Pioneering Sustainable Practice in the Supply Chain
The world’s population is continuing to rise at a rapid rate. According to research by Future Agenda, by 2050, this will increase demand for food by as much as 70 percent. The creation of a more sustainable and efficient supply chain will therefore be essential to help address this global challenge, as well as meet commercial priorities such as ensuring product quality and adherence to corporate standards for ethical farming.
Sustainability has also become a growing priority for today’s consumers, many of whom don’t want their buying behaviour to negatively impact the environment or workers in developing countries. Yet while demand for sustainability has continued to rise, few modern consumers are prepared to compromise on the quality of the goods they buy.
For this reason, the business case for improving sustainability in the supply chain has to consider consumer expectations. Failing to deliver quality products in an environmentally and economically friendly way could undoubtedly result in lost sales and damage to reputation.
As Muhtar Kent, chairman and chief executive of The Coca Cola Co. and co-chairman of the Consumer Goods forum, puts it: “Consumers today are understandably concerned about sustainability, as demands for natural resources continue to challenge supplies. By 2030, the world's population will reach 8.3 billion, boosting demand for food and energy by 50% and for fresh water by 30%. In this light, sustainability is simply smart business.”
From Field to Fork
The cycle of manufacture and distribution of consumer goods begins with basic raw materials such as commodity crops or oil. In the case of field-grown crops, the supply chain journey involves multiple small relationships which can be extremely complex for large retailers and manufacturers to establish and maintain. In the long journey from Africa to the aisles of supermarkets in Europe and the U.S., for example, there are also plenty of opportunities for products with a limited shelf life, such as fruit and vegetables, to be compromised or spoiled in some way.
Typically, raw materials tend to follow complex import routes, with producers in developing markets having little control over inefficient export and distribution processes. Here, the ability to leverage mobile data and solutions offers exciting potential to improve supply chain processes and create sustainable practices through better communication and transparency.
By increasing collaboration and visibility in the supply chain, retailers and consumer packaged goods firms (CPGs) could realise a significant improvement in quality, traceability and the efficiency with which products are moved around. The experience of a major chocolate manufacturer based in India highlights the advantages that can be achieved, particularly in terms of optimising transport and delivery routes.
The chocolate manufacturer’s existing practice was to send trucks on a circuit around various farms, without knowing how much cocoa was being collected – or even if there was any produce to collect at all. To make this process more effective, a solution was devised that provided its various cocoa farmers with a basic cell phone and enabled them to listen to a recorded message in their choice of local languages.
Using the keypad, the farmers provided information such as whether their crop was ready and, if so, the amount that was available to collect. Using this data, the manufacturer succeeded in creating a more efficient logistics process, streamlining the timeframe within which the trucks were despatched and optimising the routes that they followed.
The next logical progression will be to evolve this use of mobility to create a transactional platform. This advanced solution would still see the producer communicating how much product was available but could also enable the driver to weigh the goods they collect and authorise payment, which would then be processed and submitted based on the agreed wholesale price.
This integrated approach would bring about significant cost, sustainability and environmental benefits. Minimising inefficiencies in transport would reduce cost and carbon emissions, while the introduction of mobile payments could considerably reduce the amount of cash held within the supply chain, thereby reducing costs and providing greater visibility of transactions. Eliminating cash from the process would also bring greater security when distributing money and ensure that the producer received all of the agreed payment.
Quality Control and Traceability
"Track and trace" mobility solutions that use machine to machine (M2M) technology also present advantages for supply chain quality and sustainability. As many retailers and manufacturers are discovering, these solutions can enable vehicles and freight to be monitored in a highly sophisticated way.
Using the technology to track vehicles and cargo containers anywhere in the world, it is possible to gather information such as the physical location of the cargo, as well as monitor environmental factors such as temperature and humidity and even signs of tampering. Besides reducing risk, these capabilities enable "green lane" customs treatment, which offer further efficiencies and provide total visibility between what has been shipped and what has been received.
Track and trace also has the potential to help improve quality control and reduce instances of waste. Recently, a major potato chip manufacturer began investigating the technology with the aim of achieving these important objectives. If a potato is overexposed to carbon dioxide it will go brown. While this is unlikely to affect the taste, most people don’t want to buy and consume brown potato chips.
For this reason, the ability to maintain the correct carbon dioxide levels and ventilation in the shipping containers as the potatoes go through the supply chain would present a major advantage for the potato chip manufacturer. Additionally, the visibility that track and trace brings can also prove, for example, that potatoes or other products such as coffee have come from a specific source and have not been substituted with goods or produce from elsewhere.
Mobility also has an important role to play in improving the dialogue between manufacturer and producer. This will not only improve productivity but also help manufacturers with the difficult task of forecasting fluctuating commodity prices by giving them access to information that will help them to plan in a timely and efficient way. It can also enable them to share the latest information about potentially damaging weather events, or communicate specific produce requirements and help the grower to fulfil orders.
The technology also supports corporate sustainability initiatives that involve responsible sourcing by monitoring compliance via a simple, easy-to-use reporting function carried out easily and efficiently on an inexpensive mobile device.