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The global food industry from farm-to-fork is approaching a tipping point of radical transformation. Startup food brands, whether retail or brand manufacturers, compete on a level that existing large food companies cannot – Trust. These startup food companies are being transparent on issues that shoppers say they care about – how and where the food is produced, the origin of ingredients, what chemicals and other inputs are used and so on.

This poses a significant challenge to traditional food companies who are confronted by their own size and complexity – these companies often have limited insight into global, multi-tiered supply chains that comprise tens of thousands, and often millions, of suppliers.

The impact of not providing transparency and trust to shopper’s is already being felt – shopper’s trust of food companies is at an all-time low and food sales are being impacted – between 2010 and 2015, the largest 25 food company’s market share in the US decreased by 10%.

How can companies solve this transparency challenge? Let’s begin by looking at the barriers for those pursuing transparency efforts. Transparency initiatives usually initiatives of downstream companies (e.g., manufacturers or retailers) pushing upstream to the source.

greenfence shopperEvery industry, including food, experiences four barriers to success with this approach:

  1. Significant investments and resources required by downstream companies to engage with thousands or millions of suppliers in complex, global supply chains.
  2. No real benefits or rewards for the supply chain to participate.
  3. Costs for the supply chain to participate e.g., technology licenses or the supplier’s effort and resources to provide information to every customer that asks.
  4. Unwillingness to share: Tiers of autonomous brokers, middlemen and other suppliers who believe there is business value in their sources, and do not want to share them.

The result is that suppliers only participate when pressed to do so, downstream companies struggles to persuade other tiers to participate, and the effort and cost involved is simply not scalable to the entire supply chain. The outcome is usually some transparency in limited areas, despite often years of trying.

This outcome is common to every industry, not just food: No industry has achieved end-to-end supply chain transparency. However, for the food industry, given shopper demands and purchase behaviors, there is no choice. So what can be done differently?

Put simply, the supply chain has to want to participate, and the way they will do so is when there is a direct benefit to them that outweighs the potential downsides. With greenfence, we overcome the four key barriers and provide that benefit.

How are companies like greenfence achieving this? We take a very different approach. Just as Uber transformed the taxi industry by connecting drivers with those wanting a ride, and Amazon who created a marketplace for anyone to buy and sell, we have developed a platform economy ecosystem for the food industry whereby anyone can participate, the supply chain can get connected and buyers and sellers can conduct their everyday business.

In addition, as it’s a critical need for the food industry, we uniquely enable suppliers to become trusted through greenfence, by leveraging authentication and verification service providers such as accreditation bodies, certification bodies, individual auditors and other assurance providers.

Platform economy ecosystems – like greenfence – overcome traditional barriers to trust and transparency:

  1. The supply chain begins to manage itself – there is a direct revenue benefit for business in differentiating themselves from peers, and the bar is raised by this competition.
  2. The resources and costs that, today, are predominantly imposed on buyers to manage the supply chain, are now shared across the supply chain.
  3. There is a direct benefit and reward from the supply chain participating. They are visible to new buyers and customers, and can be immediately trusted by those buyers due to being authenticated and verified.
  4. There are no software license or maintenance costs.
  5. Duplication is eliminated – to share information with a new or different customer requires a simple click of the mouse.
  6. Selected supplier information can be kept anonymous, while allowing authenticated information such as food safety certificates, origin, farming inputs, or labor practices to be freely shared.

By leveraging such a platform economy ecosystem approach, transparency becomes a simple outcome, enabling large food companies to act like nimble startups. And the resulting transparency, which has been authenticated and verified, can be honestly shared by retailers and manufacturers with their shoppers. Food companies get the transparency and trust they need to satisfy shoppers demands, and achieve this in a way that benefits the entire industry.

Find out more about greenfence and see our solutions by visiting our booth at GFSC Houston, and join the CEO of greenfence, Mitch Chait, on Wednesday at 9.30am in Plenary 1: Transparency & Visibility in the Supply Chain, together with SIM, Ahold Delhaize and Alimentaria.


This post was written and contributed by:

Kelvin Harris,
SVP Retail & Markets for Greenfence

 

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