Rethinking supply chains: how to build resilience after COVID-19
Staying closer to home
Last year the COVID-19 pandemic shut everything down almost overnight. All around the world, the transit of containers and ships came to a standstill. Our customers in California who are growing nuts encountered issues but luckily those products have a long shelf life. But growers of fresh products like cherries and blueberries who ship from the US to Asia on the other hand, had a problem if their container didn’t come through. They weren’t getting any guarantees that their product would actually arrive on time.
The pandemic revealed the limits of globalization, showing us how fragile our supply chains are when borders are suddenly closed. With that guarantee of continuity gone, a lot of food companies are rethinking their strategy to focus on smarter logistics and a more regional dynamic. While the process of globalization had pushed production to low-wage countries, companies are now looking at bringing their operations closer to home again. Advantages in product quality, agility, and delivery performance may overshadow the cost savings of low wages. This year we will see more and more companies reassessing which parts of their business will be global and which will be local or regional.
Out with chains, in with networks
All the corona upheaval has caused people to place a lot more value on reliability. This is where partnerships are essential. To stabilize our supplies, we will have to think not in terms of chains but in terms of networks. Supply networks depend on a web of collaboration serving the end customer, creating workflows between suppliers, distributors and customers. These rest on platforms with a solid information flow including forecasts, shipments, ETAs, and inventories. The key is transparency: everyone has access to the information. This makes the supply system more agile, dynamic and resilient.
Supply networks aren’t just about sharing data, but about aligning business processes and organizational structures across the value chain. The goal of this collaboration is to increase both visibility and to improve management decisions, ultimately decreasing supply network costs. With heightened transparency, increased communication, and intensified collaboration, various actors in the network have the best information with which to make critical decisions.
Using data to build resilience
We’re just starting to tap into the power of data to manage our food supply, from using predictive analytics to forecast inventories to localizing contamination to prevent food waste. Smarter machines plugged into the Internet of Things (IoT) can communicate inventory forecasts, information on when food processing equipment will need maintenance, and transportation costs. For example, a smart machine on the quality control line can predict the amount of quality yield which can inform your sales and delivery. This helps streamline supply network processes and increases efficiency.
Meanwhile, the same data stored in blockchain can help trace contaminants back to their source, so that a whole batch doesn’t necessarily need to be thrown out. Over a billion tons of food are wasted every year, something this world with its exploding population and fragile supply chain can’t sustain. At the same time, customers demand more transparency regarding the quality and fairness of their food supply all along the value chain. The answer: full traceability and full transparency through data collection and blockchain. That means food growers, processors, transporters and quality controllers all have to get on board with collecting and sharing data. The result will be a food supply that is safer, more reliable and more resilient.
As found on LinkedIn by Raf Peeters, CEO & Founder at Qcify, Forbes Next 1000 Honoree