Embracing Emerging Technologies To Improve The Supply Chain
Friday, July 20th, 2018
The APFI Team speaks to representatives from Ernst & Young regarding supply chain solutions to tackle pertinent issues in the F&B industry.
After the recent food scandals (re: infant formula debacle), consumers, governments, and companies are demanding more transparency behind the products they purchase. How can manufacturers strengthen their supply chain to improve consumer trust?
Mr Joshi: Consumers, especially the Millennials, expect increased levels of transparency and trust from suppliers, especially when it comes to food products. The mantra for successful innovation with these consumers is summed up in the acronym LATTE, which stands for Local, Authentic, Transparent, Trusted and Ethical. This consumer-driven paradigm has also influenced government bodies and retailers to demand products that are LATTE. As such, having a transparent and ethical supply chain is becoming key for suppliers to compete in the marketplace.
Ms Chelvanathan: Food companies must embrace emerging technologies to make their supply chains fit for purpose in this changing environment. Consider how the Internet of Things (IoT) allows manufacturers to read data across the entire supply chain process, thereby driving not only efficiency but also product quality and reliability. Another potential game-changing technology that is still in its development stage is blockchain. Blockchain provides an efficient way to create transparency and trust through the farm-to-fork chain. Other technologies such as sensors and tagging technologies like RFID can enable traceability. Beyond using technology for information transparency, food manufacturers will need Artificial Intelligence (AI)-driven advanced analytics capabilities to harness all the data generated by these technologies and make better decisions in real time.
What are the risks of having a transparent supply chain?
Mr Joshi: There are three that I can see: the first is cyber risk. As more and more operational data goes online, supply chains are exposed to cyber threats and can become more vulnerable. Second, more automated and faster supply chains can fail in a bigger way compared to more localised and segmented ones where failure in one part can be relatively contained. Third, more transparency increases competition and makes issues more visible to regulators and consumers, giving manufacturers less reaction time when things go wrong. Having a strong cybersecurity plan and quick response time to operational or quality manufacturing issues can help mitigate the above risks.
What are some marketing tools manufacturers can employ in order to gain consumer trust in their operations?
Mr Joshi: Manufacturers must use technology to make themselves more transparent and accessible to consumers in order to gain their trust. Augmented Reality or Virtual Reality technology can provide additional information to consumers at the point of purchase—e.g. it can help consumers visualise the origin and freshness of the product and provide nutritional details.
Blockchain-based trust-marking of quality and authenticity is another possibility. Using AI-enabled bots to handle and address customer queries or complaints speedily is another way to build trust and credibility.
Kindly highlight a case study in which a manufacturer successfully instituted a transparent supply chain for their products.
Ms Chelvanathan: Fonterra, the global dairy food company, has developed and announced a program to have full electronic traceability by 2020 for all their consumer food products.
As part of this initiative, they have recently launched QR code technology on their Anmum range in China that enables consumers to trace the product’s origins. The unique code on each can of product enables consumers to access information such as the product batch number, the production and expiry dates, the region that the milk was sourced from and a certificate of inspection.
“Food safety continues to be top-of-mind for consumers in China, making it essential for us to provide as much assurance as possible on the safety and quality of our products,” said Christina Zhu, President of Fonterra Greater China. “This new QR code strengthens our brand position in the world’s largest infant formula market and reaffirms our ambition to be the most trusted source of dairy nutrition.”
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