A number constantly being batted around by everyone from the UN to NGOs to food processors is 9 billion – what the world’s population is expected to reach by 2050. While many see this number as a tipping point when we will no longer be able to feed the world’s population, one voice disagrees. Jason Kay, CCO, IMS Evolve, explains the role digitization is playing in transforming the cold food chain to eradicate waste, improve food safety, and mitigate the risk of a global food crisis.
MPJ: In this issue of MPJ we’ve started a new feature entitled Future Protein. In preparation for this, during much of the last year I’ve been talking to a range of people who see the answers to our growing food crisis in everything from insects to lab cultured meat. But you see our current production level is adequate to feed well beyond the 9 billion we’re expected to reach by 2050. Not to say you’re a lone voice in the wilderness but….
Jason Kay: The world today has a vast, genuine problem with food – from a lack of biodiversity to excessive wastage, from poor health linked to over consumption to massive food poverty. We grow enough food to feed 12 billion – far in excess of the current seven billion population – yet more than one billion people are under fed. The UN estimates that, on our current path of food consumption and waste, by 2050 we will reach a tipping point and the world will be in a food crisis.
The problems extend from agriculture all the way through the food supply chain to the home, where food wastage – in more economically developed countries at least – is excessive. The UN target calls for the world to cut per capita food waste in half by 2030 – but while changing consumer education and expectation is essential – as in the drive to increase biodiversity – it is within the food supply chain that these changes will come together. Without democratizing an incredibly consolidated food supply market, it will be impossible to reduce wastage, embrace innovation and change consumer behavior. Systemic change is essential.
If I understand correctly then, you see then not so much our population as unsustainable, but instead more on how we manage the distribution of food – our cold chain – is what is unsustainable?
Exactly. Over the past 50 years, the economies and ethics of food production have fallen out of sync. Farmers do not want to produce food that is wasted, but every aspect of this low margin model results in wastage. Fears regarding food safety, especially with regards to meat and poultry, combined with failure of cold chain equipment, leads inevitably to food being destroyed. But basic process failures are just one aspect of the problem.
The sheer cost of managing suppliers to ensure product consistency and safety makes it difficult for retailers to embrace new, innovative providers; while those with existing contracts cannot afford any risks associated with late delivery or under supply, and hence build in significant contingency. The result is not only more wastage but also minimal opportunity to invest in innovation, to explore opportunities for new, healthier food options or embrace automation to improve efficiency.
Are you talking 10, 20, or even 30 years in the future or is this something that is achievable now?
Clearly the systemic change required if the world is to avoid the predicted food crisis cannot be achieved overnight. In a difficult, low margin market, with small numbers of players fighting hard to retain share, it is incumbent upon innovators and disruptive market players to leverage digitization to drive that change.
The most obvious role of digitization is in minimizing avoidable waste. When one in three freight journeys in the UK is food, the use of real-time information to improve routing and distribution planning is key to improving resource utilization. Meat and poultry in particular make for sensitive cargo that leave no room for error; bacteria will double three times faster on poultry transported at 32 degrees Fahrenheit, for example, then it would at just four degrees cooler. Using existing sensors on refrigeration units, heating units and air conditioning systems to raise alarms when problems occur to enable immediate rerouting or allocation of items, plus the use of predictive maintenance to avoid equipment downtime, can therefore have a very significant impact on food wastage, not to mention food safety.
I hate to say it but what you’re proposing in a way sounds almost too easy, which begs the question, then why isn’t anyone taking this tact?
They are. This approach is already being used by forward thinking organizations that are using digital and automation strategies today to reduce avoidable loss of food, achieve huge reduction in reactive maintenance costs, even reducing customer complaints. While supply chain complexities have traditionally made it easier and safer to store all chilled foods at the lowest temperature required (by meat), this can reduce the quality of some other produce, such as dairy, and relies on more energy than is otherwise necessary. By integrating the data from the existing machine sensors with supply chain and merchandising systems as well as the fridge control systems, each machine can be automatically set at the temperature to suit the specific contents, ensuring safety while radically reducing annual power consumption. Together these changes result in a reduction in revenue expenditure of tens of millions and, in large estates, percentile point gains on capital employed can run into many hundreds.
For all of its ease, it sounds expensive.
Critically, this is being achieved by deploying an IoT layer over the existing infrastructure – clearly it is not feasible for retailers to rip and replace control infrastructure across hundreds or thousands of locations. The impact on both profit and customer experience would be hugely damaging.
Instead, by leveraging edge-based processing to ensure information from existing equipment throughout the supply chain is both actionable and actioned to make immediate changes, retailers are able to achieve IoT capacity at pace and with no downtime. It is this frictionless approach to digital adoption that will be key to releasing measurable value.
What is IoT?
IoT stands for Internet of Things; it represents connection of multiple types of controls, machine classes and assets, bringing them all together to communicate in one unified language and leverage a brand new stream of existing data that can then be used to drive valuable outcomes. This, in business, provides a complete view of an estate in real time.
It’s not necessarily a new concept; people have been talking about the potential of connected devices since the late 1980s and we, at IMS Evolve, have been applying this technology at scale for more than a decade. It has been in the last couple of years, however, that IoT has gained considerable momentum – a testament to its potential to improve customer experience, drive down costs, and transform business operations. Organisations across every market have now embarked upon pilot IoT deployments to prove the value of the data derived from a vast array of devices and sensors. By leveraging and contextualizing the data and embedding information within existing core processes, from stock management to logistics, organisations have begun to drive measurable value.
In the main, however, these deployments have been single solution – designed to demonstrate the viability of the technology rather than addressing core business issues. Now that the potential of IoT is established, it is time to evolve beyond these single issue deployments and determine how best to embed IoT across businesses as a whole to bring about large scale change – such as, in this instance, within the cold chain.
And this would be your frictionless approach you mentioned.
With this approach organizations can achieve a significant revenue uplift – without the need for massive investment. Indeed, it is the compelling ROI from this initial step of leveraging existing equipment that will be key to providing the investment that will underpin the next level of digitization – the use of traceability systems to manage the advocacy, source and safety of food.
With the ability to confirm not only that products have been correctly produced but that they have followed the correct processes at every stage of the supply chain, from farm to retailer, digitization provides a full audit trail of trusted information. This approach delivers low cost governance, radically reducing the cost of supplier ownership for retailers and opening up new opportunities for suppliers to enter the supply chain and create the democracy that is essential to enable innovation.
And it is this innovation that will be key to moving away from the entrenched practices of food procurement that have embedded consumer expectations and misunderstanding across the board. Following significant consolidation, both retail and restaurant markets are dominated by a small number of organizations delivering a consistent and stable customer experience, one that offers products of identical size, shape and price irrespective of season or country of origin, which has built a market predicated on waste. A democracy of participation within the food market will help to educate consumers, improve understanding of food quality and the implications to health, and facilitate the introduction of new products and practices, including biodiversity, that deliver a new consumer experience.
A more predictable marketplace will also encourage investment, enabling SMEs to enter and embrace automation to replace the reliance upon cheap labor to improve productivity. The result should be not only less wastage and a fairer distribution of food globally but also a better consumer experience with access to fresher, healthier and less heavily processed food. In effect, the adoption of IoT to minimize avoidable waste within the retail cold food chain is the essential first step towards full digitization throughout the food production lifecycle – digitization that will underpin the global response to the developing food waste crisis.
With the population clock ticking, I’m back to my question: 10, 20, or 30 years more years to come because time doesn’t seem to be something we have?
A fundamental change to the global supply chain will take time. But there are very significant changes that can be made today that not only begin to address the wastage endemic within the food chain but also release the investment required to support the adoption of digitization throughout the infrastructure that will be key to transforming the end to end business model.
It is by embracing digitization to improve food safety and advocacy that the market can democratize access in order to generate the innovation key to making fundamental change, from automation to enhanced productivity to improving consumer education and supporting essential change in global food production and consumption.