This year researcher principals from Swinburne and the CSIRO released a report on the positive economic impact available to regional Australia by adding value to our food supply chains. The authors reference Dutch researchers, Schiefer and Deiters, who identified five future critical challenges faced by our food sector.
1. The emergence of new innovations in technology, management, distribution, and food handling.
2. Changes in the lifestyle driven by more awareness of health costs and wellness. This is resulting in demand for better quality foods, fresher foods, sustainable and super foods.
3. Global increases in food consumption. In particular, the growing size and wealth of cities is giving rise to new supply chain systems and mechanisms for delivering fresh food to wealthier consumers.
4. The world, including Australia, is facing a diminishing production base, due to a loss of arable land.
5. Attitudinal changes in our society, where more focus is now being put on how the production of food affects environmental outcomes, ethical and moral outcomes, and development outcomes.
These 5 forces for change can be summarised further into 3 core drivers of change:
1. Demand drivers – changes in lifestyle and food consumption
2. Supply drivers – pressures on arable land
3. Operational drivers – innovation & attitudes
As demands increase and supply pressures continue it is the operational drivers of change that can give suppliers important new levers to create value. There are new tools for realising value from the water, labour and capital invested in our land. A lot of this value creation opportunity sits post farm gate. Those opportunities include reaching more markets, better sales management, brand building using low cost digital marking, and automation of compliance and workflows. What supports those opportunities are four key shifts in the way we conceptualise the post farm gate supply chain.
figure: key supply trading shifts 2020+
This is already happening. At the end of this decade we are seeing signs of this shift entering our supply chains via new consumer technologies. For instance, WhatsApp is being used to improved responsiveness (albeit inside of existing personal networks) and camera tools have made information transfer richer (primarily through image management and convenience). But these personal technologies were never designed for industrial supply chains. Industrial technologies and thinking will supercharge the benefits.
In the next decade if the forces outlined by Schiefer and Deiters are realised, then suppliers who create produce outcomes that meet new consumer tastes will have more market power. So, if that occurs is that it? After 5 years of trading, we see much more opportunity to turn market power into higher multiples of value. How? By innovating and co creating the supply chain of tomorrow. If you can touch more of the market you can find and respond to a wider range of value pools, transparency allows “needs” to be matched to “demands” with greater speed and fit, information supports better decision making, and integration takes costs of out workflow and automates compliance obligations.
A few years ago, at Asia Fruit Logistica, I saw wholesale buyers lining up to plead their case for access to Tasmanian cherries. Overlay that “market power” dynamic though tomorrows supply environment and I think we can get a taste of the opportunities that lay before us.