In 2023, the world is well aware of how easily the food supply chain can be disrupted. Whether it’s a pandemic or war, it doesn’t take long for the food supply chain to be impacted across countries of all economic statuses. But while richer countries have the wherewithal to at least partly weather such destabilising influences, emerging markets and developing economies (EMDEs) have less of a buffer, leaving them more vulnerable to food shortages and even famine. As we have all become more reliant upon the global food marketplace, it is becoming increasingly pressing for food producers and governments to find ways to secure the food supply chain better, to protect both EMDEs and the richer nations, and technology could have the power to provide an answer.
Understanding the current problems with the global food supply chain
‘Supply chain’ is a broad term incorporating many factors, from producers to logistics, with many, many intermediaries across the piece, and this makes it a complex area to tackle. But there are a number of key areas that need addressing in order to not only protect the food supply chain but also enhance its overall efficiency – which has the potential to enhance profits for producers while lowering prices for consumers.
Right now, the Fast-Moving Consumer Goods (FMCG) industry produces billions of individual products, with more than half a million manufacturers and at least 25 million distributors working to get food in front of consumers. And over 100,000 new products are coming to market every year. But according to the United Nations (UN), over 200 million people are on the brink of a food crisis. This is because of fundamental problems with how long it takes for products to move from the producers to retailer’s shelves. The distribution process is fractured, leading to confusion, delays, over-abundance in some cases, shortages and price inflation in others. In recent years, FMCG brands have lost $1.8 trillion in sales because their inventory never made it to merchant’s shelves. Why? Because the necessary technology to enhance the system isn’t available in the places it is needed.
The food supply chain and technology
Living in America, where online shopping and next day – even same day – delivery is the norm, it’s challenging to imagine living with a tech infrastructure that resembles that which was typical in the 1980s, when cash remained king and even card payments were infrequent. But that’s the case for many of the world’s food producers and this has several ramifications.
Tied to a cash-based payment system – which is slow-moving, expensive to handle, and leaves no digital traces – producers may not have reliable trading records, which means they’re excluded from access to credit.
This also means many producers lack the data they need to drive their businesses. Having no knowledge of who their merchants might be or which of their goods are being sold and where, guesswork forms the basis for most important decisions, opening the door to tremendous mistakes at worst and hampering growth at best.
How can technology address the current problems?
For the food supply chain to become truly resilient and secure, we need to be able to smoothly move goods from manufacturers to retailers rapidly, without interference and interruption. For that to happen, producers need to know in real-time who is buying their products, where their customers are, and in what geolocations the demand for their products is the highest. That way, they will be empowered to change their processes to meet the most relevant demands – and access to technology is the only way this will be achieved.
Right now, the big ecommerce players are dominating the supply chain. Having access to the right technology, they have built their distribution networks that serve their particular requirements. A by-product of that process is that they have prevented millions of distributors and retailers from accessing the goods they need to grow and evolve, erecting barriers that have helped to secure their development while preventing the producers the world needs from safeguarding the food supply chain.
With the right technology, food producers will have the power to access banking – and, along with that, the credit necessary to grow. With artificial intelligence (AI) and machine learning (ML), they’ll be able to enhance their processes, maximising efficiency and productivity and enhancing their profitability while helping to reduce consumer prices. And with that technology will come data, enabling even small FMCG producers to compete on the global stage, staying one step ahead of the market and proactively adjusting production to meet market needs.
But for any of that to happen, Open Source technology must be made available to anyone – any FMCG manufacturer – who needs it.
Right now, there are a range of threats to the global food supply chain. Geopolitical tensions – most notably the conflict in Ukraine, but we see awful events happening in Israel and Gaza – have had a widespread impact. Logistical issues – initially due to Covid-19 but also through driver shortages – have meant that the food supply chain has stalled for the last three years. But technology can help to address these problems, enhancing end-to-end visibility within the supply chain, supplying actionable insights, and opening the door to credit, investment, and the more unrestricted movement of funds. With Open Commerce and AI, the food supply chain can evolve to suit its needed purpose.
Juandre de Jong Senior Vice President Products at RedCloud, the world’s first Intelligent Open Commerce Platform. He is an astute business leader with 20+ years’ experience in business strategy, product management and digital execution in emerging markets. He was previously at Vodacom, setting and executing the product vision and strategy for their lending unit, including their BNPL offer in Africa, prior to this he was leading the portfolio growth of African FinTech, Jumo
