.1.4 Periodic markets

Closely related to production (Naude, 2004) is the

fact that there is limited direct access to markets that

are slightly further than the nearest shopping centre

(e.g. urban or international markets). Many rural

areas have a model of periodic markets, which are

held in some focal points, mostly close to major road

networks and trade centres that act as feeders for the

urban areas. Given that a lot of the produce comes

from far-flung rural areas, it is desirable to

coordinate the service provision and schedules for

the periodic transportation of the goods and the

farmers to and from the markets. There is also need

to provide facilitation for freight collection and

distribution services and subsidisation in support of

the coordinated schedules, centres, and services.

Coordination of local transport to coincide with

local periodic markets, mobile clinics, school

transport, etc. is also desired (Naude, 2004).

In some cases, you also have brokers and

middlemen who supposedly take the burden of

going to the far-flung periodic markets from the

farmers. They provide transport services as well as

collection points at which they buy the produce, but

these multi-tiered middlemen make the supply chain

too long and therefore unproductive (UNCTAD,

2003).

2.1.5 Telecommunications and the Internet

In most rural areas, teledensity remains depressingly

low (Parkes, 2001), though the mobile services

market is growing rapidly. Mobile penetration rates

in rural areas are very encouraging, with most

people having access to the mobile networks, and

this may provide some of the needed stimulus for

accessing web-enabled services.

Internet connectivity still remains dramatically

skewed in favour of urban areas, though some

efforts have been made to provide local access

points in some of the focal areas of rural regions.

The International Telecommunications Union (ITU,

2004) notes that given the rising demand for Internet

access, wireless technologies could provide the

solution for rural areas.

However, very little use is currently made of the

available telecommunication infrastructure for the

purposes of improving the supply chains.

CREATING JOINT EFFICIENCIES: Web-enabled supply chain services for rural communities

129

2.2 Utilisation of the opportunities

Based on the existing situation presented earlier, it

becomes clear that some of the problems facing the

rural communities can be solved by introduction of

web-enabled supply chain services. As a result, it is

important to provide support for the development of

such services to integrate, centralize, and rationalize

supply chain functions, assets, infrastructure, people

and operations. Encouraging free flow of

information, use of supply chain technologies,

provision of one-stop solutions, and end-to-end

synchronisation of logistics services, all via the web,

can be used to do this.

The general deduction that can be drawn is that

the technology and access to it from the rural areas

(UNCTAD, 2003) is no longer the main problem,

and therefore there is need to strengthen and

improve the development practises to enable

services to be efficiently provided over the web i.e.

delivered remotely. However, some of the

underlying problems are caused by farmers’ lack of

access to market information and their resulting

inability to bargain effectively. The development of

commodity market information systems and the use

of the Internet by producers themselves can enhance

market intelligence to the benefit of agricultural

producers (UNCTAD, 2003).

A support environment for the development of

web-enabled services is expected to provide the

much-needed support to the already existing

initiatives, as well as to stimulate the uptake of new

technologies. Use of the environment would then

allow the developers to model and simulate the

development processes and accessibility of the rural

communities to both national and international

markets for their goods and supply chain services.

It is the assumption of this paper that if the

design and development processes for web-enabled

services were standardised to incorporate best

practices exhibiting some means of repeatability, it

would be easier to expand the functionality of the

services provided to the rural communities. A model

incorporating possibilities of providing location-

based services or services offered over mobile

devices is highly desirable, given that it has been

proven (ITU, 2004) that it is possible to provide

services via mobile phones and networks, thereby

by-passing the ever present discussion about lack of

telecommunications infrastructure in rural areas.

Also worth taking advantage of is the presence

of cyber-cafes in many of the focal centres of the

rural areas, which has meant that provision of

services is no longer a mirage. If the cyber-culture

were to be encouraged to grow further, it is expected

that it will create some critical mass that utilizes the

services provided, thereby assisting in lowering the

charges associated with providing the service. With

web-enabled services, we get the advantage of

ubiquitous access, fast assembly of components, and

optimum utilization of existing resources as these

can all be done in a distributed manner.

3 CREATING JOINT

EFFICIENCIES

Given the characteristics explained earlier about

rural areas, it becomes imperative that we are able to

create a link between several of the services

provided to the rural communities to effectively

utilize them. Through the use of the web, we can

provide for coordination of transport in rural areas

so as to reduce the amount of empty miles traveled

by ensuring that trucks can offer services mid-way.

Especially since the distances traveled are very long,

it would also be desirable if the farmers could be

able to book for transport services in advance to

coincide with, for example, the periodic markets.

The use of web-enabled supply chains in the

rural areas can reduce transaction costs in a number

of ways. The first is the reduction of search costs,

because buyers and sellers can easily locate each

other without necessarily traveling long distances

(UNCTAD, 2004). Multiple intermediaries

characterize rural marketing chains, and buyers

spend much time searching for information about

suppliers, products and prices. Web-enabled services

may reduce search costs in terms of effort, time and

money, because information can be exchanged more

efficiently via the web than through traditional

channels. Use of web-enabled supply chains can also

increase the efficiency of existing intermediaries to

the extent that they adopt the new information

technologies. This may lead to the development of

e-markets, which can be viewed as new

intermediaries to replace traditional offline

intermediaries.

Another area in which the joint supply chain

efficiencies can be utilized is in the coordination of

non-emergency mobile services that can be done in

such a way that one takes advantage of the other.

For example, in many rural areas there are mobile

health clinics, banking services, and periodic

markets. Having a system that supports brokering of

transport in such a way as it fully utilizes the

available capacity would be very beneficial to the

rural communities. To complement this, organized

agricultural bodies (e.g. cooperatives) can be used to

improve the logistics services, and coordinate the

periodic markets.

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3.1 The Conceptual Model

We feel that the development of web-enabled

services can be done better if the developers were

provided with a support environment that gives

insight into the complexity and dynamics of the

supply chain, while supporting and simplifying the

design process. Access to the services, the providers,

and the data can be done via web-enabled

connections, which in this case are taken to include

peer-to-peer networks. This concept is presented in

figure 1.

The service development environment presented

in figure 1 builds on the idea of (Keen and Sol,

2005), and begins from the decision process and

works back to the system providing a front end tool

that enables developers of web-enabled services to

work with the existing data rather than the other way

round. An approach within the environment is used

to support the entire process of developing web-

enabled supply chain or other matching services,

which will most likely have multiple stakeholders

with varying needs.

3.2 The Support Environment

The support environment, referred to as a studio by

(Keen and Sol, 2005), is interactive and it is where

suites are deployed. The suites are toolkits for the

designer, selected on the basis that they are the most

effective resources for support in the particular

decision domain. The effectiveness of the studio

rests on its processes, which fundamentally involve

people and collaboration. The studio contains

domain specific processes for effective decision

enhancement practice known as recipes, which are

proven, repeatable, sequential, and used. Within the

environment provided by the studio, the decision

makers are in a position to make more informed,

enhanced, and repeatable choices. Figure 2 (Keen

and Sol, 2005) diagrammatically presents the idea of

a framework for the decision enhanced studio.

Databases e.g. GIS,

meteorology, etc.

Service Access Point

e.g. library, town hall,

Figure 1: The service development, support, provision, and consumption environment.

Service Consumers

Service providers

Service Schedules

Service Development Support Environment

Services e.g. logistics, transport

scheduling, etc.

Access via the

web e.g. dial-up,

mobile access

The Web

Support for product

specific web-

enabled services

CREATING JOINT EFFICIENCIES: Web-enabled supply chain services for rural communities

131

The studio is centred on the design of skilful,

flexible, focused activities at the level of the

workplace, the organization, and between

organizations. It helps decision makers visualize

scenarios and alternatives, thereby giving them the

chance to ‘rehearse the future’ by framing decision

making situations, providing facilitative services,

and applying proven and adaptive recipes in

specified contexts. The development of activities

takes place in studios, which are targeted at

decisions that matter. The studios make use of

services that can support or improve the decision

making process by increasing the decision process

agility, referred to as Decision Enhancement

Services (DES). Some of these services include:

• Services that shape the environment in

which we participate with other actors:

landscaping

• Services for collaboration and participation

that need to be facilitated separately

• Services in the form of examples,

scenarios, recipes

• Services for designing the processes, to

achieve real Business Process Agility

• Services as instruments in the sphere of

animation, visualisation, (gaming)

simulation

• Services that develop and realise effective

cooperation, collaboration, within the

studio

These services of a studio make it a very

attractive option for the design of a support

environment in which the development of web-

enabled supply chain services for the rural areas can

take place. The decision makers and other

stakeholders are provided with the opportunity of

gauging their initiatives before implementation, and

this is expected to greatly improve the outcomes of

the various web-enablement initiatives.

3.3 Applicability of the concept

As is typical with any service implementation, the

service providers are often faced with almost

immediate requirements to change their structures or

add new structures to their profiles to suit customer

needs as soon as their product is ready. Such

additions or modifications may require re-designing

several tiers of the existing service environment. In

such a scenario, it would be more efficient if we did

not have to re-build the service architectures every

time but instead just modify the relevant structures

using a readily available approach. This approach

containing the various structures would be included

in a studio, thereby making it a useful solution.

Because of the fact that dynamic models and

visualization of ideas play an important role in the

concept of a studio, it supports both the gaining of

qualitative insight for all stakeholders into the

potential solutions, and quantitative results when

comparing alternatives.

To illustrate this, an example application taken from

the realm of rural logistics where web-enabled

services could be particularly relevant is when there

is need to coordinate periodic transport, service

provision and market schedules. Based on the

characteristics presented earlier, this would include

important aspects such as routes, stopping places,

and service times, considering that each of these can

vary even for the same customer group.

Architecture

“Landscaping”, governance, blueprints

Studios

Experiential process methods and “recipes”

for leveraging suites

Suites

Core resources for design and delivery

Figure 2: The Decision Enhanced Services Framework

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In such a case, it would be useful to establish a

system for arranging and disseminating information

about meetings and/or service access points and

times that might involve a different combination of

services and customer groups (Naude and Mashiri,

2000). By implication, mobile technology may have

a key role to play here in accessing the web-enabled

service. Using the studio, the developers would then

be able to model, simulate, and toy around with the

possible decision scenarios that can be taken to get

to the optimum decision.

In other cases, there may be a need to focus on

how different service supply chains involving

information and physical flows, as well as durable

and ‘rapidly vanishing’ stock could usefully link

with other service supply chains to create joint

efficiencies and add value to the supply chains.

Again, in this case, rehearsing the different scenarios

within the studio would provide very helpful insight

before implementing the service, and simulation

model results could easily demonstrate the potential

benefits to all involved stakeholders.

Owing to the peculiar situation of their

environment, most communities living in rural areas

regularly need to have access to logistics,

transportation, education, and many other services

which can be better provided through the use of

web-enabled technology. Use of the studio would

provide an environment to support the development

of these services. The services would then be

accessed via the local point of access to Internet in

the community, which would often be the town hall,

library, local school, or a cyber café in a rural centre.

4 CONCLUSIONS AND FURTHER

WORK

The paper has attempted to show how the

development of web-enabled supply chains for rural

areas using a support environment can be more

effective than when you develop the services

without a support environment. The conceptual

model presented may provide support for a much-

needed solution to some of the failures and problems

faced when trying to put supply chains in rural areas

onto the web.

Web-enabled technologies are continuously

becoming essential tools in the development and

management of rural supply chains, since they

provide enhanced market access for rural

communities and for organizing markets and supply

chains. Considering that some of the (often GIS)

data is already present, several institutions and

government bodies would then only worry about

developing relevant business models and technical

solutions to implement new services for rural

communities. Using these databases in combination

with other local variables, it will then be possible to

create joint efficiencies in the rural areas by utilizing

every available capacity effectively.

The concept presented in this paper and the

accompanying discussions are part of work in

progress, and exploratory cases are being carried out

to prove and validate its applicability.

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