FRESHER AND FASTER
From precision agriculture to personalised meal delivery, technology is making inroads across the food supply chain to improve efficiency and reduce waste.
Getting food from farm to fork before it goes bad has been a challenge ever since humans learned how to grow food and domesticate animals around 10,000 years ago.
The challenge is especially daunting in Asia, where rising affluence is expanding appetites — literally — for all kinds of food products. This has placed a further strain on underdeveloped logistics systems. Improving efficiency in harvesting, packaging and transporting perishable goods is critical.
Poor post-harvest practices currently result in anywhere from 15% to 50% of fruits and vegetables and up to 30% of grains produced across Asia and the Pacific being lost between the farm and the market.
Technology evangelists paint a rosy picture of innovations such as custom-tailored farming, where even individual families can source exactly the food they want, when they want it — and even have it delivered to their kitchen by drone in time for dinner. Food waste will also drop dramatically. That day may well be coming, but it’s not here yet.
Nevertheless, the world where customers are at the very end of the supply chain will soon be over. Asian suppliers have to adapt to digitally driven changes that are shaking up the entire food supply chain if they want to stay competitive.
Mobile applications, e-commerce, data analytics, connected devices and distributed ledger technology are starting to change the way food is sourced, processed and delivered. Suppliers need to learn how to interact with customers in new ways to serve them in a more highly personalised manner.
“The flow of goods has been changed with applications such as HelloFresh as they are no longer being delivered in pallets or containers but in recipes” TOM DEN HERTOG CEO of Feliz Advies
RECIPES TO GO
“Suppliers must understand that consumers are more unpredictable now than ever,” says Tom den Hertog, CEO of Feliz Advies, a Netherlands-based consultancy specialising in change management, retail marketing and supply chain. “Everything is changing and there is no silver bullet for all the problems.”
Mr Hertog, a former president of the supermarket group Ahold Asia Pacific and a visionary in the retail and supply chain management industry, has decades of experience in the food and perishable goods industry. Just as industries from banking to fashion have moved into personalisation, so too should producers of perishable foods.
“Getting the right products in the right place at the right time is the basic requirement if you do not want to disappoint your customers, but this is still not enough. You have to be even more flexible,” he said.
He points to the example of HelloFresh, a Berlin-based company that is now the largest meal-kit company in the world, with global revenue in 2017 of around US$1.3 billion, up 50% from the year before. It went public in 2017 and had a market capitalisation of €1.44 billion ($1.63 billion) as of the end of November.
HelloFresh “gives people in this industry a lot to think about”, he told participants at Symposium 2018: The Future of the Agriculture and Perishable Goods Value Chain, held by Tilog-Logistix in late August.
HelloFresh, founded in 2011, currently operates in Germany, the Netherlands, Belgium, Austria, Luxembourg, the UK, the US, Canada and Australia. It delivers kits for home-cooked meals to subscribers each week using its recipes. Everything required for home-made meals every day is planned, sourced and delivered to each subscriber at the time most convenient to them.
Personalisation on this scale relies on a huge data-driven technology platform that tracks subscriber needs and tastes in great detail. This allows the company to consistently manage the supply chains while optimising the customer experience and costs.
A subscriber who downloads the HelloFresh app begins by picking a meal plan, based on how many people will be eating and how many recipes you want per week. This allows the company to work out how many pre-measured ingredients you will need.
After you have picked a plan, which can cost between $6.99 and $9.99 per serving depending on the plan (Classic, Veggie or Family), number of people and total meals per week, you simply wait.
When the delivery arrives each week (shipping runs from $5.99 to $7.99), you will receive a box containing simple step-by step recipes and all the pre-measured ingredients — no food waste — that you need. Changes, cancellations and special delivery arrangements can all be made easily via the app.
To ensure freshness, the company handpacks all ingredients with special ice packs and insulation. It also provides detailed nutritional and food allergy information.
“These are all driven by data,” Mr Hertog said. “The flow of goods has been changed with applications such as HelloFresh as they are no longer being delivered in pallets or containers but in recipes.”
More suppliers, he says, have to start thinking about smaller volumes, and in this respect they can learn from Amazon and Alibaba. The e-commerce titans use data and robots to keep track of millions of SKUs (stock keeping units), compared with a few thousand for a typical physical store.
BLOCK-FOOD-CHAIN
Food suppliers that want to improve personalisation, delivery efficiency and cost effectiveness need to think about how they can use data coupled with sensors and robotics in distribution centres to pack, organise and deliver food. Mr Hertog sees blockchain as one potential tool for updating and optimising the supply chain.
“Without data and the people who know how to use it, there will be no smart predictions,” he said.
Tony Yin, global business development manager at Alibaba Group, also champions data analytics to find out when customers are going to need their products and services and how much they will want.
“With data we can accumulate information on buying behaviours. We can analyse how many families there are, what kind of food they eat the most, what kind of food will need cold-chain service,” he said.
“Then we transfer that information to our logistics partners and they can plan for a fulfilment centre in this neighbourhood beforehand while preparing for any coldchain support that might be needed.”
This information allows logistics providers and stores to plan ahead and locate their resources accordingly in the most timely manner. Fulfilment centres can be set up almost everywhere that the data predicts where the demand will come from. It could even be in your basement, or involve the use of lockers near your building. Alibaba is already doing this in China, which helps it to cope with demand, even when it soars on the annual Singles Day.
This year, the company’s online shopping blowout on Nov 11 smashed records (again) with $30.8 billion in sales from China.
The Internet of Things (IoT), in particular sensor-equipped monitoring devices, is a key to improving food delivery efficiency and reducing waste, according to Mr Yin.
“IoT is an important part to trace, simultaneously, the real-time temperature and location of the cold-chain support services but the data and forward planning is also very important,” he said. “Data will maximise the whole thing, from customers’ needs, to your resources, and the planning part.”
Machine learning can also be used to predict what the customer might want to buy next based on data from previous purchases, he added.
Using data to accurately predict what customers want, where and when they want it, could require blockchain to bring it all together and provide added value. IBM is now developing blockchain technology for the food supply chain, which could lead to growing adoption of precision agriculture.
According to IBM, blockchain coupled with other technologies such as drones, smartphones and IoT can help improve the food supply system and cost-effectiveness. For example, stores can use data on when food was harvested to better maximise freshness and shelf life while blockchain can provide quick response to food recalls, which will help to reduce waste.
In terms of food safety, blockchain could be used to securely trace products in seconds, not weeks, to mitigate cross-contamination or the spread of food-borne illnesses. This could have been helpful, for example, handy during the recent needles-in-strawberries scare in Australia and New Zealand.
At the same time, new technologies can democratise the food supply chain by verifying authenticity and also screening for unethical labour practices. They could also allow for organic or small-batch specialty foods to be grown in places ranging from too-small-to-cultivate plots in far-flung or inaccessible areas.
Blockchain can also be a boon for small-scale farmers in many countries where security of land tenure is fragile and title deed systems prone to corruption. A farmer can upload GPS data and images from a smartphone to produce a blockchain record that would be almost impossible to dispute after periods of political turmoil. This is because the data that has been written into the blockchain cannot be removed or edited.
The technology can also be used to record the entire life cycle of livestock and fish while isolating beneficial activity or disease-generating factors in barns or ocean habitats. This can be done using a variety of IoT and radio-frequency technologies that acquire data and input results before uploading them into the blockchain.
Drones, meanwhile, can be used to help expand cultivation possibilities on small or hard-to-reach plots such as mountainous terrain, or even urban rooftops, monitoring plant health, seeding, irrigation and harvesting. Blockchain can also enable restaurants, schools and families to “sponsor” plots where they can remotely follow cultivation history and receive the exact product they expect.