Understanding supply chain uncertainties that might hinder an expansion of coffee husk-biochar production in Vietnam

Abstract: Purpose - The purpose of this thesis is to increase the understanding of supply chain uncertainties that might hinder an expansion of coffee husk-biochar production in Vietnam, and understand how the coffee husk-biochar supply chain can be configured to address these uncertainties. Methodology - A case study regarding the potential use of coffee husk-biochar as raw material for activated carbon was used to conduct this research. Through this approach, uncertainties that potentially could hinder an expansion of coffee husk-biochar production were found. Also contextual findings that could affect appropriate supply chain configurations and the responsiveness measures, needed to address these uncertainties, were identified. The found demand uncertainty from the activated carbon producer represented one level of demand uncertainty, and from those findings, further analysis was made of how other levels of demand uncertainty could affect the supply chain. To support this case study research, qualitative data was gathered from current coffee husk-biochar producers, an activated carbon producer, as well as other experts on the biochar subject. Findings - This study shows that uncertainties in terms of both demand and supply are low in a supply chain where coffee husk-biochar is commercialized in Vietnam. The low demand uncertainty originates from investigating activated carbon producers as customers, but it was also found that it is unreasonable to prepare for other levels of demand uncertainty no matter to what market the biochar is sold. This is due to the characteristics of the biochar, which makes it a functional product that always should expect stable demand. Due to the found uncertainties, the responsiveness measures that are needed are a centralized production, low-cost transports and low levels of inventory. Only the low levels of inventory were found to be difficult to achieve among these measures. This is because of the need of annual production in combination with the short period of time where the coffee husk, which is the raw material, is generated. Small-scale farmers were found to be inappropriate producers of the coffee husk-biochar as they were found to have difficulties in both financing the production as well as having it utilized. Instead, large-scale farmers, external intermediaries or coffee processors which could use already existent flows and relationships, should be the producers. Originality - Previous research has mostly focused on how both smoke issues and soil degradation can be solved by the production of coffee husk-biochar, as well as the technology needed for this production. Our idea was that biochar is a functional product, and that finding more application areas for the biochar could potentially scale up production, and thereby reduce the costs of producing biochar through economies of scale. Through this original supply chain management perspective, we were able to find uncertainties in the supply chain that might hinder the desired expansion of biochar production. We did also point out appropriate supply chain configurations that address the found uncertainties in the current context, and our study is original as this supply chain management perspective had not yet been used in this context. Keywords - Supply chain uncertainties, supply chain responsiveness, biochar, Vietnamese coffee industry, activated carbon. Paper Type - Master’s Thesis.