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Innovation and digitalisation to drive resilience

Digitally connected supply chains and the use of this process to mitigate risk and smooth flows of inventory in food chains.
Hello, my name’s Liam Fassam. I’m an associate professor of food supply chain management. I’d like to welcome you to this MOOC and some insights into digital connectivity within the food supply chain. I’m going to try and give a short case study of an event that I commented on in an article in The Grocer that will accompany this session. This will try and give a flavour of how digital fails the UK European supply chain, and some lovely golden nuggets in terms of how digital can actually affect positive change and build sustainable changes in supply chains going forward.
I think before we go into supply chain in too much detail, we need to understand that risk is about mitigation, especially when there’s supply chain and from a business perspective. And I always like to point to the Alliance Risk parameter, which is produced every year. And it takes a global view– and also a regional view– of instances that happen within supply chains, and gives quite a pragmatic view of what’s happening. Currently for this year, cyber instance was number one on the risk. And what we’re currently going through right now with the COVID-19 issues is number three on the business risk, ranked about 27% in terms of natural catastrophe.
So it’s important to understand that we didn’t know about COVID-19, but we do know, and we are cognizant of natural catastrophes and disasters within our food supply chains and the businesses that we reside within. However, each contingency plan that we draw up for these differs wildly from each other. And it’s very, very rare that we need to worry about such issues and risks on a global scale. However, looking back to our case study– we’re going to pick up from The Grocer what I told them– is that we’re looking at trucks coming out of Poland. We’re looking at this as example. There’s been much in the press around panic buying or bulk buying, as I prefer to call it.
And it hasn’t really been given a fair crack in terms of the supply chain, how agile it is, and the good work that’s been done across the networks there. A lot of the reasons that we have the panic buying is a lack of connectivity, what we call upstream and downstream. And the upstream piece, I’m talking about the farmers. There’s very little visibility of data from upstream from the farm to the consumer at the table of where the food is at any one time within the supply chain. Poland is not a great deal away. If you jumped in a truck right now, it would take you around about circa three to five days is the average transit time.
But because of COVID-19 and the border checks, this three to five day transit time has been extended up to 10 days. At one point in the supply chain there were 50 kilometres cued cross Polish border, which in itself was taking two days because of checks for health reasons. When we extrapolate that out and take an average of the food supply chain within the UK context now on imports, it’s about 5,500 trucks per day in food. That equates to around about half a billion pounds. So for each day, we need to carry half a billion pounds worth of stock on hand.
This it what we call smooth the flows, and eradicate what we call these stock outs in the store that we’re appearing to see. So we actually have the perfect storm now of demand outstripping capacity. Doesn’t mean to say the food isn’t there, but it is there, it’s just not moving through the point quick enough. And of course, as soon as people see empty shelves, it exacerbates that problem. Now, if we had a connected data stream between farm and fork, and consumers were able to see that, hey, actually there’s product in the supply chain, it’s just two days away, it will come through, and the supply chain is starting to smooth its way out.
And we can portray that message out to the general public, it would lessen that risk. It would lower the anxiety, and it would make life a lot easier in terms of supply chain management. But because of the lack of connectivity and a thing called the bullwhip effect, which is where it propagates up the supply chain, it becomes very hard for supply chain actors to actually perform their roles. It’s all really easy for me to sit here and say that we should be sharing data, but for a number of years business schools have been advocating through MBAs to our leaders that companies require competitive advantage.
And this competitive advantage is something that we’ve all been being struggling with, and it’s sort of settled in the past few years that data has become the competitive advantage. Therefore, why would I share data with my competitors? And arguably, they’ve got a really valid point. They have protected their chains, they’ve protected their supplies. They’re using specific overlays and specific farmers, and we don’t want to look at other people’s pricing. But the mindset and the culture needs to change around that.
And we did a piece of work on a European Horizon 2020 funded project called, AEOLIX, where we connected up some of the biggest names in food across Europe to start sharing data in a competitive– or through coopetition strategy, as we call it– to enable us to push and pull data for the benefit of all stakeholders in the supply chain. Now importantly, when we’re looking at data, 92% of the food chain in Europe is encapsulated by an SME. And they don’t have the money or the funds to spend billions or millions on SAP, or Oracle, or RedPrairie systems. So the beauty of using connected open source systems, such as AEOLIX, is an SME can plug into that with a mobile phone.
And that works its way all the way through to the retailer, and then the consumer at the end. But a little bit more important than that with the data, a lot of the focus at the moment is on short-termism with data. How can we supply and keep the focus on supply in stores and push it through? There’s piece of research that we undertook a few years back– and the paper will accompany this webinar– where we took a look at data and the systems that reside predominately around provenance of food and food fraud. And a couple of the things that were missing is, we were struggling to engage with consumers.
The authenticity was a significant issue, because we couldn’t see through the pipeline correctly to the farm gate. There was a lack of intelligent sharing across the systems of companies and those in the supply chain weren’t talking to each other, which created a significant amount of risk. But when we’re looking at risk in a supply chain perspective– and that example of the truck going from Poland to the UK. When we were doing the piece in The Grocer article around this, an example came of retailer in the UK talking to a Spanish hauler who had to make 10 telephone calls to contacts regarding the status of that shipment.
Whereas if we had data and digital connectivity live from the truck driver’s mobile phone, we could tell where that shipment was, what the temperature is of the shipment, whether somebody’s opened the doors on it, roughly what its ETA is going to be at the back door. That means that the retail distribution centres can make informed choices about stock movements to store. At the moment, it’s very much a blind process because the supply chain isn’t really connected past tier two. And we’re making it very hard for consumers, retailers, pickers, manufacturers, and growers to make any sort of sense from this. I suppose it’s very simple for me to sit here and say data is the key.
And it is, I suppose, overriding the data perspective within supply chains is communication. And whatever we do, no matter how much money we spend on data and the flashy systems that go with it, it’s never going to be a silver bullet solution. The only thing that’s going to fix this current problem that we have– and other post-disaster supply chain problems– is we do what we are built to do as human beings, and that’s communicate. When we communicate together, we’re able to advocate change in supply chains, smooth the flow through the supply chain, keep lowering inventories, and ensure supply in a way that’s reliable, traceable, and delivers provenance to the consumer.
And I suppose more fundamentally, having data connectivity within supply chain enables policymakers across Europe to take one view of the live state of a supply chain in a proactive manner and make decisions based on real time data. Opposed to what’s happening at the moment, where we’re garnering historic data that has no relevance to the current situation we’re in. So we’re very reactive. So we’re thinking operationally too much, when we should be going tactically. So the one key takeaway around this is not necessarily the computer that you buy or the way you interact with data, it’s the way you as food supply chain leaders interact with each other and communicate through the systems.
And have a think about coopetition, maybe that will just mitigate this risk in the future, and help us, and our consumers, and our farmers, and manufacturers have a much easier time in ensuring the supply chain and the food within it is nutritious, on time, and ready for consumers to have. Anyway, I hope you’ve enjoyed this very short insight. There’s many more areas of data we could touch. And if you have any questions, please do get in touch.

In this video, Mr Liam Fassam, Associate Professor Food Supply Chain Management in University of Northampton introduces us to digitally connected supply chains and the use of this process to mitigate risk and smooth flows of inventory in food chains.

Risks in the Supply Chain

The Alliance risk barometer is produced every year and it takes a global (and regional) view of instances which happen within supply chains. Currently, cyber instance is the number one risk and the recent Covid-19 health crisis sits at number 3 on the business risk, ranking at 27% in terms of natural catastrophe’s.

While we did not predict the Covid-19 crisis, natural catastrophe’s and disasters are considered as part of the food supply chain risk management. However, each contingency plan we draw up for these differ greatly.

Case Study: Trucks coming out of Poland to the UK

Our food supply chain is very complex. There is a lack of connectivity and data flow from farmers to consumers. As a result, there is a disconnect between the food on our plate and where it comes from and bulk buying or ‘panic-buying’ has been a consequence of the Covid-19 control measures.

The average transit time from the United Kingdom to Poland is 3-5 days. However, due to Covid-19 and the border checks, this time has been extended up to 10 days. At one point, there was up to 50 km queues to cross the Polish border which was taking two days alone.

Within the UK, imports of food is about 5,500 trucks of food per day which equates to half a billion pounds with slower than normal supply chains. It is vital we smooth the flow of goods through our supply chain to prevent empty shelves in our supermarkets. The food is there it is just not making it through the supply chain quick enough. When consumers see empty shelves, it exacerbates the problem.

How can digital connectivity help?

If we had a connected data stream between farm and fork and consumers could see there is product in the supply chain it is just two days away, the supply chain is starting to smooth its way out, it would alleviate some of the panic and help supply chain management.

In addition, this digitally connected supply chain could trace shipments, their temperature, the estimate time of arrival to allow the distribution centers and retailers to make more informed decisions about stock movements to store.

Finally, digitally connectivity in the supply chain enables policy makers across Europe to take one view of the live supply chain in a proactive manner and make decisions based on real time data.

Communication is key

Communication is key in supply chains especially during crisis situations. Communication allows us to advocate change in the supply chain, smooth the flow through the supply chain, keep lower inventories and ensure supply in a way that is reliable, traceable and delivers provencance to the consumers.

Please note that due to Covid-19, all our video contributors had to self-record themselves using a laptop or smartphone. As a result, the audio quality is not optimal. We apologise for the inconvenience. Should you want to better understand the video content, we have provided the English audio transcript in the below downloads section.

What we would like you to do

Please share your thoughts on digitial connectivity in the food supply chain:

  • Do you think a food crisis forces us to become innovative?
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Understanding Food Supply Chains in a Time of Crisis

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