Foreword
"If we want everything to remain as it is, everything must change" - The Leopard
Authorities, certification bodies and consumers are asking brands and producers to ensure product transparency and sustainability throughout the supply chain.
In the agri-food sector, this trend is not only linked to strong consumer demand, but to the fact that global agri-food chains are unsustainable and need to change course as quickly as possible. Today's food systems are responsible for producing 37% of greenhouse gas emissions and require a large amount of energy, much of which is produced from fossil fuels. Not to mention that the agricultural sector alone also uses something like 70% of water resources. Not to mention that there are 930 million tonnes of food wasted (in G20 countries alone), with responsibility for the whole "chain":
- 65% wasted by households;
- 25% from catering;
- 4% from retail.
The 2021 edition of the Food Sustainability Index carried out by the Barilla Foundation in collaboration with The Economist Intelligence Unit (EIU) not only shows the role of all the players in the various sectors of the food system, but also how important the role of the agri-food supply chains is.
This is the result of increasingly long, energy-intensive and less and less sustainable food supply chains as the consumer's purchase price and the price at which the various actors are paid are not balanced.
Today, many companies are forced to make a decisive change, looking more and more towards sustainable and responsible choices that ensure safer and environmentally friendly production and transport systems, raw materials from sustainable sources and that workers receive fair wages.
Supply chains will play a key role and must be able to meet multiple objectives: a high level of customer satisfaction, profitability objectives and resilience to disruptions.
Fortunately, new technologies, in particular the Internet of Things (IoT) and Blockchain, appear to be valuable allies in achieving these goals.
How can these technologies be used to serve supply chains?
The process involves several steps, through which the adoption of technologies can be achieved.
Acquisition
It will be essential and necessary to implement solutions that track what is happening across the board. This is where IoT comes in, enabling organisations to collect new types of data from different stages of the supply chain. For example, such devices can track the production of a packaged food product from ingredient sourcing to manufacturing, shipping and retail, including inventory and working conditions in manufacturing and logistics facilities.
Secure' registration
Once the data has been collected in a timely and organised manner, companies should make sure that each of them ends up on a blockchain ledger. This choice will become strategic for the future of the organisation because it would allow anyone to be able to verify that the data recorded is authentic. Transparency would become a vehicle to ensure sustainable sourcing, help improve the execution of supply chain contracts and give financial institutions more certainty in obtaining better funding.
Moreover, the implementation of a blockchain-based system can be done in a decentralised manner, thus not requiring huge investments in IT systems or expensive third-party certification. In fact, anyone today has a technology at their disposal that allows them to unequivocally prove the authorship and time stamp of a piece of data.
Harmonisation and sharing
The records collected will come from different sources, from different companies or from different times in production (e.g. temperature sensors, scanners tracking the movement of inventory in and out, etc.), so it will be necessary to adopt sharing standards . In this there is little need to reinvent the wheel, but just use international standards, such as the GS1 EPCIS. EPCIS (Electronic Product Code Information Services) is the GS1 standard for real-time traceability. It is a tool for sharing information about the life of a product and the path it takes throughout the supply chain, from producer to distributor to end consumer.(For more information)
Real-time data analysis
Analyses of this kind, once the data is organised and shared, make it possible to improve profitability and reduce food waste, optimising economic returns not only for the individual company but for the whole supply chain.
For example, based on temperature data from logistics centres we can predict how long a food product will mature or spoil. This predictive model can then be used to guide inventory planning and design promotions for short-term food products.
Conclusion
It is not necessary for a company to develop all four steps at the same time. The gains from the use of these new technologies (blockchain and IoT), can be different and depend on the level of implementation.
At a fundamental level, the source of the most rapidly collected value generation is from reducing execution errors and improving productivity through visibility, traceability and automation of supply chain activities.
Companies that choose such an innovative approach, adopting these four measures, see a strengthened supply-chain, significant economic returns and strong market positioning. The path is not immediate but neither is it impossible; and, given that they can be developed in any sequence and on any scale, careful consideration should be given to getting started.
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