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Open Food Network: the Role of ICT to Support Regional Food Supply Chains in Australia

Authors:

Abstract

Many organizations have introduced various ICT-enabled innovations to improve economic, environmental and social performance. The Open Food Network (OFN) is an example of an ICT-enabled innovation that has the potential to enhance the sustainability of regional food supply chain by improving farmers' access to local and regional markets and consumers' access to fresh local produce, as well as optimizing the regional food distribution and improving local community welfare. OFN has just been recently launched in Australia and currently there is a limited understanding of the actual impacts. This research-in-progress paper aims to evaluate the effectiveness of the OFN system in connecting and supporting the sustainability of regional food supply chain communities in Australia that will help devise strategies for expanding the use beyond Australia. The findings contribute to a longer term research program that investigates how ICT can support sustainability initiatives within organizations and supply chains.
Australasian Conference on Information Systems Kurnia et al. (2015)
2015, Adelaide, Australia Open Food Network
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Open Food Network: the Role of ICT to Support Regional
Food Supply Chains in Australia
Sherah Kurnia
Computing and Information Systems
University of Melbourne, Australia
Email: sherahk@unimelb.edu.au
Serenity Hill
Open Food Foundation
Australia
Email: serenity@eaterprises.com.au
Md Mahbubur Rahim
Caulfield School of IT
Monash University, Australia
Email: md.mahbubur.rahim@monash.edu
Kirsten Larsen
Open Food Foundation
Australia
Email: kirsten@eaterprises.com.au
Patrice Braun
Federation University
Australia
Email: p.braun@federation.edu.au
Danny Samson
Management and Marketing
University of Melbourne, Australia
Email: dsamson@unimelb.edu.au
Abstract
Many organizations have introduced various ICT-enabled innovations to improve economic,
environmental and social performance. The Open Food Network (OFN) is an example of an ICT-
enabled innovation that has the potential to enhance the sustainability of regional food supply chain by
improving farmers’ access to local and regional markets and consumers’ access to fresh local produce,
as well as optimizing the regional food distribution and improving local community welfare. OFN has
just been recently launched in Australia and currently there is a limited understanding of the actual
impacts. This research-in-progress paper aims to evaluate the effectiveness of the OFN system in
connecting and supporting the sustainability of regional food supply chain communities in Australia
that will help devise strategies for expanding the use beyond Australia. The findings contribute to a
longer term research program that investigates how ICT can support sustainability initiatives within
organizations and supply chains.
Keywords: Food supply chain, ICT, Food Hubs, sustainability, Australia
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1 Introduction
In recent years, due to the rapid increase of global population and the significant economic growth in
many developing countries, sustainability has become an important issue for businesses and the
broader society (Porter and Kramer 2011). An increasing number of organisations have endeavoured
to improve their business operations within their organisation and supply chains to enable them to
achieve economic, environmental and social benefits. The various sustainability initiatives introduced
have been based on the sustainable development principle (Brundtland 1987) that encourages the
fulfilment of the needs of the current generation without compromising the ability of the future
generations to meet their needs. Therefore, organizations are challenged to create not only economic
benefits, but also environmental and social benefits. These three aspects (economy, environment and
society) are the three pillars of sustainability which are known as the Triple Bottom Line (TBL)
(Elkington 1997).
Specifically, within the food supply chain context, food waste has been identified as a significant
supply chain issue due to growing supermarket domination in a number of countries (Blay-Palmer et
al. 2013). Large supermarket chains around the globe typically apply high quality control which
results in the rejection of imperfect produce supplied by local farmers. In addition, because of the
restricted agreement on the supply imposed by large players within the industry, excess fruit and
vegetables exists within supply chains and farmers have limited means of distributing these products
(Blay-Palmer et al. 2013). Such a situation threatens the sustainability of regional supply chains that
impact on the economic, environmental and social condition of the local communities in regional
areas.
As a response to the current food supply chain issues, the Food Hub concept has emerged as a way to
improve local food supply systems. Food Hubs represent an alternative model to the mainstream food
supply and are defined as organisations that aggregate, distribute, and market food products primarily
sourced from local and regional producers though simple, and more sustainable supply chains (Fisher
et al. 2013). They help facilitate a closer connection between producers and consumers (Matson and
Thayer 2013). The existing literature has identified a wide array of existing and potential benefits Food
Hubs provide to producers, consumers, and local economies. Significant benefits include greater
market access and the ability to provide a premium price through product differentiation by values
associated with production, location, and farm identity. These benefits are particularly important for
small and medium enterprises to seek alternative commodity markets to achieve economies of scale
which are necessary for survival. Conner et al. (2008) also identify providing fresh food access to low-
income communities, schoolchildren, and other institutions such as universities, prisons, and
hospitals as an important benefit.
However, there are a number of key challenges experienced by Food Hubs that threaten their viability
over a long term. For example, finding appropriate value chain partners for distributing products and
developing mechanisms for value chain decision-making, transparency, and trust are difficult
(Stevenson et al. 2011). In practice, many Food Hubs lack coordinated marketing mechanisms that
raise brand awareness to local customers, and many have been unable to establish effective strategies
for product differentiation, branding, and regional identity (Rose and Larsen 2013). Furthermore,
Food Hubs have not been well recognized by government and mainstream players within the food
industry (Rose and Larsen 2013).
With the advancement of the broadband internet technology, information and communication
technology (ICT) has the potential to support the operations of Food Hubs and overcome some of the
key challenges. Specifically, the application of electronic markets that was rapidly introduced in the
late 1990s appears to be relevant to address the issues within local food supply chains. The value
proposition of an electronic market is to reduce search costs for buyers and sellers through the use of a
hub, facilitate product evaluation through transparency of information, and help discover the right
price of products (Bakos 1998; Alt and Klein 2011). One of the recent innovative applications of e-
market to support regional food supply chains is Open Food Network (OFN). Open Food Network has
been established in the state of Victoria, Australia to connect various players of regional food supply
chains in Australia and support the operations of Food Hubs. However, since such an application of an
e-market is relatively new, there has been limited research conducted to assess the effectiveness of
such an ICT-enabled innovation in supporting the sustainability and resilience of Food Hubs and the
regional food systems. Furthermore, OFN has been recently launched in Australia and hence, little is
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known about the actual use and the impact of OFN on the stakeholders. Without an understanding of
the effectiveness of OFN, it is difficult to devise appropriate strategies to enhance the features and
encourage wider adoption within regional food supply chain parties.
This study is part of a large research project that aims to understand how ICT can help implement
sustainability practices within organisations and supply chains. In this research-in-progress paper,
we systematically assess how the OFN has been used by the early adopters who are regional food
supply chain players and the impacts on their operations. The overall research question and sub-
questions addressed in this study are:
How does OFN support regional food supply chains in Australia?
How is OFN used by the adopting supply chain players?
What are the benefits and challenges experienced by the OFN adopters?
This research-in-progress paper addresses the above research questions by conducting a preliminary
focus group with nine current OFN enterprise users to investigate the use and impact of OFN. Through
this preliminary investigation, we enhance the current understanding of how OFN as an example of
simple e-Commerce application applied innovatively within the context of regional food supply chains
can benefit the supply chain participants. In addition, we have identified a number of issues and
challenges faced by the participants in using OFN that will be valuable for the OFN technology
provider to further improve the OFN features and devise appropriate strategies that may encourage
wider adoption. Understanding obtained from this study may also benefit future design of ICT-enabled
initiatives that address sustainability in different contexts.
In the next section, we provide a brief literature review on the concept of Food Hubs, roles of ICT to
support sustainability initiatives and e-Marketplaces as an example of ICT application. We then
describe the concept of OFN, the research method, and the preliminary findings of the study. Finally,
we draw some implications from this study and explain the next step of the research project.
2 Literature review
2.1 Food Hubs: Benefits and Challenges
The growing interest on a healthier diet to avoid controllable diseases such as diabetes and obesity,
and concern over the environmental impact of supply chains has given rise to the popularity of
supporting the concept of ‘localisation’’. Localisation of food supply chains simply means that food
should be consumed as close to the point of origin as possible (Seyfang 2006; Barham et al. 2012). In
general, the concept of localisation stems from the consumers’ interest in understanding where and
how their produce is grown to ensure their food has high nutritional value without damaging the
environment (Seyfang 2006). The concept had led to the emergence of ‘Food Hubs’ in regional areas
of a number of regions including the United States, United Kingdom, and Australia.
Food Hubs could be viewed as an intermediary that uses an innovative business model to directly
connect small and medium-sized producers and local consumers. Their potential to improve local food
supply chain coordination, sustainability, and resilience has attracted the global attention of
practitioners and researchers (Woods et al. 2013). Existing research indicates that Food Hubs may
offer a number of environmental, social and economic benefits to the food industry and communities.
For example, Food Hubs support environment friendly production such as organic items that do not
use harmful ingredients such as pesticides and chemicals (Flaccavento 2009; Stevenson 2009). They
provide nutritious produce in their local community by shortening the delivery timeline through
restructuring of the supply chain (Rose and Larsen 2013). They also facilitate civic agriculture by
helping community members understand the origin of their food and its supply system (Lyson 2005).
In addition, they help improve the health of low-income communities, school children, and other
institutions (e.g. universities, prisons and hospitals) by providing them with greater fresh food access
(Erlbaum et al. 2011; Conner et al. 2008). Furthermore, studies indicate that Food Hubs ensure
equitable income for farmers and food system workers, fair prices for consumers (Flaccavento 2009;
Matson and Thayer 2013), and create more jobs in the local economy to support the development and
operations of Food Hubs and regional food distribution systems (Rose and Larsen 2013). Finally, Food
Hubs potentially minimize fuel consumption and carbon emissions by using optimisation technology
to improve the routing schedule and truck optimisation (Rose and Larsen 2013).
Despite the growing popularity of Food Hubs, their operations regularly encounter a range of
challenges. Pricing is a key challenge that requires fair price assurance for producers that are also
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affordable for consumers (Fischer et al. 2013). Food Hubs struggle to manage growth since they are
newly established entrepreneurs with limited experience and business skills (Fischer et al. 2013). As
the volume of transactions increase, many have found it challenging to manage the rise in suppliers,
buyers, and operational costs associated with the growth and many have identified balancing supply
and demand as a challenge (Fischer et al. 2013). Meeting capital requirements including the cost of
new infrastructure, other start-up costs, and distribution has also been identified as a challenge
(Clancy and Ruhf 2010; Melone et al. 2010; Fischer et al. 2013). Finding appropriate value chain
partners and developing mechanisms for value chain decision-making, transparency and trust,
determining effective strategies for product differentiation, branding and regional identity, and
determining appropriate strategies for product pricing based on understanding true cost structures
have also been identified as challenges (Martinez et al. 2010; Tropp and Barham 2008).
Within the Australian context, Rose and Larsen (2013) identify specific barriers and obstacles faced by
the development of local food economies as a whole in the southern Melbourne region of Australia.
They include difficulty in securing capital for business expansion and growth, lack of recognition of the
new sector from government/mainstream players, inability to represent themselves and advocate their
needs for large food manufacturers who can lobby to influence regulations, lack of integrated food and
agricultural policy, regulations around food safety that hamper innovation, lack of coordination
amongst policy makers, lack of highly-skilled labour, and lack of coordinated marketing mechanisms
that raise brand awareness.
2.2 Roles of ICT to support sustainability initiatives
Currently, the literature exploring the link between ICT roles and Food Hubs is scant, although some
IT-related challenges in the sector have been identified. Previous studies have indicated the roles that
ICT can play in supporting organisations to practice sustainability initiatives within the supply chains
(Dao et al. 2011; Porter and Kramer 2011). These roles include automating, informating, and
transforming and providing infrastructure to support organisational activities in such a way that
sustainability goals can be met (Dao et al. 2011; Kurnia et al. 2012). Kurnia et al. (2012), in particular,
synthesize a number of key practices along the three dimensions of sustainability and conceptualize
how each practice is supported by different roles played by ICT based on Dao et al. (2011)’s
classification. They find informating and infrastructure provision to be the two major roles in
supporting various sustainability practices. They also highlight the significance of transformation role
to further support value creation in the sustainability context although it has not been well explored in
the current literature. However, there are currently limited studies with empirical evidence to explain
how different roles of ICT support organisations to improve the three aspects of sustainability
performance (Elliot 2011; Kurnia et al. 2012).
Furthermore, ICT has been useful to support information sharing and facilitate collaboration among
different organisations, opening the potential to address one of the challenges related to collaborating
and goal alignment among different parties involved in the operation of Food Hubs (Dewet and Jones
2001). However, it appears that Food Hubs often have limited ICT skills and therefore do not have a
clear understanding of ICT requirements to support business operations (Jablonski et al. 2011). They
then experience lack of technical assistance related to web and data management, organizational
management, product development, and food safety knowledge and compliance (Day-Farnsworth et
al. 2009). A survey study involving Food Hubs in 2013 indicates that technology is one of their top
three challenges (Fischer et al. 2013). There is some evidence that information technology
developments in food supply chains connected to traceability, efficiency in distribution, quality
systems, market information, and product development, are also being adapted to shorter, localized
food chains (Barham et al. 2012 and Matteson and Hunt 2012) although there is little research on
specific interventions and impact. Therefore, more effort is required to better understand how ICT can
be used to support Food Hubs to enable them to run their operations more effectively and efficiently
and how this is specifically linked to environmental, social, and economic benefits.
2.3 Electronic Marketplace (EM)
A number of capacity limitations and challenges faced by Food Hubs identified in the existing studies
may be overcome by introducing an online intermediary (EM) to connect the producers and
consumers and assist with the aggregation and distribution of fresh produce. Although EM comes in
varying forms, it can be broadly defined as a virtual place where buyers and sellers meet to exchange
goods/services (Segev et al. 1999). There are many benefits incorporating EMs in a business model.
From a buyer's perspective EMs have the capacity to reduce search costs by making product and
pricing information accessible, which also raises competition among suppliers, resulting in lower
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prices (Bakos 1998; Soh, Markus and Goh 2006). Electronic Marketplaces also allow sellers to
compete for a wider range of customers, who may previously have been unreachable, with lower
customer acquisition and transaction costs (Mahadevan 2003). Additionally, EMs can also enable
sophisticated price discrimination on the sellers’ behalf (Bakos 1998).
Electronic Marketplaces have evolved within multiple industries with differing modes of operation
(Mahadevan 2003). They can facilitate trade between businesses (B2B) or between businesses and
consumers (B2C, C2B and C2C) (Grieger 2003). Mahadevan (2003) gives an illustration of this
breadth through a selection of EM structures which have arisen in the B2B space, including: catalogue
aggregators, consortia marketplaces, forward and reverse auction sites, and Trading Partner Networks
(TPN) and exchanges. According to Grieger (2003), a number of traits can be used to characterise the
spectrum of EMs, among which are the degree of buyer/seller orientation and whether the pricing
mechanism is fixed or flexible.
From the perspective of buyer/seller orientations, OFN falls into the category of a 'neutral' EM, that
involves a third party equally favouring buyers and sellers (Grieger 2003). These EMs are referred to
as 'market makers' and their typical business model is to facilitate interactions between buyers and
sellers, charging a fee for this service (Benjamin & Wigand, 1995). Being IT based and unrestrained by
brick and mortar resources, market makers have strong potential to upscale (Kaplan and Sawhney
2000). However, one challenge facing market makers is that they must recruit a large volume of
buyers before they can attract sellers, or vice versa, placing them in a 'chicken-and-egg' predicament
(Grieger 2003).
Additionally, the interests of buyers are in direct conflict with those of sellers in regards to the level of
pricing transparency (Soh et al. 2006). While buyers are attracted to high price transparency, sellers
may be deterred from participating in an EM with high transparency. Flexible pricing mechanisms
such as forward and backward auctions, and pricing transparency features such as direct comparisons
alter the price discovery process and raise competition (Bakos 1999). Neutral EMs must make a
strategic decision that satisfies both parties. Soh, Markus and Goh (2006) assert that EMs must
compensate buyers/sellers with other sources of value if the pricing transparency policy goes against
their interests. In a discussion of the failings of past EMs, previous research indicates inadequate
revenue as a common downfall of market maker Ems (Kaplan and Sawhney 2000; Grieger 2003).
Establishing a pricing model which appeals to customers and also generates adequate revenue to
sustain operations has proven difficult.
3 Open Food Network (OFN)
The core vision of the Open Food Network is for a diverse, transparent, and decentralised food system.
It provides food enterprises such as Food Hubs and other organizations involved in regional food
distributions with an online marketing platform and tools for aiding their operational and
administration activities. This is designed to enable Food Hubs to take advantage of e-commerce
opportunities, without needing a large amount of capital to invest in the software. To the customer, the
OFN website is a collection of online stores, organised as a directory. Customers can browse profiles
and stores to learn about where their food is coming from and place and pay for orders. The profiles
and online stores are controlled by the enterprises.
Open Food Network is being used by a variety of enterprises as their shopfront and as a tool for
managing back-end activities. Current adopters of OFN include farmers selling directly to customers,
not-for-profit food coops, and Food Hubs with multiple suppliers, buying group customers, and
commercial customers. These early adopters provide a test to whether OFN can help facilitate
financially viable, alternative business models. The functionalities that serve the different enterprises
include reporting tools, inventory management and the capacity to integrate accounts with trading
partners (such as suppliers and buying group customers). This makes cooperative relationships and
trading partnerships easier to manage, and lowers the administration burden for hubs to collaborate,
therefore reducing overall costs in the supply chain. Ultimately, OFN’s goal is to create a website with
functionality that allows enterprises to establish an online trading presence in a relatively short
amount of time and at little cost.
While e-commerce has reduced barriers to entry into the food and grocery sector, the cost associated
with establishing an online shopfront and an Enterprise Resource Planning system for small business
is still prohibitive to many micro and small enterprises. Further, duplicating the development of this
software across multiple small businesses made little sense. The OFN is evolving to fill this need.
More information on specific features is available at openfoodnetwork.org/features.
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4 Research method
This study aims to understand the role of ICT in supporting regional food supply chains in Australia.
In particular, we focus on assessing the effectiveness of the OFN as an example of an ICT application
that has been established to support Food Hubs and other regional food supply chain parties, as well
as address the challenges they face. Focus group study was used in this study as a way to obtain
preliminary in-depth, qualitative information from the early adopters of the OFN. This method is
beneficial for this type of exploratory study that investigates how ICT supports regional food supply
chains.
OFN was launched in June 2015 and there are currently still a limited number of adopters. The focus
group involved seven users of OFN as outlined in Table 1. All participants are enterprises that act as
‘hubs’’. The focus group session was conducted for over two hours in June 2015. The session was
recorded and subsequently transcribed for analysis. All the key ideas were coded under relevant
thematic headings (Miles and Huberman 1994) to explore OFN use, benefits, and challenges as
perceived by the OFN adopters.
Organisation
Type
Year in
Operation
Number of
Participants
Participant
Number
A
Food Hub
5 years
2
Participant 1
Participant 2
B
Food Hub
In planning
1
Participant 3
C
Food Hub
1 year
1
Participant 4
D
Farm-based hub
3 years
1
Participant 5
E
School-based hub
Pilot
2
Participant 6
Participant 7
F
Food Hub
2 years
1
Participant 8
G
Food Hub
3 years
1
Participant 9
Table 1. Overview of Focus Group Participants
5 Study Findings
The following section describes the study findings which are grouped into 3 categories: use of OFN,
benefits of OFN to enterprise users, and issues with OFN to enterprise users.
5.1 Use of Open Food Network
The Focus Group findings indicate that Open Food Network is being incorporated into a diverse range
of food enterprise models. Firstly, OFN has been used to facilitate a more efficient and customer
friendly way of taking and processing orders. This particular use is specifically relevant for Food
Hubs with complex operations. Food Hub enterprises typically aggregate produce from six nearby
producers each week to be distributed to multiple buying groups and institutional customers. They
accept unique customer orders, in contrast to fixed mixed vegetable boxes, representing a relatively
high degree of operational complexity. Product availability information is taken from farmers weekly.
This information can now be displayed on the OFN accordingly. Each buying group has a unique
shopfront created within the hub's order cycle, allowing for customised shopfronts according to the
preferences of each buying group, such as exclusively organic.
With the use of OFN, individual customers place orders through their respective group shopfronts and
upon closure of the order cycle, the central Food Hub views the order totals aggregated across all
buying groups, and place orders with farmers accordingly. Produce is then brought to a central
packing location either by delivery from the farmer, or collection by the hub. Orders are packed by
paid staff and then picked up and delivered to the buying group pick up locations by a member of each
buying group.
For a number of participants who have been performing direct marketing of their meat products, OFN
has been used as a direct marketing tool to reach regional and metropolitan customers efficiently.
This enables the participating enterprises to obtain advance customer orders. Taking orders in
advance (through OFN) of slaughtering and packing gives an accurate indication of demand, reducing
the risk of over or under supplying. Customers are also given flexibility to buy a ‘mixed box’, with the
option of adding ‘extras’. This can secure purchases of the less popular cuts of meat while also offering
the option to order additional specific products.
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OFN has also been used as part of a project of the Rural City Council to increase accessibility of fresh
fruits and vegetables to the community, with the ultimate goal of reducing obesity. Open Food
Network has been used to sell produce from a local wholesaler to buying groups established in local
schools.
5.2 Benefits of OFN to Enterprise Users
A number of benefits of OFN have been achieved by the early adopters participating in our study,
which are discussed below. Benefits of Electronic Marketplaces that have been identified in different
contexts within the literature appear to be relevant for our study context.
5.2.1 Expanding marketing channels
The ability to market online is valuable to enterprises as it gives them an independent means of taking
their product to market and allows customers to shop conveniently. Adopting OFN's e-commerce
functionality gives enterprises a substantial advantage over more traditional marketing channels (e.g.
farm gate stalls, markets, email ordering) because it helps enterprises connect with the rising number
of Australian consumers who prefer the convenience of e-commerce over the traditional marketing
channels. This sentiment is echoed in the following excerpts by Participant 9:
"That rapidity with which you can scale up from having no online presence to being a fully-fledged
online store …. …. People have all kinds of expectations of the ways that they want to engage with a
food business these days. If you don't have an online presence, it's fairly difficult."
5.2.2 Ease of use
The ease of product trial and use is very important to the emerging Food Hub movement. Minimising
the learning costs and transactional costs is critical as there are already many mental hurdles
preventing customers from engaging with the innovation. OFN has ensured that its shopfront and
checkout processes are familiar to customers and easy to use which benefit the current and potential
adopters. For example, Participant 5 noted: "My customers say it is really easy to use, they like it, it's
really visually appealing".
5.2.3 Administrative efficiency
Administrative activities involved in operating a Food Hub include establishing produce availability of
suppliers, accepting orders from customers, and managing accounts payable/receivable. Open Food
Network's reporting functionality allows users to easily view and interpret data relating to their trading
activities. A number of the participants indicate that the usability OFN's reporting functionalities is
excellent. It gathers data about their products, customers, and orders, and lets them display and
interpret this data in different ways. OFN has made the task of managing orders less demanding, "I've
got so many hours back every week in my life. I don't need to respond with individual emails to every
order," (Participant 5). For multi-party trading arrangements, this is particularly valuable, as the tasks
of manually tracking orders and accounts can be a huge burden on these, often under resourced
organisations.
5.2.4 Operational efficiency
The operations of local Food Hub businesses are inherently complex due to the seasonality and
perishability of products, the inconsistency and unpredictability of supply, working with multiple
suppliers and having multiple incoming and outgoing logistics, and tracking payments from customers
to suppliers. Achieving efficiency in operations as well as automating and standardising processes is
especially important for Food Hubs that are low on human resources or rely on contributions from
under skilled and often transient volunteers.
The OFN software enables Food Hubs to manage the operations complexities more efficiently, making
these factors more manageable and bringing feasibility to their business models. Participants 1 and 2
were acutely aware of the challenges they faced in juggling their operations. "We had a desperate need
for some sort of software to help us organise ourselves” (Participant 1). They were also impressed by
the "phenomenal flexibility" of the system. It allowed them to change the way they articulated their
problem and their model and still find a way to adapt the system to find a solution. Another hub
manager explained the simplicity of incorporating a new supplier into the system. "It can happen very
quickly... all of a sudden they're on the order cycle and we're beginning to move their stuff"
(Participant 4). The flexibility of OFN is highly valued by users, as it can accommodate shifts in their
operations and the elements of uncertainty which are inherent in their businesses.
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The OFN's order cycle model encourages enterprises to accept and fulfil orders in a periodic, routine
manner. This allows them to aggregate demand on a weekly, fortnightly, or longer basis leading to
more efficient operations and logistics. The order cycle function is being used by Participant 5, who
has two complementary order cycles, which is used to coordinate with butchering and packing
activities. As will be discussed in the limitations section, shopping in this cyclical manner involves a
learning curve for customers.
5.2.5 Visibility and access to new customers
Functioning as a network of interconnected enterprises, rather than in isolation, OFN brings multiple
related benefits to users: 1) Reach target customer segments (conscious consumers in their locale); 2)
Connect with and form symbiotic trading relationships with other enterprises who share aligned
interests; 3) Strengthen their image or brand through association with the OFN's values (stronger
together than alone).
Multiple enterprises spoke of having attracted new customers from their involvement and exposure on
OFN: "then the first week, wham I got ten new customers" said Participant 5, and Participant 4 said
"we've had at least one or two producers and some customers come along because of some kind of
contact or awareness of OFN".
Enterprises using OFN are able to share in the OFN's brand equity and strong brand values. "I think a
lot of people out there, a lot of consumers, want that information. And it's an added value thing... So
that is the big selling point (of OFN), for both people setting it up for their own organisation, and
people coming in and buying from it" (Participant 3).
5.2.6 Raising the profile of Food Hubs and alternative food distribution models
Open Food Network is housing and giving momentum to Australia's local food movement, a
movement which is still in its infancy and is in need of promotion and substantiation. Amongst the
public, government, and mainstream players, there is a lack of recognition of Food Hubs and their
potential role in regional food systems. By raising the profile and credibility of these novel models,
OFN is improving the receptivity of government funders, suppliers, and consumers to the innovation,
which makes for a more amenable environment for emerging Food Hubs. A local council employee
who had piloted a school based Food Hub explained: ”OFN enabled us to have conversations that we
haven't had before” (Participant 5).
5.2.7 Reducing transaction costs
The administrative demands of coordinating multi-party trading can be prohibitive for many
organisations. Open Food Network has functions which facilitate coordination and ease the exchange
between parties, making the formation of complex, multi-party trading arrangements feasible. One
existing hub operator explained how the OFN technology had led them to consider a greater diversity
of food distribution models: "It's (expanded) our notion of how local food comes in to a central point
and how it's distributed and goes out."..."Just using the word hub, we're able to see a much bigger
role, for our group, than just food in and food out to families via veggie bag systems" (Participant 1).
Participants 1 and 2 have since explored supplying through wholesale channels, bulk buying groups,
and the local community house, who serves low income families, amplifying their impact.
5.3 Issues with OFN to Enterprise Users
Since the OFN has just been recently launched, there are still a number of issues encountered by the
early adopters, which are discussed below. Recognizing and identifying these issues are critical for
further enhancement of the OFN features and devising appropriate strategies for encouraging wider
adoption among regional food supply chain players.
5.3.1 Subscription and advanced customer accounts
Presently, OFN cannot attach detailed information to a customer's account, restricting the ways that
enterprise can use OFN for their customer relationship management. The development of more
detailed and integrated customer accounts would allow for a number of added features directly
requested by participants, including: managing subscription/membership within the OFN system
(Participant 9), creating “member only” order cycles (Participant 5) and creating automatic 'standing
orders' placed by subscribers (Participant 5).
It is common for Food Hubs and Community Supported Agriculture enterprises (CSAs) to operate
under a membership or subscription model. Currently, OFN does not offer functionality for managing
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9
subscription or creating 'member only' shops, which was raised as a major concern among
participants. "My big one is that we run on a subscription model. So we have customers subscribe for
a 12 week season, and so not having a subscription management system as part of it, it’s the biggest
limitation for us" (Participant 9). To compensate, this hub manager had to operate an additional
external subscription database. In the case of member only shops, the manager must manually flag
and contact non-member customers who have placed an order.
An extension of this shortcoming is the inability to create a recurring order for customers who have
subscribed, or paid upfront for a repetitive order (such as a weekly vegetable box delivery). Thus, a
request was placed by an enterprise (Participant 9) for "standing orders for particular products, and
having repeating orders" to prevent enterprises from needing to manually place orders for their
committed subscribers each week. These limitations show that there is space for OFN to create
customer accounts which contain membership status and recurring order information, and can be
used to further streamline manual administrative tasks.
5.3.2 Restricted checkout (requiring a minimum order or membership of enterprise)
Participants discussed a number of scenarios where they would like to restrict customers from placing
an order. This includes: if they are not a member, if they have not purchased one essential item, if they
have not reached a minimum spending amount, or if they are located beyond a set distance from the
hub. At the time of writing, the OFN cannot restrict checkout based on any of the above. The type of
restriction required varied depending on the enterprise. One producer wanted all customers to
purchase the mixed box in order to checkout, with the option of adding additional extras: "I would
prefer it's a minimum order as a box, rather than a dollar amount" (Participant 5). For another hub,
a set spending amount was more important. This would make it possible for them to manage margins
"That's something that I foresee could be an issue, for people like us. Feasibility of fixed costs and
everything, so you need to have a certain tipping point." (Participant 3)
5.3.3 Lack of integrations with other software
OFN does not integrate with any other software. One participant declared that they wanted to be able
to integrate between their labelling scales, accounting package, and their OFN account. This would
allow her to perform multiple functions in the same place, saving her time. In addition to the
significant efficiency gains to be achieved from coordinating OFN with other software products, it
would also reduce the barriers for enterprises who are migrating their existing operations to OFN and
improve the ease of uptake.
5.3.4 Cross platform performance and responsiveness
A number of participants raised concerns about how well OFN performed on devises such as
smartphones and tablets. "I think the biggest (issue facing customers) is the mobile and tablet thing."
Participant 9. One enterprise had customers who used tablets and mobiles exclusively, as they didn't
own computers. Another hub was trying to secure hospitality customers, who traditionally ordered by
fax. For them, this transition would be smoothest if they could order on their smart phones in the
restaurant. "Moving online was sort of blowing them away a little bit. And they were like, well how
will our chefs do that? And I was like, well they've got smart phones" (Participant 6). While OFN is
designed responsively, the current performance (speed) impedes streamlined use from smartphones
and tablets.
5.3.5 Set up time for existing enterprises
Depending on the size and complexity of the enterprise, there is a significant time commitment
associated with establishing an enterprise on OFN. This time is in data entry (creating profiles and
products) and also familiarising oneself with the different functions and how the site works: "working
out the nuts and bolts, and ironing out the creases to start with, that's a very, very long process"
(Participant 3). This was raised as a major challenge and a process that enterprise users wanted
simplified. Specifically, Participant 5 said, “If I could have just imported a spreadsheet, and all my
products would be there, that would have been nice.” While this user did persevere, she stated that
that initial setup becomes quite a mental hurdle and finding the time to populate the site was
difficult.
5.3.6 Lack of enterprise capacity and need for a forum for knowledge sharing
Throughout the focus group participants raised issues which confronted their business, and were not
directly related to the OFN's core functions. Participants recognised that there was a huge range of
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10
skills and resources that enterprises need to be successful in the space; "when you get into this, you
realise there's quite a big suite of skills and knowledge you need to run a local food economy and
these people don't have that... and I wonder whether there is that reason why a lot start up and
crash." (Participant 6)
One participant highlighted that the "Open Food Network already is somewhat directly educating
people and providing that kind of function, and it could be expanded upon, and sharing learnings in
different ways. I don't know, I see a lot of potential for that" (Participant 4). An example of such a
resource which proved useful for one participant was a collection of Food Hub case studies, housed at
foodhubs.org.au; "I had never worked in this area before and I read that website quite a lot before I
started working there, and it really helped” (Participant 6). A further suggestion was the provision of
"Something like a development kit, for people starting up in this space, in other places" (Participant
9). Or simply, "Even something associated to the OFN website, whereby you could go on and visit the
help section for people using it" (Participant 8). Participant 4 found pricing to be a challenge, "I don't
know whether there's something that OFN can do to help us through it."
They also recognised that "there's a huge amount of knowledge sitting in the people who work around
OFN, it would be a shame not to share that and to share the learning"(Participant 4). There was
consensus that some kind of online forum for sharing knowledge and having discussions with other
OFN users would be very valuable: "We could have people learning about Food Hubs and having that
dialogue about, what do you put in your constitution, what sort of structure did you set up, and also
some technical stuff about OFN, like how do I do this or that" (Participant 3). One participant said,
"I'd love to hear about how other people operate, and get little ideas from them. Just the little things,
like putting recipes out. What people are doing and how you might be able to improve yours, or
change it a little bit" (Participant 6).
5.3.7 Product property and quality control (e.g. free range)
At the time of the focus group there was no way for hubs or producers to attach a property field to
products, to share any third party certification or labelling which applied to their products. This
information was also not apparent to customers in the shop. "The main thing is just putting a filter for
certified organics” (Participant 4). Such product information has become important for customers
who are generally becoming more health conscious.
6 Discussion and Future Study
Based on the preliminary focus group conducted to explore how OFN as an example of an ICT
application to support sustainability practices within regional food supply chains in Australia, we have
identified some evidence of how different roles of ICT are played out by OFN to provide infrastructure
to support sustainability initiatives and to automate, informate, and transform business processes
within Australian regional supply chains. In line with a number of previous studies (Dao et al. 2011;
Kurnia et al. 2012; Elliot 2011; Dewet and Jones 2001; Jablonski et al. 2011; Barham et al. 2012 and
Matteson), our study shows that OFN enables regional food supply chain parties to achieve economic,
environmental and social benefits by playing different roles to support various sustainability practices,
but the most significant roles played are informating and infrastructure provision.
Table 2 demonstrates a number of key practices along the three pillars of sustainability that have been
enabled by OFN through various roles played as suggested in Kurnia et al. (2012). The first two key
practices related to profit margin and cash flow in Kurnia et al. (2012) have been combined into
’enhancing operational efficiency’ to suit the study context. The shaded rows indicate the relevance of
the key practices and the ICT roles proposed in Kurnia et al. (2012) for this study.
In terms of the economic dimension of sustainability, our study shows that OFN provides a useful
infrastructure for regional supply chain parties to improve business administration and operational
efficiency, increase the numbers of suppliers and customers by improving visibility and expanding
marketing channels efficiently. These improvements are achieved through the automation and
increase access to relevant information that is required to manage supply chain operations and control
the quality of products. As a result, Food Hubs and other enterprises involved in the regional food
supply chains can enhance sales and improve customer satisfaction.
In terms of the environmental dimension, the findings also indicate that OFN enables the elimination
of traditional marketing activities which lead to reductions in the use of paper and printing
requirements, transportations to visit specific farms and markets, and the use of space for facilitating
interactions among the players. In addition, with the timely availability of supply and demand
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11
information, enterprises involved in the logistics can optimize their routing schedule to maximize the
truckloads and minimize fuel consumptions.
Key Practice
ICT Roles Demonstrated through OFN
Automate
Informate
Transform
Infrastructure
Enhancing operational
efficiency
Y
Y
Y
Achieving consumer
satisfaction
Y
Y
Creating repeat customers
Y
Y
Enhancing sales
Y
Y
Y
Quality initiatives
Y
Y
Creating competitive
advantages
Y
Y
Y
Eco-design of products
Y
Y
Y
Y
Green purchasing
Y
Y
Y
Y
Clean/Lean Production
Y
Y
Y
Green Distribution
Y
Y
Y
Reverse Logistics
Y
Y
Y
Community relations
Y
Y
Y
Employee well-being
Y
Y
Y
Human rights
Y
Y
Work safety/healthier
community
Y
Y
Ethical considerations
Y
Y
Purchasing from minority-
owned suppliers
Y
Y
Y
Product safety/quality
Y
Y
Y
Education support
Y
Y
Table 1. Relevant Sustainability Practices and the Roles of OFN (based on Kurnia et al. 2012)
Finally, in terms of social benefits, the findings point towards useful evidence of how OFN through its
roles in providing infrastructure, automation, informating and transformation can help generate some
social benefits. For example, by playing those four roles, OFN affects the way food enterprises interact
with suppliers and customers which in turn contributes to the community relations through online
forums to exchange ideas and mutual supports. Likewise, OFN helps improve food enterprises’
employee well-being through enhanced skills and greater operational efficiency and education support
to the community. Through product quality and information transparency, OFN even potentially
creates a healthier and more resilient community.
Besides the benefits of the OFN, this study has identified a number of challenges that still need to be
addressed before we can expect a wider adoption of the OFN. The challenges, however, can be
addressed through continuous improvement of the OFN features and ongoing education support to the
regional communities to leverage the potential of ICT and to harness on knowledge sharing and
collaboration within the communities to establish sustainable local food economy. This study
confirms that OFN is a useful ICT tool for supporting sustainability initiatives within regional food
supply chains and extends the current understanding of how ICT can support sustainability practices
with organizations and supply chains. In the next step of our research, we will conduct a longitudinal
study to find out the longer term impacts of the OFN on those early adopters and the overall
sustainability practices within the same regional community. We will also do a comparative study with
the UK and US experience as OFN is being rolled out globally. All this will contribute to the theory
development regarding the importance and roles of ICT in supporting sustainability initiatives.
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