A digital transformation is currently underway in the food supply chain. By leveraging the internet of things (IoT) and connected technologies, business leaders are beginning to achieve much tighter integration among stakeholders along every step of food’s journey to consumers.
Historically, these efforts have been largely disconnected, with limited information exchanged at each point of transfer from one link in the supply chain to the next. Various types of recordkeeping have always been required, but methods were primarily manual and cumbersome. Now, with IoT-enabled connectivity capable of gathering real-time data virtually from farm to fork, a framework is available to help not only automate these tasks, but also to pass along real value for both businesses and consumers. Not simply technology for technology’s sake, IoT can address some of the most challenging problems plaguing the food cold chain: food waste and food safety.
To begin to understand this potential, it helps to take a step back and consider what’s involved in bringing food to our tables. The process typically starts with production at a farm, proceeds to a processing plant, enters the transportation and logistics stream, arrives at a storage or distribution facility, and finally gets delivered to retailers. When you stop and think about the many opportunities for errors along these steps — such as time in transport, temperatures and humidity — it’s easy to see how quickly and easily food quality could be impacted.
We’re frequently reminded how problems in the food supply chain or preparation processes can potentially lead to food safety issues for consumers; these events are detrimental to both public health and the reputations of the companies providing the damaged food. But too often, the problem of food waste is overlooked and merely considered a natural consequence of the food supply chain. A fully connected and integrated cold chain has the potential to change that.
Mitigating the Cost of Food Waste
According to a recent study by the Boston Consulting Group (BCG), 1.6 billion tons of food — the financial equivalent of $1.2 trillion — are wasted each year. The sum of this loss essentially reduces total global food production by one-third. It’s a staggering amount that demonstrates the true extent of the problem, which, if left unchecked, could reach costs of $1.5 trillion by 2030.
The study looked at the potential for loss at every stage of the food supply chain, including production, handling and storage, processing and packaging, distribution and retail, and consumption. With the exception of consumption, IoT connectivity holds the potential to help combat the food waste crisis at every stage of the food supply chain.
Let’s look at one area that’s particularly problematic: fresh produce. The BCG study reports that among the many perishable food categories affected, fruits and vegetables represent the highest percentage of food waste, with 46 percent of total output lost each year. By employing IoT sensors to provide real-time tracking, monitoring and analytics of food conditions, producers can greatly extend perishable shelf life and improve the quality of fresh produce.
And it all starts from the moment of harvest.
The time of day in which produce is harvested can have tremendous impacts on how it should be processed, packaged and transported. For example, when strawberries are picked in the hotter afternoon temperatures, they’re more likely to respirate. IoT sensors can determine the fruit’s internal temperatures, and this data feeds the analytics that help a producer make critical decisions, such as selecting a packaging option with adequate ventilation, and determining the recommended temperature and humidity conditions for the shipping container.
During transport, additional sensors can track the route location of shipping containers in real time, continually monitoring produce conditions and making informed decisions about the delivery of perishable goods. For example, a shipment that was picked in the morning will likely not respirate as much and will stay fresher longer. Monitoring this information helps allow the producer to deliver these shipments to more distant locations without compromising food freshness. If these shipments are first routed to a distribution facility, the providers will be prepared to bring these items into inventory in ideal conditions to preserve their longevity.
This is just one example of where IoT can connect historically disconnected supply chain providers to make real differences in food quality, freshness and longevity. And according to the aforementioned BCG study, these technologies have already been identified as one of the means to combat food waste. By boosting the food supply chain’s efficiencies and improving its underlying infrastructures, the potential exists for $270 billion in food-related preservation gains. Of course, on a commercial level, reducing food shrinkage also translates into significant bottom-line increases for producers and retailers alike. As the study notes:
“An unbroken, temperature-controlled ‘cold chain’ can help to reduce spoilage significantly. Digital tools can better match supply and demand, improve tracking and streamline transactions.”