Building producer loyalty in Malaysia's fresh milk supply chain

Abstract

The paper presents results from a survey of 133 dairy producers in Malaysia, and identifies how Malaysian milk buyers can build a loyal customer base with their suppliers as a means to secure uninterrupted milk supplies. A structural equation model was conducted to test the conceptual model using AMOS 17.0 software. The results show that whereas timely and collaborative communication, price satisfaction and cultural fit influence positively suppliers’ contractual and competence trust in their buyers, power dependency negatively influences competence trust. Furthermore, suppliers’ trust in their buyers will eventually lead to loyalty. The principal implication is that milk processors and other buyers need to engage in collaborative communication with the dairy farmers to ensure continuous and uninterrupted supply.