On October 12, 2023, Fletcher took center stage at the 19th Proagrica Annual Integration Meeting in Cologne to discuss their latest white paper on a subject of pivotal importance: the digitization of agri-food supply chains. With a lineup of esteemed speakers, the conference highlighted the urgent need for resilient and sustainable domestic and international supply chains, emphasizing the transformative role of digitalization.
A Continuous Digital Voyage
As iterated during the conference, digitalization in agriculture and food is not a finite goal but an enduring journey—one that continuously evolves. This path is marked by the adoption of precision-based agriculture for crops and livestock, a shift from a concept of traditional supply chains to dynamic supply networks, and a relentless pursuit of best practices within the sector.
Trends and Observations
Key observations from the event included:
- Precision Agriculture: The move towards precise crop and livestock production is now a tangible reality. As the industry consolidates, stakeholders frequently occupy multiple roles within the supply network, necessitating a more nuanced approach to management.
- Supply Networks: Future discussions should pivot from linear supply chains to complex networks. Such networks comprise input suppliers, farmers, processors, retailers, third-party logistics, and distribution companies—all intricately linked through enhanced digital connectivity.
- Best Practices: Variability within what is considered “best practice” necessitates a strategic approach to consolidate these practices, especially within organizations where inconsistencies arise.
- Driving Financial Health: Effective digitalization can positively impact both revenue and profit. Integration with various data streams enables improved forecasting, planning, and automation—resulting in better customer insights and experiences.
- Choosing Partners: The ecosystem is brimming with digital service providers. Last year alone, approximately 700 startups emerged in this domain. However, the key to sustainable success lies in partnering with entities that possess not just digital prowess but also in-depth agri-food sector experience.
- Breaking Down Silos: Gone are the days of siloed IT functions. Today, digitalization weaves together disparate business segments, fostering a comprehensive and integrated operational framework.
- Enhanced Business Outcomes: The synergy of digital tools and techniques promises improved business results, enhanced support for technical farm and food production, and a sharper competitive edge, which aligns with achieving sustainability benchmarks.
- Data Utilization: The judicious use of data is fundamental, as customers, logistics, and suppliers become increasingly connected through shared, real-time data sets. The question of data ownership remains a hotly debated topic.
- Customer-Driven Initiatives: Developments in digitalization are often spurred by customer needs, particularly from major international retailers. Investments in digital tools and ERP systems are pivotal in setting priorities, customer retention, and supply chain innovation.
- Advocacy for Digital Projects: Teams must champion digital initiatives, especially when internal budgets are constrained. Demonstrating the potential for increased efficiency and profitability is essential to gain support for these investments.
Facing the ‘Perfect Storm’
The agri-food sector is currently navigating a ‘perfect storm,’ which demands accelerated efforts towards digital unification. Leading players are expected not only to excel technologically but also to emerge as thought leaders on critical issues like sustainability, global expansion, consolidation, and the digitization of supply chains.
The Way Forward
Despite several exemplary instances of digitalization within agri-food supply chains and considerable activity in this arena—as highlighted by McKinsey—the sector remains one of the least digitized. This underscores the vast scope of work that lies ahead.
Join the Conversation
To delve deeper into these insights and to access the Fletcher White Paper, please connect with Gordon Donkin at gordon_donkin@fletchercsi.com.