Analysis of supply chain issues in poultry industry

Abstract

The world poultry-meat industry derives its significance from the fact that among all the meat categories, poultry meat is the fastest growing. India is the third largest egg producer and fifth largest poultry meat producer in the world. The Indian poultry industry employs about 2 million people, and contributes 1.1% to the national income.1 Among all the meat categories, poultry meat is witnessing the highest growth rate, at over 15% per annum, compared to the overall meat industry growth rate of 5% per annum. Currently, poultry meat constitutes approximately 25% of the total meat production in the country.2 Poultry meat is a perishable product. Hence, it cannot be made to stock like other non-perishable products by full capacity utilization (to reduce the cost per unit). Neither can it be made to order as the lead time for production of poultry meat (from hatching of eggs to rearing of fully-grown broilers) is about 10-12 weeks.3 The problem is compounded by uncertainties in demand leading to large price fluctuations. In a low margin industry, such as poultry, it is critical to control cost while building market share. The overwhelming challenge for poultry producers in getting their costs down is the sheer size of their supply chain, which extends from breeder farms, feed producing plants, hatcheries, to conversion and further processing facilities together with distribution centers. The complexity of the poultry supply chain can be seen with the help of the following figure.