LOGISTICAL STRATEGIES AND RISKS IN CANADIAN GRAIN MARKETING

Supply chain management in grain marketing has become very important with the maturity of the industry. This is particularly important in the Canadian grain marketing system which has experienced disruptions for various reasons over many years. These problems have been the topic of numerous industry evaluations, have resulted in a complaint about service obligations and recently have been addressed by the Estey Commission. A detailed model of the supply chain in the Canadian grain logistics system was developed in this paper to evaluate factors that cause disruptions, as well as the effect of several important logistics and marketing strategies on system performance. The results indicated that in a normal year there is sufficient randomness throughout the various elements of the system that it is expected that demurrage at the West Coast would be a major cost. However, the amount of service disruptions and demurrage are affected by several important factors including the distribution of tough and damp grains, mis-graded grain, and the level of exportable supplies. There are several important strategic variables that have important effects on system performance. These include the aggressiveness in selling relative to capacity, and the level of beginning port stocks.