When it comes to following supply chain processes and technologies, the supply chain that extends from a food manufacturer’s factory to retail stores has always gotten a disproportionate share of attention. This is natural because large food & beverage and consumer goods companies were the first to use warehouse and transportation management systems, are heavy users of advanced supply chain planning applications, and are leading the way toward demand-driven supply chains based on the use of demand signal repositories.
I grew up in Indiana making summer money detasseling seed corn. Not surprisingly, I also find the farm supply chain interesting. But this supply chain gets far less attention. I was talking to a logistics manager for a feed supplier that delivers products right to the farm. His company needs to achieve flawless transportation execution, which involves more than just showing up on time. Their trucks drive right up a farmer’s driveway and they need to make sure they use the correct driveway – the one that leads to the barn, not the house. The farmer’s wife gets testy if a truck knocks down her shrubbery or flattens her flower beds. The truck drivers also need to know which bins to fill with feed, since there are apt to be several available. In short, fulfillment execution is about delivering the right product, using the correct process, in order to meet the farmer’s expectations, and each farmer has slightly different requirements.
And then there is Monsanto. It has been demonized as a company that produces genetically-modified soybean, corn and cotton seed products. But I consider Monsanto one of the best examples of a company using product development to differentiate its product. I put them right up there with Apple in the area of product differentiation. The company’s trick was to develop a herbicide, Round Up, that only works when used with its seed. In parts of the world where farmers use this combination of seed and herbicide, Monsanto is the clear winner in the marketplace because its products generate higher yields.
My complaint about Monsanto stems from its overzealous use of litigation. The company sues organic farmers or dealers if their organic seed becomes contaminated with Monsanto’s patented biotech seed germplasm based on the legal claim that these farmers or dealers are using its seed without paying required royalties.
Fonterra is also a very interesting company. Fonterra is a leading multinational dairy company owned by 13,000 New Zealand dairy farmers. It is also the world’s largest exporter of dairy products. Fonterra has an innovative supply/demand planning process. This process is complicated because as a cooperative Fonterra is contractually obligated to take all of the milk its farmers produce. The company cannot cut production to balance to demand. Fonterra forecasts how much milk it will produce based on where it rains, using GIS (global informaton systems) and satellite maps to determine the latter. The more it rains, the more grass will grow, the more milk cows will produce. Once it has forecast the supply, the company turns fresh milk into inventory by figuring out how much cheese and powdered milk it can profitably sell over a multi-year period. Having the supply/demand plans in place allows Fonterra to optimally move the milk to the correct production facilities.
Leading growers are using GIS and GPS to figure out which parts of their massive farms should be planted with which crops based on soil books, slopes, frost free zones, and other parameters. This improves yields while reducing fertilizer, fuel, and seed costs.
I had hoped, based on the passage of the Food Safety Act in the US this past January, that farm-to-fork traceability and food safety would make big advances in the near future. As I’ve written in the past, despite scientific and technological advancements in so many areas, such as plant safety, mine safety, driving safety, and disease control, we’re really not improving the safety of our food supply. But after reading the traceability portion of the Food Safety Act a while back, I was very disappointed.
It is technologically feasible to have end-to-end, farm-to-fork traceability using case-level barcode/RFID tracking with product and location codes developed by GS1. If products need to be recalled, then multiple companies could access a database “in the cloud” to quickly trace back to the source of the problem. And of course, when this end-to-end visibility exists, the supply chain can be optimized in new and exciting ways.
However, the corporate interests won. The food safety bill only includes one step up/one step back traceability by the different players in this supply chain. In short, timely recalls will be impossible. For a non-legalese based explanation of the statute, the consulting firm Leavitt Partners provides a good explanation in an article titled “Product Tracking: Impact of FSMA.”
But the farm supply chain will always interest me. You can take a Hoosier out of farm country, but you can’t take the farm out of a Hoosier.
