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Are Traasdahl, Crisp
FST Soapbox

How a History of Slow Technology Adoption Across Food Supply Chains Nearly Broke Us

By Are Traasdahl
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Are Traasdahl, Crisp

The COVID-19 crisis has exacerbated existing disconnects between food supply and demand. While some may be noticing these issues on a broader scale for the first time, the reality is that there have been challenges in our food supply chains for decades. A lack of accurate data and information sharing is the core of the problem and had greater impact due to the pandemic. Outdated technologies are preventing advancements and efficiencies, resulting in the paradox of mounting food insecurity and food waste.

To bridge this disconnect, the food industry needs to implement innovative AI and machine learning technologies to prevent shortages, overages and waste as COVID-19 subsides. Solutions that enable data sharing and collaboration are essential to build more resilient food supply chains for the future.

Data-sharing technologies that can help alleviate these problems have been under development for decades, but food supply chains have been slow to innovate compared to other industries. By reviewing the top four data-sharing technologies used in food industry and the year they were introduced to food supply chains, it’s evident that the pace of technology innovation and adoption needs to accelerate to advance the industry.

A History of Technology Adoption in the Food Industry

The Barcode – 19741
We’re all familiar with the barcode—that assemblage of lines translated into numbers and letters conveying information about a product. When a cashier scans a barcode, the correct price pops up on the POS, and the sale data is recorded for inventory management. Barcodes are inexpensive and easy to implement. However, they only provide basic information, such as a product’s name, type, and price. Also, while you can glean information from a barcode, you can’t change it or add information to it. In addition, barcodes only group products by category—as opposed to radio-frequency identification (RFID), which provides a different code for every single item.

EDI First Multi-Industry Standards – 19812
Electronic data interchange (EDI) is just what it sounds like—the concept of sharing information electronically instead of on paper. Since EDI standardizes documents and the way they’re transferred, communication between business partners along the supply chain is easier, more efficient, and human error is reduced. To share information via EDI, however, software is required. This software can be challenging for businesses to implement and requires IT expertise to handle updates and maintenance.

RFID in the Food Supply Chain – 20033
RFID and RFID tags are encoded with information that can be transmitted to a reader device via radio waves, allowing businesses to identify and track products and assets. The reader device translates the radio waves into usable data, which then lands in a database for tracking and analysis.

RFID tags hold a lot more data than barcodes—and data is accessible in remote locations and easily shared along the supply chain to boost transparency and trust. Unlike barcode scanners, which need a direct line of sight to a code, RFID readers can read multiple tags at once from any direction. Businesses can use RFID to track products from producer to supplier to retailer in real time.

In 2003, Walmart rolled out a pilot program requiring 100 of its suppliers to use RFID technology by 2005.3 However, the retail giant wasn’t able to scale up the program. While prices have dropped from 35–40 cents during Walmart’s pilot to just 5 cents each as of 2018, RFID tags are still more expensive than barcodes.4 They can also be harder to implement and configure. Since active tags have such a long reach, businesses also need to ensure that scammers can’t intercept sensitive data.

Blockchain – 20175
A blockchain is a digital ledger of blocks (records) used to record data across multiple transactions. Changes are recorded in real-time, making the history unfalsifiable and transparent. Along the food supply chain, users can tag food, materials, compliance certificates and more with a set of information that’s recorded on the blockchain. Partners can easily follow the item through the physical supply chain, and new information is recorded in real-time.

Blockchain is more secure and transparent, less vulnerable to fraud, and more scalable than technologies like RFID. When paired with embedded sensors and RFID tags, the tech offers easier record-keeping and better provenance tracking, so it can address and help solve traceability problems. Blockchain boosts trust by reducing food falsification and decreasing delays in the supply chain.6

On the negative side, the cost of transaction processing with blockchain is high. Not to mention, the technology is confusing to many, which hinders adoption. Finally, while more transparency is good news, there’s such a thing as too much transparency; there needs to be a balance, so competitors don’t have too much access to sensitive data.

Cloud-Based Demand Forecasting – 2019 to present7
Cloud-based demand forecasting uses machine learning and AI to predict demand for various products at different points in the food supply chain. This technology leverages other technologies on this list to enhance communication across supply chain partners and improve the accuracy of demand forecasting, resulting in less waste and more profit for the food industry. It enables huge volumes of data to be used to predict demand, including past buying patterns, market changes, weather, events and holidays, social media input and more to create a more accurate picture of demand.

The alternative to cloud-based demand forecasting that is still in use today involves Excel or manual spreadsheets and lots of number crunching, which are time-intensive and prone to human error. This manual approach is not a sustainable process, but AI, machine learning and automation can step in to resolve these issues.

Obtaining real-time insights from a centralized, accurate and accessible data source enables food suppliers, brokers, distributors, brands and retailers to share information and be nimble, improving their ability to adjust supply in response to factors influencing demand.8 This, in turn, reduces cost, time and food waste, since brands can accurately predict how much to produce down to the individual SKU level, where to send it and even what factors might impact it along the way.

Speeding Up Adoption

As illustrated in Figure 1, the pace of technology change in the food industry has been slow compared to other industries, such as music and telecommunications. But we now have the tools, the data and the brainpower to create more resilient food supply chains.

Technology adoption, food industry
Figure 1. The pace of technology change in the food industry has been slow compared to other industries. Figure courtesy of Crisp.

Given the inherent connectivity of partners in the food supply chain, we now need to work together to connect information systems in ways that give us the insights needed to deliver exactly the rights foods to the right places, at the right time. This will not only improve consumer satisfaction but will also protect revenue and margins up and down food supply chains and reduce global waste.

References

  1. Weightman, G. (2015). The History of the Bar Code. Smithsonian Magazine.
  2. Locken, S. (2012). History of EDI Technology. EDI Alliance.
  3. Markoff, R, Seifert, R. (2019). RFID: Yesterday’s blockchain. International Institute for Management Development.
  4. Wollenhaupt, G. (2018). What’s next for RFID? Supply Chain Dive.
  5. Tran, S. (2019). IBM Food Trust: Cutting Through the Complexity of the World’s Food Supply with Blockchain. Blockchain News.
  6. Galvez, J, Mejuto, J.C., Simal-Gandara, J. (2018). Future Challenge on the use of blockchain for food traceability analysis. Science Direct.
  7. (2019). Crisp launches with $14.2 million to cut food waste using big data. Venture Beat.
  8. Dixie, G. (2005). The Impact of Supply and Demand. Marketing Extension Guide.
John McPherson, rfxcel
FST Soapbox

Clear Waters Ahead? The Push for a Transparent Seafood Supply Chain

By John McPherson
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John McPherson, rfxcel

The seafood supply chain handles 158 million metric tons of product every year, 50% of which comes from wild sources. Operating in every ocean on the planet, the industry is struggling to figure out how to overcome the numerous obstacles to traceability, which include unregulated fishing, food fraud and unsustainable fishing practices. With these and other problems continuously plaguing the supply chain, distributors and importers cannot consistently guarantee the validity, source or safety of their products. Furthermore, there are limits to what a buyer or retailer can demand of the supply chain. Niche solutions abound, but a panacea has yet to be found.

In this complex environment, there are increasing calls for better supply chain management and “catch to plate” provenance. One problem, however: The industry as a whole still regards traceability as a cost rather than an investment. There are signs this attitude is changing, however, perhaps due to pressure from consumers, governments and watchdog-type organizations to “clean up” the business and address the mounting evidence that unsustainable fishing practices cause significant environmental problems. Today, we’ve arrived at a moment when industry leaders are being proactive about transparency and technologies such as mobile applications and environmental monitoring software can genuinely help reform the seafood supply chain.

A Global Movement for Seafood Traceability

There are several prominent examples of the burgeoning worldwide commitment to traceability (and, by default, the use of new technologies) in the seafood supply chain. These include the Tuna 2020 Traceability Declaration, the Global Tuna Alliance, and the Global Dialogue on Seafood Traceability. Let’s focus on the latter to illustrate the efforts to bring traceability to the industry.

The Global Dialogue on Seafood Traceability. The GDST, or the Dialogue, is “an international, business-to-business platform established to advance a unified framework for interoperable seafood traceability practices.” It comprises industry stakeholders from different parts of the supply chain and civil society experts from around the world, working together to develop industry standards to, among other things, improve the reliability of information, make traceability less expensive, help reduce risk in the supply chain, and facilitate long-term social and environmental sustainability.

On March 16, 2020, the Dialogue launched its GDST 1.0 Standards, which will utilize the power of data to support traceability and the ability to guarantee the legal origin of seafood products. These are guidelines, not regulations; members who sign a pledge commit themselves to bringing these standards to their supply chains.

GDST 1.0 has two objectives. First, it aims to harmonize data standards to facilitate data sharing up and down the supply chain. It calls for all nodes to create Electronic Product Code Information Services (EPCIS) events to make interoperability possible (EPCIS is a GS1 standard that allows trading partners to share information about products as they move through the supply chain.). Second, it defines the key data elements that trading partners must capture and share to ensure the supply chain is free of seafood caught through illegal, unreported and unregulated (IUU) fishing and to collect relevant data for resource management.

Why Transparency Is Critical

By now it’s probably clear to you that the seafood sector is in dire need of a makeover. Resource depletion, lack of trust along the supply chain, and the work of global initiatives are just a few of the factors forcing thought leaders in the industry to rethink their positions and make traceability the supply chain default.

However, despite more and more willingness among stakeholders to make improvements, the fact is that the seafood supply chain remains opaque and mind-bogglingly complex. There are abundant opportunities for products to be compromised as they change hands over and over again across the globe on their journey to consumers. The upshot is that the status quo rules and efforts to change the supply chain are under constant assault.

You may ask yourself what’s at stake if things don’t change. The answer is actually quite simple: The future of the entire seafood sector. Let’s look at a few of the most pressing problems facing the industry and how transparency can help solve them.

Illegal, unreported, and unregulated fishing. IUU fishing includes fishing during off-season breeding periods, catching and selling unmanaged fish stocks, and trading in fish caught by slaves (yes, slaves). It threatens the stability of seafood ecosystems in every ocean.

According to the Food and Agriculture Organization of the United Nations, IUU fishing accounts for as much as 26 million tons of fish every year, with a value of $10–23 billion. It is “one of the greatest threats to marine ecosystems” and “takes advantage of corrupt administrations and exploits weak management regimes.” It occurs in international waters and within nations’ borders. It can have links to organized crime. It depletes resources available to legitimate operations, which can lead to the collapse of local fisheries. “IUU fishing threatens livelihoods, exacerbates poverty, and augments food insecurity.”

Transparency will help mitigate IUU fishing by giving buyers and wholesalers the ability to guarantee the source of their product and avoid seafood that has come from suspect sources. It will help shrink markets for ill-gotten fish, as downstream players will demand data that proves a product is from a legal, regulated source and has been reported to the appropriate government agencies.

International food fraud. When the supply for a perishable commodity such as seafood fluctuates, the supply chain becomes vulnerable to food fraud, the illegal practice of substituting one food for another. (For seafood, it’s most often replacing one species for another.) To keep an in-demand product flowing to customers, fishermen and restaurateurs can feel pressure to commit seafood fraud.

The problem is widespread. A 2019 report by Oceana, which works to protect and restore the Earth’s oceans, found through DNA analysis that 21% of the 449 fish it tested between March and August 2018 were mislabeled and that one-third of the establishments their researchers visited sold mislabeled seafood. Mislabeling was found at 26% of restaurants, 24% of small markets, and 12% of larger chain grocery stores. Sea bass and snapper were mislabeled the most. These results are similar to earlier Oceana reports.

Consumer health and food safety. It’s difficult to guarantee consumer health and food safety without a transparent supply chain. End-to-end traceability is critical during foodborne illness outbreaks (e.g., E. coli) and recalls, but the complex and global nature of the seafood supply chain presents a particularly daunting challenge. Species substitution (i.e., food fraud) has caused illness and death, and mishandled seafood can carry high histamine levels that pose health risks. Consumers have expectations that they are eating authentic food that is safe; the seafood industry has suffered from a lack of trust, and is starting to realize that the modern consumer landscape demands transparency.

Why Seafood Traceability Supports the Whole Supply Chain

Most seafood supply chain actors are well-intentioned companies. They regard themselves as stakeholders of a well-managed resource whose hardiness and survival are critical to their businesses and the global food supply chain. Many have implemented policies that require their buyers to verify—to the greatest extent possible—that the seafood they procure meets minimum standards for sustainability, safety and quality.

This kind of self-regulation has been an important first step, but enforcing such standards has been hampered by the lack of validated traceability systems in a digital supply chain. Of course, it costs money to implement these systems, which has been a sticking point, but industry leaders are starting to realize the value of the investment.

Suppliers. A key benefit of traceability for suppliers (i.e., processors and manufacturers) is that it allows them to really protect their business investments. Traceability achieves this because it demonstrates to consumers and trading partners that suppliers are doing things the correct way. Traceability also gives them better control over their supply chains and improves the quality of their product—other important “indicators” for consumers and trading partners.

These advantages also create opportunities for suppliers to build their brand reputations. For example, they can engage with consumers directly, using traceability data to explain that they are responsible stewards of fish populations and the environment and that their products are sustainably sourced and legitimate.

The bottom line is that suppliers that don’t modernize and digitize their supply chains probably won’t be able to stay in business. This stark realization should make them embrace traceability, as well as adopt practices that comply with the regulations that govern their operations. And once they “get with the program,” they should also be more inclined to follow initiatives and guidelines such as the GDST 1.0 Standards. This will invariably create more trust with their customers and partners.

Brands (companies) and distributors. These stakeholders also have a lot to gain from traceability. In a nutshell, they can know exactly what they’re purchasing and have peace of mind about the products’ origins, sustainability, and legitimacy. Like suppliers, they can readily comply with regulations, such as the U.S. Seafood Import Monitoring Program (SIMP), a risk-based traceability effort that requires importers to provide and report key data about 13 fish and fish products identified as vulnerable to IUU fishing and/or seafood fraud.

And, of equal importance to their own fortunes, brands and distributors can use traceability to bolster their reputations and build and solidify their relationships with customers. Being able to prove the who, what, when, where, how, and why of the products they’re selling is a powerful branding and communications tool.

The end of the supply chain: Retailers, food service groups/providers, and consumers. High-quality products with traceable provenance mean retailers and food service companies will have better supply chain control and more “ammunition” to protect their brands. As with the stakeholders above, they’ll also garner more customer loyalty. For their part, consumers will know where their seafood comes from, be assured that their food is safe, feel good about being responsible buyers, and be inclined to purchase only products they can verify.

Transparency, Technology, Trust and Collaboration

The seafood industry is at a critical point in its very long history. It’s not a new story in business: Adapt, adopt and improve or face the consequences—in this case, government penalties, sanction from environmental groups, consumer mistrust and abandonment, and decreased revenues or outright failure.

There is one twist to the story, however: What the industry does now will affect more than just its own interests. The health of all fish species, the environment, and the future of the food supply for an ever-growing population hang in the balance.

But as we’ve demonstrated, there is good news. Supply chain transparency, driven by international initiatives and new technologies, is catching on in the industry. Though companies still struggle to see transparency as an investment, not a cost, their stances seem to be softening, their attitudes changing. The writing is on the wall.

The message I want to end with is that supply chain stakeholders should know that transparency is attainable—and it needn’t be painful. Help is available from many quarters, from government and global initiatives like the GDST to consumers themselves. Working with the right solution provider is another broad avenue leading to supply chain transparency. Technology is at the point now that companies have solid options. They can integrate their current systems with new solutions. They can consider replacing outdated and expensive-to-operate systems with less complicated solutions that, in the long run, do more for less. Or they can procure an entirely new supply chain system that closes all the gaps and jumps all the hurdles to transparency.

Whatever path the industry decides follow, the time to act is now.