I was asked recently to address the 19th
Proagrica
Annual Integration Meeting in Cologne. This was an action packed day, with speakers from across the supply chain discussing the need to achieve greater resilience and sustainability in our domestic and international supply chains - and the role of digitalisation in all of this.?
This is a huge, complex and increasingly important subject in world agriculture and food. As was pointed out on the day, “it is very much a journey, not a destination”. ?The digital and data journey may be one that never really ends.
There were a whole series of points made throughout the day and some of the most important to me seemed to include:
- the trend towards precision based crop and livestock production are now a reality. Further consolidation in the supply chain is all but inevitable. This will often see key players taking up more than one position within the same supply chain
- don’t talk supply chains - talk “supply networks” in the future. These will be made up of input suppliers, farmers, processors, retailers, 3PL transport, logistics and distribution companies - but bound to each other via increased digital connectivity
- there can be across the sector, a high degree of variability as to what constitutes “best practise”. This can even occur internally within the same organisation. Where this happens, it needs to be consolidated as a priority
- getting digitalisation “right” can help drive the top and bottom line of a balance sheet. Being linked to numerous data streams can lead to much better forecasting, planning, product ordering, automation of functions such as invoicing and cash collection and eventually lead to and enhanced customer understanding and better customer experience per se
- there are numerous potential suppliers of digitally based services for the agri food sector. ?Some 700 start ups were reported last year in this space alone, but many do not have genuine agri food experience to go with their digital competencies.? As a result, many will not succeed beyond the short term.? Selection of the right partner to work with is crucial
- traditionally, the IT activity in an agri business related to the production and procurement functions, but these days, ?wider digitalisation of the business means that all parts of it can be linked together in a much more integrated way. ?No more silo working allowed! The value, however, that can be gained for a business has to be seen across several internal departments for it to achieve the optimum benefit
- this will eventually lead to a range of better business outcomes, better technical farm and food production support being given to customers and a greater degree of business competitiveness.? This will include being in a better position to achieve sustainability goals
- the better use of data is of course a critical part of all this, as we see customers, logistics companies and suppliers being increasingly linked by shared data sets. These need to be provided in a real time environment. ?There is an ongoing debate about the ownership of data to be had too
- these developments are nearly always driven by a defined customer need – not least, from the major international retailers. Investments in digitalisation and ERP systems will assist in priority setting, retaining and winning new customers, implementation of internal projects and supply chain development
- project development teams need to be able to put forward strong arguments for digitalisation based projects, in the face of limits on internal budgets. They also need to build a strong case for the increase in efficiency and ultimately, profitability, that can be generated by these investments
?The perfect storm that the agri food sector finds itself in now means that efforts to digitise systems and solutions need to be accelerated across businesses in a move towards “digital unification”. ?The final point of the day was that for the leading players in this sector, as well as having great tech, need also to assume the role of “thought leaders”. ?
This needs to be around subjects such as sustainability, global expansion and consolidation, supply chain digitisation and the development of more resilient methods of procurement, processing and marketing of agri food products.
My own concluding thoughts were that, while there are some fantastic examples of digitalisation of agri food supply chains taking place and clearly lots of “stuff” going on in this space, as identified by McKinsey, agriculture is one of the least digitalised industries of all.? And so there seems to be a huge amount of work still to be done here going forward.
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John is a Divisional Director at
Promar International
, the consulting arm of
Genus ABS
and has worked on agri food supply chain and market research projects in over 60 countries around the world. He recently spoke at the 19th
Proagrica
Annual Integration Meeting in Cologne.
