The Analysis On Supply Chain Quality Management Of Dairy Products

During recent years, it is not unusual to hear quality issues for dairy products. Those quality issues have great negative influence on Chinese civilian’s living standards and health and bring damage on social economics. Chinese government has now started building the supervision on safety of dairy products. Many dairy products manufactures also realized that product quality would greatly affect their development. Therefore, it is now required by the industry to use scientific and systematic quality control management to analyze and improve the supply chain management for dairy products.This article starts from the analysis of the current situation for the supply chain of dairy industry and points out the main reasons and factors that would influence the quality of dairy products. And then based on the Game Theory, the article tries to find out how the dairy products manufactures can improve the quality of dairy products by optimizing the supply chain.The first part of this article points out the background and significance of the study. In recent years, the emerging cases for dairy products quality issues impede the growth of the dairy industry and the whole civilians’health level. And the quality issues, to a large extent, are the result of different interests and the interest conflicts among supply chain players. Therefore, the game theory is adopted in this article to analyze the decision and equilibrium of different entities to coordinate the actions of those entities and minimize their conflicts, which in result would improve the quality of dairy products. The article then summarizes the current study on this area and lists the major findings on Chinese dairy industry supply chain and the game theory that has been used to improve the supply chain for dairy industry. The study from the perspective of supply chain management to improve Chinese dairy industry and of sales channel to achieve quality control is still very limited. This is what this article focus on.The second part of this study summarizes the theories used in this article. It describes the definition and characteristics of supply chain management and quality management. Literature review on the application of game theory on supply chain management is also in this part. The article then analyzes the current situation of supply chain management for Chinese dairy industry. It summarizes the operation organism of supply chain for Chinese dairy industry, its characteristic and followed by the major problems that could influence the quality of dairy products based on the analysis on the supply chain players.The fourth part, which is also the major part of this article, focus on analysis of the key segment that would influence quality of dairy products:upstream-the suppliers for the original milk and the downstream-the distributors. And the simulation based on the game theory is also set up to conduct the analysis. The first simulation pattern is the multi-function agent pattern between upstream suppliers and dairy product manufactures. Most of dairy products manufactures tends to stimulate the suppliers based on quantity. As a result, suppliers would sacrifice the quality of the milk to increase sales quantity. Based on this finding, the multi-function agent pattern is established to analyze the stimulation that should be increased to balance the stimulation of quantity and quality, thus to reduce the chance of speculation that milk supplier would reduce the quality of milk in exchange of higher sales quantity and to control the quality of dairy products from original milk supply. The article then establishes the loss sharing pattern for quality issue between dairy product distribution and dairy distributors. Dairy products have high chance of deterioration and high requirement on the quality and time of transportation. In order to reduce cost, many distributors reduce the transportation level or sell the products with quality problems. Therefore, the supervision on distributors from dairy products manufactures is also required. But the supervision would also increase the total cost of dairy products and the increasing cost would also influence the development of the dairy industry. Therefore, it is necessary to construct an optical organism between dairy products manufactures and distributors. By establishing the loss sharing pattern and comparing the results of four different loss sharing options, the article come to the conclusion:the loss sharing pattern can ensure the reasonable supervision on distributors and optimize the interests of both dairy manufactures and distributors.The final part summarizes the whole article and points out the limitation of this study and improvement that could be made in the area of quality control for dairy products.The innovation for this article is that the supply chain quality control theory is used on the supply chain management for dairy products. Together with game theory, the simulation pattern is established to optimize the agreement between dairy product manufacture and milk suppliers, to compare the loss sharing pattern on quality issues between dairy products manufactures and distributors, to reduce the conflicts between supply chain players and eventually to improve the quality of dairy products.