Why the food supply chain needs a technology makeover
28 septiembre 2020
The following is a guest post from Rob Bailey, CEO and founder of data-automation startup BackboneAI.
When COVID-19 first hit, the news was full of stories of sold out food and supplies as consumers clamored to stockpile necessities. And while it may have seemed rising consumer demand was the reason for these sudden shortages, it soon became clear that the supply chain was really to blame.
Permission granted by Rob Bailey
From restaurants to hospitals to convenience stores, the $300 billion foodservice industry has seen an estimated sales decline of 60% to 90% due to COVID-19, with bottlenecks in farm labor, processing, transport and logistics seriously impacting the food supply chain. Over the last several months, major meat and poultry production facilities have closed because of COVID-19 cases among their employees. As the largest segments of U.S. agriculture, these closures have had far-reaching implications domestically and abroad when it comes to consumer supply and pricing.
Undeniably, supply chains are long overdue for an overhaul.
Challenges with existing supply chain technology
While there is technology in place to help add efficiencies along the supply chain, recent fracturing in the flow of products has shed light on where the major vulnerabilities lie in existing systems. These include:
Fragmented technologies that cost companies time and resources. Despite few technologies in place to track their journey end to end — let alone to optimize for speed, accuracy and efficiency — component parts (and the data associated with them) need to move through numerous parties. This disparate system creates enormous friction and escalates unnecessary costs, including order errors and slower inventory turns.
Lack of transparency reveals unreliable available inventory. Accessing reliable information about available inventory can be incredibly challenging while conditions rapidly change, fluctuating consumer demands. At the start of the pandemic, food distributors experienced sudden halting of outbound orders because of government- mandated closures of restaurants, even though inbound orders of food kept coming in from farmers, foodservice producers and processors. That led to logistical bottlenecks and storage space shortages as distributors tried to exercise inventory control.
Multiple-sourced data means room for error. Organizations are continuously investing efforts into having their internal systems synchronized, but this process often breaks down across supply chains where numerous organizations are using different systems. For example, decades of consolidation in agriculture have recently uncovered a major disconnect between food service and supermarket supply chains. When farmers and suppliers lost business in the food service sector as clients shut down, it was difficult for them to use reliable data to pivot to the supermarket sector.
The new face of food supply chain technology
As the food industry attempts to streamline their supply chains in new, ever-changing market environments, new technology and tools will play an increasingly important role in fixing the fragmented system. As farmers, distributors, producers, CPG companies and retailers navigate fluctuating conditions and weak links in the supply chain, having the right technology in place can provide resiliency, integration, transparency and efficiency. As such, future tech solutions should include these capabilities:
Coordinated data. We need to unify the data silos from supply chains into one intelligently coordinated fabric, including data from legacy systems. As it exists today, digital silos are collectively costing companies billions of dollars. Moving forward, there is a need for data to be shared more freely across the ecosystem so that the interplay between companies and systems with the food supply chain can be more effectively modeled and responded to, rather than data being siloed in discrete units where knock-on effects can be missed. More informed decision-making comes from more accurate real-time data, which a coordinated supply chain can provide.
Data automation. The current health crisis is forcing companies to compress 10 years of food supply chain transformation into six months, and companies are urgently looking for innovative platforms that provide greater ROI rather than costly, painful ERP (enterprise resource planning) upgrades. During the last few months, there has been tremendous demand for data-automation platforms from companies that manage supply chains for physical products. Companies must partner with expert organizations to help them move faster and serve their customers better by automating their intercompany data flows.
Real-time execution. Multiple sources of data, such as food availability and shipment status, must be collected and transformed into a unified, real-time data layer that synchronizes different systems. With increased data coverage and comprehensive information, food industry vendors can make more informed decisions, better managing their product flows with greater visibility and speed across their supply chains. By automating data collection in supply chains, supplier and customer data can be made smarter through the use of machine learning to integrate product data from various sources, both within and beyond a company.
As we continue to witness what’s happening in just a few months in what, otherwise, would have happened over a decade, COVID-19 is clearly a catalyst for necessary change. And our collective global food supply chain disruption makes it clear that the time to bring transparency and efficiency is now.