Effect of Governance and Policy on the Management of a Sustainable Agri-Supply Supply Network: An Example from the Sri Lankan Tea Industry

Abstract

While the overall objective of this research was to identify the influencing factors on sustainable supply chain management in the Sri Lankan tea supply chain, the primary aim of this paper is to explore the effect of governance and policy on the management of the Sri Lankan tea supply chain, which would effect on the overall sustainability of the tea industry in Sri Lanka. Focus group discussions and individual interviews were carried out to explore the supply chain and to identify the factors related to governance and policy on the Sri Lankan tea supply chain.The analysis shows that strict governance and policy is a main influencing factor on sustainable tea supply chain management. Government bureaucracy, high tax implications, and restrictive policies on ownership, tea import and export were identified as the main categories that negatively affect the sustainability of the tea industry, as excessive quality checking and repetitive processes are highly detrimental on performance throughout the supply network. These functions are not only a waste of time and resources, but also increase the cost and destroy trust along the supply chain. The policy restrictions on the marketing channel were identified as a root cause for many challenges along the tea supply chain, as it limits flexibility in doing business, serves as a barrier to better relationships with customers and prevents innovation along the tea supply chain. This research shows that changes in supply chain governance can provide price benefits to the primary producers, and that being close to the consumer market provides better opportunities to understand consumer needs, pass price advantages on to them and develop a base of loyal customers.