IBM Retail White Paper | Technology & Smarter Food Supply Management


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The stresses on the food value chain are pervasive, profound and persistent. A smarter approach to managing our food value chain is needed. While technology alone cannot solve the crisis, we can make great strides by leveraging the collective and synergistic power of intelligence, instrumentation and interconnectivity. Read this whitepaper to learn about the capabilities and attributes necessary for a smarter food value chain.

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IBM Retail White Paper | Technology & Smarter Food Supply Management

  1. 1. IBM Global Business Services White Paper An appetite for change How an interconnected approach to food supply management can help food growers, producers, sellers and consumers — and planet Earth Guy Blissett, IBM Institute for Business Value, Consumer Products Lead
  2. 2. Executive summary In many ways today’s food supply chain is a marvel—a highly fragmented and com- plex, and ever-evolving ecosystem that delivers an astounding volume and quality of product—sufficient food in all its various forms to feed roughly 6 billion of the Earth’s 6.8 billion inhabitants. However, in this same value chain where fresh produce is shipped around the globe hours after being picked, globally linked financial mar- kets dynamically set prices for agricultural commodities, and crops are increasingly re-engineered at the genetic level, major stresses are appearing. At a planetary level concerns are rising about food security and sustainability; How can we feed the ad- ditional 2 billion people that will inhabit the planet by 2050, while at a participant level concerns linger and grow about recalls contaminations, waste, spoilage and distribu- tion inefficiencies that create shortages and embed incremental costs? Planetary concerns center on the increased demands that 2 billion new inhabitants will place on the food supply, and changes in consumption that accompany increas- es in income. Based on existing trends we will likely need to increase the food supply 70-100 percent by 2050. Exacerbating these concerns are newer issues such as climate change and drought; high and volatile energy prices; plateauing crop yields; arable land limitations; and diversion of crops for biofuels. As a consequence, we are seeing significant price volatility, shortages, government interventions and a growing realization that the current model is not sustainable. Indeed, agriculture is already the largest human use of water, comprising an estimated 69 percent of total. At a participant level many of the issues are not new, just persistent. Consumers continue to crave additional information about product source and contents, while harboring lingering safety concerns. Retailers continue to wrestle with stubborn lev- els of out of stocks and razor-thin low margins. Consumer products (CP) companies continue to struggle with accurately sensing end demand, and synchronizing their plans and forecasts with retailers. Farmers and growers struggle with increasingly pernicious weather, rising input costs, uncertain demand and volatile market prices. Page 2
  3. 3. Other persistent problems—such as In this whitepaper, we will summarize Structure of the current food food spoilage and waste, product the current structure of the food value value chain contaminations and recalls; and often chain, assess its current state, and The food value chain — comprising liter- convoluted farm subsidies and trade identify the capabilities and attributes ally tens of thousands of participants of policies—further complicate an already necessary for a smarter food value chain. varying size and sophistication spread challenging landscape. across the globe — is a daunting enter- prise to summarize. For our purposes, we Clearly, a smarter approach to manag- have grouped and summarized partici- ing our food value chain is needed. And pants into the following value chain (see while technology alone cannot solve the Figure A). While this figure represents a crisis, its application to create a value gross simplification of the web of partici- chain that is increasingly instrumented, pants and their interactions it does enable interconnected and intelligent is essential. a structured assessment of the existing and emerging stresses, and provides a framework for considering solutions. Figure A. The Food Value Chain...a highly simplified representation Page 3
  4. 4. In addition to its complexity, the food It is notable that some organizations act Commodity and specialty products provid- value chain can also be viewed as a as highly focused specialists developing ers / primary producers study in contrasts. At each step the unique capabilities and expertise in a This complex and fragmented group participants and their activities vary specific competency (e.g., raising broiler and can be clustered around the follow- across the spectrum in terms of dimen- chickens in their thousands), while ing competencies: sions such as scale, breadth, scope, others operate across multiple com- • Agriculture: Growers of legumes, sophistication and integration (see petencies reaping benefits of vertical pulses, wheat, rice, fruits, vegetables, figure B). integration (e.g., global beverage and corn, and other crops. They range snack company integrated all the way in size from the small family farms to upstream to potato farmers and sup- titans such as Archer Daniels Midland pliers of sugar alternatives). Assorted (ADM), Bunge, and Cargill. cooperatives, trade associations, and market organizations also play a role • Beef, chicken and pork farmers: in- aggregating product, collecting informa- cluding cow/calf operations, stocker tion, representing industry interests and and backgrounding operations, sharing knowledge. feedlots, ranchers, and Concentrated Animal Feeding Operations (CAFO). Figure B. Food Value Chain particpants and their activities...a study in contrasts Page 4
  5. 5. • Dairy farms and cooperatives: pro- Brokers, distributors, exporters, Food and Foodservice Wholesale distributors ducing cheese, milk and milk protein importers, traders These entities bridge the gap between and other derivative products. This portion of the supply chain en- CP companies and retailers, enabling compasses a massively diverse group CP companies to efficiently sell and • Fisherman and fish farms: that catch of large and small players that typically distribute products to diverse and and/or farm fish, shrimp and shellfish add little to no value to the physical numerous retail outlets, and delivering product itself, in fact in many cases they incremental services to the customers . Component converters, processors, abat- never even “touch” the physical prod- In many markets multiple tiers of whole- toirs, packers and repackers uct. Their role is to facilitate movement, saler and distributor may exist between While operations at this step are aggregation and trade. In Japan, mega- the primary manufacturer (i.e., the CP sometimes highly automated and tightly players such as Itochu, Mitsubishi and companies) and the retailer or restaurant. integrated with those of the farmers Mitsui are active in each of these areas. and growers, they are just as likely to Food retailers and restaurants be performed manually and dispersed Consumer products companies Food retailers used to consist almost across a web of small players. Ranging from global players that own exclusively of traditional grocery stores, and manage portfolios of familiar prod- kiosks, and restaurants but now food a) Converters of raw / bulk crops, ucts and brands (e.g., Danone, Unilever, is sold through every type of outlet livestock and other foods into com- Nestlé, Arla, Heinz, and Kraft), to local imaginable, including online. Examples ponents —slaughtering, deboning, and regional players focused on a single range from global powerhouses such peeling, cleaning, sorting, slicing, brand or category (e.g., Kikkoman, as Carrefour, Trust-Mart, Tesco, Panta- freezing, and otherwise storing, Weetabix, Utz, and Bush Brothers) to loon and Walmart to individually owned, the increasingly important private label single store locations. Restaurants also b) Processors that change the com- manufacturers who make products range from global fast food chains such position of the product through for retailers under their own labels. As as McDonalds, Jollibee, Taco Bell and cooking, mixing, grinding, and/ competition increases, critical inputs KFC to single unit, individually owned or other chemical, mechanical, become scarce and/or expensive, and restaurants. These organizations run thermal operations the geographic scope of operations the gamut in sales volume and degree Secondary and tertiary suppliers expands, CP companies are playing an of technological sophistication. Chemical, pharmaceutical, industrial increasingly active role upstream assist- and specialty companies that manu- ing and integrating with suppliers and facture and market the antibiotics, pes- connecting with end consumers to un- ticides, fertilizers, seeds, and genetic derstand their needs and preferences. material increasingly a component of to- day’s food value chain. Examples include Monsanto, BASF, DSM, Potash Corp. Page 5
  6. 6. Food consumers Given the complexity of the food value The global trade in food, myriad regula- At the end of 2008 there were ap- chain effective collaboration on issues tions and inspection standards, and proximately 6.8 billion food consumers and stresses is essential. Progress has the complexity of the processed food on the planet, and by 2050, two billion been made toward developing and we eat are all complicating efforts to more will join them. Although consum- adopting standards that facilitate collab- improve food safety. In the U.S. for ers the world over crave safe, healthy, oration, however significant challenges example imports account for nearly 60 abundant food choices at relatively remain especially in the upstream end percent of the fruits and vegetables low cost, they are extremely difficult of the chain. Globalization, specializa- consumed, and 75 percent of the to please and characterize. They want tion and fragmentation of the food value seafood. However, only one percent of more information about the source and chain are exacerbating longstanding those foods are inspected before they contents of products and are connect- issues as products get handled by more enter the country. ed, concerned and empowered to get entities spread across a wider geography. that information and share it. Food safety issues present problems for A sample of cross chain and individual more than just consumers. Food grow- Stresses on the current system participant level stresses follows: ers and consumer product manufac- The current food value chain does many turers are facing a crisis of confidence things very well, from producing pro- Contaminations and recalls from their customers while they struggle digious volumes of food at a relatively This issue took center stage in 2008 to institute appropriate safety measures low direct-end price to the consumer, to and 2009 with a series of highly in the face of rising costs. Government innovating around processes, products, publicized recalls around the globe of agencies that regulate food safety are pricing and packaging. However numer- products as diverse as spinach, milk, also increasingly under fire as they ous factors are stressing the chain at peanuts, ground beef, and jalapenos try to answer the public’s demand both the participant and planetary level. sickened thousands. Awareness of for greater accountability with limited the food safety issue and its cross staff and resources. Participant Stresses channel impact has been growing and Participant stresses — typically business consumers the world over are increas- Agricultural entities related — impact or occur at the partici- ingly concerned about the safety of the Agricultural entities face an onslaught pant level, rather than a planetary level. food they eat and farmers feeling the of unique stresses. Competing in the Some business stresses — such as financial impact of recalls. A sample of increasingly competitive global market, contaminations and recalls — cut across contaminations and recalls since 2005 these organizations must often con- the entire chain and even overlap with is shown in figure C. tend with extreme price volatility, due in planetary concerns. Others — such part to biofuel production fluctuations; as high failure rates for new product widespread tariffs and import quotas; introductions — are more localized in and sometimes perverse production their impact. incentives such as those currently in place for European milk and sugar, and U.S. corn. Page 6
  7. 7. Figure C. Product contaminations and recalls...a major stress on the Value Chain Additionally, costs are on the rise in The future will likely bring more, not Many CP companies are already many areas of the industry. High energy fewer pressures for these organizations, responding to these changes but rec- costs are forcing production costs including: ognize they have yet to find workable, up because oil, natural gas and their comprehensive solutions. Connec- • Rising demand for sustainable practices derivatives are essential components tions with consumers are tenuous and to modern agriculture, both to fuel • Growing concern about water usage, distrust of companies, products and machinery and as ingredients in fertil- waste and runoff brands remains high. At the same time izers and pesticides. Additionally, many • Increased need for agility due to acceptance of private label products is agricultural entities are under increas- climate changes growing. ing pressure to pay a premium for the water they use to grow crops or raise Consumer Products companies Additionally, pressure is mounting for livestock. Europe already has such The primary business of CP companies CP companies to reliably measure the a water pricing system in place and is to delight customers and consumers. impact of their operations and those other agricultural producers are bracing Today they struggle with an increas- of their suppliers. Walmart recently themselves for this potentially devastat- ingly concentrated and demanding announced creation of a sustainability ing cost increase. customer base who are just as likely to index that may soon set a benchmark be competitors. Another stress comes for the industry. Walmart leaders say in the form of a rapidly growing number they are creating the index due to the of increasingly affluent consumers, who planet’s increasing global population, are themselves concerned, connected decreasing natural resources and in and empowered to gather and share in- response to consumer demand. formation. IBM calls this dynamic group Omni Consumers. Page 7
  8. 8. Lastly, CP companies are caught be- in India, who hand deliver 170,000 Planetary concerns tween a financial rock and a hard place homemade meals to office workers At the heart of planetary concerns are with consumers unwilling to pay more each day. As previously mentioned, the additional two billion people ex- for their food and rising input costs. retailers are under increased pressure pected to inhabit the planet by 2050, Indeed cocoa, tea and other commodi- to be more responsive to notoriously up from 6.8 Billion at the end of 2008. ties have hit record highs within the fickle customer demands. In a dif- These consumers are increasingly past 12-18 months. ficult economy and an oversaturated likely to live in a city, and as their in- marketplace, attempting to increase come rises their consumption of meat Wholesalers/distributors customer responsiveness and remain and dairy products will also likely rise. Wholesalers and distributors are under profitable in the face of intense com- These factors will place tremendous pressure from both upstream and petition can be a daunting task. pressures on a food value chain al- downstream value chain partners to ready straining to feed the world. evolve their role and offer enhanced ser- Consumers vices. As grocers and restaurant chains A recent, steady, stream of food The global food value chain is a study handle more of their own distribution recalls and safety warnings have in contradictions. Large segments and turn to increasingly capable mega- left many consumers fearful of the of the population are subjected to distributors and third-party logistics food they consume and distrustful hunger and scarcity alongside popu- providers, food distributors are under of companies, products and brands. lations enjoying enormous excess. attack like never before. They’re also Consumers are increasingly vocal Tragically, at the same time, vast being squeezed by unprecedented cost in their demands for safer food and amounts of food is spoiled or wasted pressures, product proliferation and dis- increased transparency about the at every stage of the production tribution complexity. In many emerging origin and contents of food. Con- process; some experts estimate up to markets the multiple tiers of distributor sumer demands are also growing for 50 percent may be lost between farm further complicate the coordination functional foods that deliver added and dinner table. At the same time and collaboration so necessary for health and/or nutritional benefits. geographic regions are increasingly efficient operations. To that end, many consumer prod- subjected to alternating periods of ucts manufacturers are focusing on excessive rainfall, and then drought. Retailers and restaurants successfully launching new items to While the local food movement is As the number of channels through satisfy the increased preference of gaining increased traction, the major- which food is sold has proliferated so consumers for health and wellness. ity of food is produced far from where have the challenges. Retailers now In the last five years, there has been it is ultimately consumed, being prepare foods, own brands and sell 38 percent increase in marketing food shipped thousands of miles before ar- meals. Prepared food is sold through and beverages as “better for you.” riving in your local store or restaurant. gas stations, hardware stores, coffee Satisfying this concerned, connected shops and kiosks. The proliferation and empowered consumer is an ever of quick service restaurants (QSR) evolving stress on the value chain. globally has exploded requirements for food service and food is delivered to your home, office or other location. At the same time traditional channels remain, such as the Dabbawallas Page 8
  9. 9. Although for many consumers it may In the next few paragraphs we will focus Consumption still be hard to appreciate the planetary in on a couple of the major planetary Exacerbating the impacts of population implications of the food they eat. In- stressors on the global food value chain: growth are changing consumption pat- creasingly the impact of the global food terns. In 2008 for the first time humans Population value chain is being measured, com- ate more farmed fish than wild fish, from Although many experts believe that we municated and appreciated. From the tilapia, to salmon, to cod. Other pat- currently produce enough food to feed land and water required to raise cattle terns are also changing. It is well docu- the planet’s inhabitants, the world’s or grow grain to the energy required to mented that as incomes rise, so does population is growing. At the end of create, transport and distribute food consumption of meat, fish and dairy. 2008, the world’s population reached products and the amount of food that Between 1990 and 2005 China’s popu- 6.8 billion. By 2020, that number is ex- is wasted or spoiled along the way vis- lation increased by approximately 161 pected to rise to nearly 8 billion and by ibility to these costs is increasing. million (14 percent) and over the same 2050 the world’s population may well time period per capita pork consump- From a planetary perspective, the prob- exceed 9 billion. This unprecedented tion nearly doubled, going from 19.7 lems are many and serious. How can population growth will likely drive deep Kg to 37.9 Kg. The resulting increase food growers and producers continue changes for every member of the global in Chinese annual pork consumption of to meet consumers’ demands efficiently food value chain who will be forced to 27.1 M tonnes represents roughly 360 amidst price volatility, shortages, climate do continually more with less. million additional pigs, which require changes and government interventions? 155,000 km2 of farmland, an area Estimates are that the incremental How can consumers ensure the food roughly the size of England and Wales. population, coupled with changing they eat is safe, ethically produced, consumption (see next section) will healthy and affordable? And how can With global demand for meat and require a 70 percent increase in global the players in the historically-siloed food poultry expected to rise 25 percent by food production. The acreage needed value chain integrate their thinking and 2015, many difficult questions loom. for such an increase in production is their processes with each other to cre- How can food producers meet the ris- estimated at approximately 300 million ate a smart, sustainable system that will ing demand? Are existing methods for acres, an area roughly three times the benefit the Earth and its inhabitants for fattening livestock sustainable, safe and size of California. many generations to come? ethical? How can consumers balance their need for affordable food against For a growing number of countries the their desire for responsible products? issue of food security is taking on a Where will we find the necessary land? whole new level of relevance and driv- Finding answers for these and related ing some major shifts in ownership of questions is crucial for developing food agricultural resources. production processes that are optimal for all members of the global food value chain, and for planet Earth. Especially since these foods require large land areas, massive quantities of water, Page 9
  10. 10. prodigious amounts of energy and Water-related issues will likely increase Kilocalorie / BTU generate significant volumes of waste. in number and complexity as popula- Energy – and more specifically oil and An additional concern is that overcon- tions rise, urban areas expand, and natural gas – is perhaps the second sumption of these foods and changes climate change, drought and farming most important input to today’s food in lifestyle are a contributor to the global practices affect crop yields and avail- value chain. Sixty years ago, food obesity and health crisis. able arable land. In 1950 there was producers could create a calorie of food 1.2 acres of arable land per person, by with less than half a calorie of fossil H20 2010 it is forecast to be just 0.52 acres. fuel. Today, a single calorie of modern Until quite recently water — arguably the One manifestation is a burgeoning supermarket food may require up to 10 single most important input to the food global trade in virtual water, as countries calories of fossil fuel to produce. One value chain — was a frequently under- with limited water acquire overseas study conducted in 2000 estimated that addressed issue in many food chain farmland to bolster domestic food ten percent of the energy used annu- discussions, its continued availability security (e.g., Saudi Arabia, Abu Dhabi ally in the U.S. was consumed by the at little to no cost considered a given. and Qatar acquiring farmland in Sudan, food industry. However there is a growing apprecia- Egypt, Ukraine, and Pakistan). tion that agriculture is the single largest human use of water and that current Governments will likely play an increas- policies and practices are very likely ingly active role in finding a balance unsustainable. The underlying issues across industrial, agricultural, environ- are myriad but include degradation of mental and municipal water uses. aquifers, rivers and lakes to support crop irrigation, risk of runoff from the lagoons of animal waste created by concentrated animal feeding operations (CAFO), continued high levels of food waste and spoilage in the supply chain, deforestation that degrades water retention as developing world farmers seek new, productive acreage, and consumer thirst for bottled water, soft drinks and beer. Figure D. essential component in food production and distribution Page 10
  11. 11. Increased demand for biofuels such Let’s build a smarter food supply is rarely consumed where it is grown or as ethanol has generated a unique While technology alone cannot deliver a raised, frequently exported to low cost set of problems with the world’s food solution to the myriad stresses impact- markets for processing or packaging, supply. Biofuels gained popularity as a ing the food value chain, its application then re-exported as a finished product way to potentially wean countries from to create a smarter food value chain— for consumption. For example, cod their reliance on oil and combat rising one that is increasingly instrumented, in- caught off the coasts of Norway may fuel costs. But today, an estimated 25 terconnected and intelligent—is essential. be shipped to China for processing percent of U.S. corn is now converted into filets, only to be shipped back to to ethanol and goes to fuel vehicles Why will a smarter food value chain be Norway as a finished product for sale to rather than people or animals. In the instrumented? Because it will use sens- consumers. This inflates logistics costs meantime, high oil prices contribute to ing and tracing technologies, such as and increases waste due to spoilage, higher food prices by raising the cost of satellites, radio frequency identification damage or contamination. food-production-related items such as (RFID) and barcodes, heat and moisture fertilizer and transportation. monitors, and global positioning sys- Finally, a smarter food value chain will tems (GPS) to enhance overall supply be intelligent—capturing, leveraging and CO2 / °Fahrenheit / °Celsius chain visibility as meat, fish, dairy and sharing standardized data and inte- A growing chorus of reasoned and produce moves from the farm or field to grated information to generate insights informed voices are raising the alarm the fork, lowering waste and spoilage on optimizing the value chain. Smart about the global impacts of climate and reducing costs. Sensors can also technology can improve the complex change on agriculture. At a time when enable more efficient production meth- process that is the production, distri- the energy conversion ratio for many of ods by reducing irrigation, pesticide bution, storage, selling, consumption our foods continues to trend towards and fertilizer requirements, boosting and disposal of food. Elements include inefficiency and the environmental im- yields and monitoring moisture, tem- improved planning and coordination, pact of the food value chain is increas- perature and airflow during storage to efficient storage and dynamic routing, ingly documented and understood, reduce spoilage. optimization for cost, carbon and other climate change represents perhaps the attributes and improved traceability. The most important stress on the global A smarter global food value chain will result can be more, safer, higher quality food value chain. However the impact also be interconnected—with the dispa- food delivered when and where it is of climate change likely extends beyond rate ranches, farms, packers, feedlots, needed, and with reduced waste and the immediate and visible. A recent storage bins, manufacturing and pro- an extended shelf life. report from the United Nations Food cessing plants, warehouses, distribution and Agriculture Organization anticipates centers, and retail stores sharing infor- climate change will also increase food mation and insights. This connectivity safety risks (increasing incidence of is increasingly important as food today contamination by Salmonella, Campylo- bacter, E. coli and Salmonella). Page 11
  12. 12. Elements of a smarter food supply can • Sensors technology and actuators • Integrated communication systems be found and imagined for application can be used to identify and respond enable those at the top of the food at every step in the global value food to threats across the supply chain value chain to seamlessly share in- chain: (e.g., excessive humidity or heat, formation about anticipated growth or contamination). Companies like and demand with downstream, cre- Commodity and specialty products provid- Total Grain Management offer such ating a stronger link between supply ers / primary producers technologies that monitor conditions and demand Given the fragmentation and historic in grain silos and adjust humidity and lack of technological sophistication heat to reduce spoilage and forma- • Application of genetic manipulation among many participants in this area tion of potentially harmful mycotoxins. and nano-technology to animals of the supply chain there are many and crops to deliver drought and opportunities for greater instrumenta- • Sensors can automatically adjust pest resistance, nutrition and other tion, intelligence and interconnectivity, water usage based on local and re- functional benefits. Already 64% of including: gional dynamics (e.g., fluctuations in the world’ soybeans and 24% of corn seasonal/daily industrial or residential is genetically modified • Farmers can use GPS and ad- water requirements vanced sensor technology to monitor Consumer products companies weather patterns, assess soil and Smart CP companies can • Systems and tools can be used to crop conditions, and adjust their drive standardization of food related water, fertilizer and pesticide usage • Leverage the widespread adoption processes to mitigate risk and reduce for optimal efficiency. of data standards such as GS1, the both spoilage and waste. A powerful power middleware and other com- example of this dynamic can be seen • Farmers, growers and even fishermen munications platforms to continu- in the increasing adoption of pro- in less developed regions are using ously coordinate inventories, produc- grams such as the Consumer Goods mobile phones to access market, tion plans and sales forecasts with Forum’s Global Food Safety Initiative. scientific, and environmental data and customers and suppliers to create a knowledge through services such as consistent, seamless, link between • Serialization and tagging technol- Farmers Friend in Uganda, 12582. groups. ogy, coupled with the application com in China, mKrishi in India. In this of standardized nomenclature for way they can boost yields as well as • Embrace and enable the concepts participants, locations and products, their own returns by boosting price and principles of Open Innovation enables true end to end traceability realized and reducing production costs. by connecting with a diverse set of across the supply chain. internal and external stakeholders and other interested parties to ac- cess ideas, technologies, ingredients, and other assets. In the process accelerating the new product creation process, lowering costs and boosting success rates. Page 12
  13. 13. • Reduce water usage in production, Wholesalers and distributors Retailers and restaurants packaging and products themselves Smart wholesales and distributions In this frequently oversaturated mar- by marketing concentrated versions are deploying RFID, 2D barcodes, and ketplace, many retailers and restau- of liquid based products (e.g., laundry other identification technologies to rateurs are finding they must take a and dish detergent), reusing water in track products as they move through multi-pronged approach to retaining production processes, the chain. Such technologies enable customers and attracting new ones. companies to continuously coordinate Strategies include: • Deploy advanced monitoring tools to inventories, production plans and listen and understand the concerns sales forecasts with retail or restau- • Maintaining a seamless connection of customers and consumers about rant customers and CP company with consumers that transcends their products, brands and companies suppliers for uninterrupted planning location, allowing them to dynami- in areas such as traceability, social and communication. cally and continuously search, review, responsibility, sustainability, and apply purchase and take acceptance of advanced analytics to convert those Additionally, smart wholesalers and products and services leveraging observations into actionable insights distributors can optimize supply chain devices such as mobile phones, in such as new products, promotions software to minimize distribution costs store kiosks, and hand held devices, and distribution strategies. (e.g., storage, transportation) for identification and preference informa- multiple positive outcomes, includ- tion garnered from web searches, • Deploy sensors (e.g., RFID tags, ing increased profit and a decreased loyalty cards and purchase history, thermometers and psychrometers) to carbon footprint. supporting technologies such as track location and monitor heat and video surveillance, GPS and web humidity throughout their production, monitoring, and advanced text, data packaging and storage operations and video analytics. and connected intelligent actuators to automatically effect changes to • Improving the in-store experience. processes, conditions and operations This can be accomplished by provid- to boost efficiency, service and safety. ing more value added services to consumers through in-store offerings • Dynamically optimize their supply such kiosks, shopping cart PCs, or chain operations against both tradi- self checkout features as well as out- tional metrics (e.g., $ cost, customer of-store offerings such as Website service, asset utilization) and new interactions or services. metrics (e.g., fuel, H20, and C02). Page 13
  14. 14. • Adjusting forecasts, orders and Consumers Sequencing the cocoa genome inventories based on weather, sea- Usually, considered the end of the IBM Research, the U.S. Department of Agri- sonal, calendar, competitive, price, global food value chain, consum- culture and Mars, Incorporated are teaming availability and other conditions ers are still driving many changes up and through their collaboration, they upstream. “Smart” consumers use • Ensuring in-stock positions to hope to sequence the genome that makes technology in myriad ways to become reduce lost sales, experimenting cocoa, the key ingredient of chocolate. even smarter, including: with new formats and channels (See Researchers plan to use IBM’s computa- the IBM report on multi-channel) • Using online and mobile coupons tional biology technology and expertise to • Selectively shopping online based on develop a detailed genetic map, identifying vices/us/index.wss/ibvstudy/imc/ availability, price and convenience the specific genetic traits that produce a1016279?cntxt=a1000063 higher cocoa plant yields and resist • Continued challenges coordinat- • Researching products and compa- drought or pests. ing promotions, new product nies online — both through structured and controlled content such as com- But like any sweet treat, the results of introductions and day-to-day pany Websites and through unstruc- this research will be better when shared. business with CP suppliers - See tured and uncontrolled content such Mars will make the genome information the press release on data sharing: as social networking sites, online available for free through the Public Intel- communities and blogs lectual Property Resource for Agriculture vices/us/index.wss/summary/imc/ (PIPRA), which supports agricultural a1031441?cntxt=a1000063 • Sharing information, insights and innovation for both humanitarian and • Developing the capabilities needed to opinions in real time with other con- small-scale commercial purposes. support rapidly growing private label sumers and directly with manufacturers business (e.g., retailers increasingly and other stakeholders such as NGO need brand management, shopper • Investigating products and their impacts insights, marketing capabilities) Page 14
  15. 15. Conclusion For further information The stresses on the food value chain are Getting Real About the High Price of pervasive, profound and persistent and Cheap Food (Time Magazine, August 21, while solutions are not easy, technology is 2009) no longer the barrier it once was. A smart- article/0,8599,1917458-1,00.html er food value chain is not just possible, but imperative. By leveraging the collective Cargill’s Inside View Helps It Buck Down- and synergistic power of intelligence, turn (The Wall Street Journal, January instrumentation and interconnectivity we 14, 2009) can make that imperative a reality. SB123189501407679581.html Why IBM? Health Ills Abound as Farm Runoff Technology is shaping how food grows, Fouls Wells (The New York Times, how it tastes and how it gets to your September 17, 2009) http://www. plate. A smarter global food system would help eliminate waste, improve quality and html?scp=2&sq=runoff&st=cse ensure safety. IBM has the technology solutions and expertise to make it happen. To find out how we can help your organi- zation build a smarter food supply chain, contact your IBM representative or visit: us/smartplanet/topics/food/20081208/ index.shtml Page 15
  16. 16. ® © Copyright IBM Corporation 2009 IBM Global Business Services Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America December 2009 All Rights Reserved IBM, the IBM logo and are trademarks or registered trademarks of International Busi- ness Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or com- mon law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm. com/legal/copytrade.shtml Other company, product and service names may be trademarks or service marks of others. References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates. CPW0-3002-USEN-00