Purpose – The Australian retail food sector, comprising mostly small enterprises, is undergoing change as a result of the innovative supply chain approach adopted. This change has implications across the entire food value chain in Australia. The purpose of this paper is to empirically investigate the adoption of supply chain management practices on small and medium enterprises (SMEs) in the Australian food retail industry. Design/methodology/approach – The study surveys 120 SME retailers in the food sector. A stepwise multiple regression using SPSS version 14.0 was performed on the data. Findings – Statistical results suggest that lean thinking and the quality of information shared can lead to greater efficient supply chain performance. Research limitations/implications – The small sample is the main limitation. The findings bear important implications for further research as understanding these dimensions can help to position key changes and industry improvement that will increase revenue and reduce cost to the SMEs in the food retail supply chain. Practical implications – Adopting lean thinking and improving information sharing in the supply chain can reduce the cost for SMEs. Social implications – This study has unique implications for social sustainability, especially the smaller food enterprises, which are hard pressed to combat the challenges within the food sector. Originality/value – Innovative supply chain management helps SMEs to see beyond the silo mentality and helps them to focus on greater value addition in the supply chain.

Introduction

The food retail sector in Australia is undergoing rapid change. This change is brought about by aggressive price competition (Round, 2006; Smith, 2006), food safety and quality concerns (Rong et al., 2011), private labels (IBISWorld, 2013), industry rationalization and integration of supply chain activities that affect small producers and processors (Van Donk et al., 2008), consumer demand for organic goods (IBISWorld, 2013), and innovation and research and development investment (IBISWorld, 2013). These complexities arise due to globalization and the ultracompetitive marketplace, requiring faster speed to market. Consequently, the urgency of just-in-time production and lean thinking has led to lower stock levels. This then forces stricter quality assurance, which is built into the practice of supply chain management, to improve performance. Further, the change in the business environment points more outsourcing of food retail activities using rapid development of information and communication technology (ICT) tools. Technologies such as electronic data interchange (EDI), radio-frequency identification (RFID), selfcheckout systems, smart phone application/payment and online shopping are increasingly adopted by the major retailers (IBISWorld, 2013). In such an environment, supply chain practices have been observed to impact supply chain performance (Trienekens et al., 2012; Van Donk et al., 2008; Wognum et al., 2011). Australia has three large supermarket chains (Woolworths, Wesfarmers and ALDI) and many other smaller players, for example, Costco, IGA, Australian United Retailer and SPAR (IBISWorld, 2013). Woolworths is the largest chain, accounting for 39.1 percent of market share. Wesfarmers is the second largest player after its merger with the Coles Group (formerly known as Coles Myer) in 2007, accounting for 31.6 percent of market share. ALDI, holding only 4.8 percent, is reshaping the industry through aggressive price strategies, home brands and offering other competitive but socially acceptable practices such as donating their excess produce to Foodbank OzHarvest and SecondBite (IBISWorld, 2013). To facilitate better inventory control, the quality and price of products, Australian food retailers have already implemented supply chain collaboration using contractual arrangements. However, the aggressive price wars between Woolworths and Wesfarmers and their hold on the contract farms are likely to have a negative impact on the small and medium enterprise (SME) food producers and retailers (Woodings, 2012). According to AC Nielsen, Woolworths and Wesfarmers control 80 percent of grocery sales, 50 percent of horticultural sales and 68 percent of meat sales in Australia (Woodings, 2012). The margins of the smaller and independent operators have thus suffered from the fierce competition. In 2012–۲۰۱۳, the turnover of the Australian food industry (which includes food and beverage, grocery, and fresh produce) was $114bn, employing almost 300,000 people. This represents a third of all jobs in the manufacturing sector. Food retail forms the major chunk of this industry by value (80 percent). The Australian Food and Grocery Council estimates that the industry value added (i.e. total value of goods less the cost of production) for food and beverage manufacturing is $24bn. Indeed, the Australian food value chain generates $172bn per annum, with food SMEs forming 98.5 percent of all businesses.