Evaluation of Operations Performance of Agricultural Products Supply Chain Using ROIC Tree

Abstract

The importance of evaluation of farming performance has been increasing with the progress of farm size and capitalization, and with the introduction of the concept of the 6th industry to agriculture. In this research, ROIC(Return on Invested Capital) tree technique was examined as a new method for analyzing operations performance of supply chain for farm produce. Current practices of production and distribution of blueberry, model crop, were investigated and ROIC tree for blueberry has been set up from the survey of the supply chain. Then, it was simulated with real values collected from the participants in the supply chain and the previous studies using a spreadsheet program. The resulting ROIC value was compared with those of other industries and the conventional performance analysis method. Features of the evaluation technique were identified and it was proposed how to apply it to agricultural field in the future.

Effects of operational performance on financial performance

“…There are few studies in which ROIC tree model is used for the analysis of link between the operational performance variables and the financial performance in other industries. Min and Chang (2014) suggested ROIC tree model to analyze operations performance of supply chain for farm product. Kim and Kim (2018) suggested a ROIC tree model to analyze the profitability of coffee franchise companies in Korea.…”

“…Return on assets (ROA), return on equity (ROE) and return on invested capital (ROIC) are the three most prevalent metrics used to obtain an idea of the returns a company generates, and to compare this return generation to the company's peers (Min & Chang, 2014, Koller et al, 2010. ROA can be skewed when a company holds excess amount of cash or assets for sale.…”