Managing a Long-distance Food Supply Chain
Opinion / Supply Chain and Quality
Managing a Long-distance Food Supply Chain
A.F. van Ahee , Consultant, Viet Nam
Managing long-distance food supply chain should focus on irreversible processes in the food products, reducing food waste.
The presentation connect post-harvest distribution issues to urbanization in 10 largest cities in Vietnam, between now and the year 2050.
As my object is the Food Supply Chain, let me first explain its composition of four channels. Just imagine you are driving on a highway.
In the Production channel, the right lane with the slow drivers, it is about adding value to the physical product, in agriculture in general composed of a skin, content and a core inside. The farmer buys seeds from a nursery, turn that into for example mangoes, which a food processor will transform into mango juice.
In the Marketing channel, the left lane with the fast drivers, it is about ownership, so sellers and buyers.
In the Distribution channel, the middle lane where drivers have to endure cars and trucks switching from the right and left lane and by doing so creating traffic jams, it is about the three logistic activities: transport, warehousing and inventory. In a supply chain there is a choice where to have inventory: upstream or downstream?
In the Information channel, these days high in space above your land and the highway with satellites to observe, Google-like platforms and data storage ‘in the cloud’, it is about collecting, storage and processing (geo-)data, actually ‘Big data’, and transformation into information for planning, decision-making and control purposes for stakeholders in the food supply chain. These activities underline expectations that not only local authorities but also famers, cooperatives, food processors and waste recycling companies can benefit.
Information Technology enables any person in the supply chain to get data and information to make decisions that improves the quality and by that the added value of the food supplies chain. In my home country large funds like ‘G4AW’ and the ‘Mekong Delta Plan’ are available to support and make a start with implementation of high tech in agri- and aquaculture, also for you in Vietnam.
Let us see how players in this model deal with issues in the Food Supply Chain.
In managing the distribution channel of any Food Supply Chain a major focus will be on irreversible process, like ripening, bruising and decaying.
The unavoidable result of these irreversible processes is waste during distribution, and consequently fewer quantities to be consumed.
Information Technology is potentially able to support the process for better farming (by using satellites to connect observations of ripening from earlier years to observation of the process of ripening now) and inform farmers to harvest at the best moment.
Also Information Technology can improve the process in the distribution channel by monitoring where problems like decaying occurs. Actions to avoid problems in the future can be made.
Many efforts are undertaken, worldwide as well as in Vietnam, to attack causes of waste.
GMP and GMH focus on the farmer with quite general actions, but effective as they are derived from experiences all over the world.
HACCP is a more limited approach, as it focuses on critical points in all links of the supply chain. The result of effectively dealing with exceptions, the general quality of food products should increase.
GlobalGap focus on the farmer with a consistent set of activities to be implemented for raising quality and more sustainable farming.
Different markets have different protocols to comply with. As an example, in the United Kingdom the GFSI is quite popular among retailers.
In the agri-industry ISO protocols are more popular than the ones mentioned before.
ISO9001 focus on food processors (slide 24), ISO14001 and ISO22000 on 3PLs like transport companies (slide 25) and warehouses. (Slide 26)
Farmers and food processors, not only when you have ambitions to export part of their harvest, the above means that certification will become a must.
From experience I know that it will take a year or so before your activities will have the stamp GlobalGap or ISO22000. So now is the moment starting with internal conversations, then with the cooperative and then submit your request to organizations like Control Union and SGS.
Universities in the field of Agriculture, like your well-known Can Tho University, have the expertise to manage effectively a laboratory for testing and analysing the products during farming, harvesting and in post-harvest stage.
The demand for higher quality food will result in including this new type of partner in food supply.
I will now present to you what the above means for the distribution channel of a Food Supply Chain, taking the irreversible process of ripening in bananas as an example.
Bananas will ripe in nature within approximately 8 days after the moment they should be picked. Thereafter they will become overripe, and therefore not preferred as fresh fruit for consumption.
All over the world there is demand for bananas, as it has some major benefits over other food products:
- Its high nutritional content;
- It can be consumed by nearly each individual, irrespective of age, gender and religion;
- One does not need equipment to process a banana before it can be consumed.
So would it be possible to distribute fresh bananas, grown in Vietnam, to consumers in the European Union? Such distribution would require a lead time of 35 days!
In Distribution the first issue to consider is the transport modality.
Transport by plane is too expensive for a low value product as our banana, which has a consumer price in EU of about VND 60,000/kg.
Transport by rail is out of the question. G-forces are far too high during departure and pulling the breaks for our banana, a sensitive product.
Transport by truck is only viable ‘upstream’ in Vietnam and ‘downstream’ after arrival in Rotterdam.
98% of travelling time will therefore be done by (container)ship, between the port in Vietnam via transhipment in Singapore to Rotterdam.
The second issue to consider is storage, in particular the conditions available. Nowadays quite a variety of Controlled Atmosphere techniques are available:
- Controlling for example ethylene, CO2, O2, pH, temperature and humidity, and if necessary
- Acting upon results outside critical limits, among others with adapting air flow.
It should be noted that storage cannot only be provided in pack houses, storage rooms and warehouses. While on the way to its destination the storage function could be included in trucks and ships, in dedicated containers. This means that ‘24/7’ optimal conditions for each and every banana can be realized.
These days it is not good enough to think only in terms of harvest, or shipment, or 40” containers. Like the fresh lobsters from Maine (USA), which the chef from your favourite restaurant in HCMC can order today and he will receive them early tomorrow afternoon (on time for preparing your favourite meal for dinner), the retailer in EU expect that his box with bananas will arrive in the perfect condition to attract his consumers.
Information Technology is potentially able to support planning processes by signalling the end user demand, and connecting demands to potential supplier in the supply food chain.
To enable that, the packaging industry has become more and more important in the Food Supply Chain.
Bags Modified atmosphere packaging (MAP) have been developed to manipulate ripening of our banana after arrival in Rotterdam at the very location of the retailer or supermarket in Germany, France, U.K. And, yes, also in smaller countries like The Netherlands, Belgium and Denmark, so they will receive the full spot-free yellow skin, required by the EU consumers.
Re-usable plastic containers have been developed and can be used in all links of the Distribution (and of the Production) channel, reducing the carbon footprint. These containers could be impregnated as well to manipulate ethylene concentrations.
Preliminary findings of my research project has shown that “YES”, it will be possible to deliver fresh bananas meeting requirements from consumers in Europe.
So, as in a Food Supply Chain such high quality performances can be realized, how can inhabitants in Vietnam benefit from those techniques and systems in Logistics?
To answer that question, in the next and final part of this presentation, Food Supply Chains within Vietnam will be connected to the wave of urbanisation between now and the year 2050, as expected in the, at present 10 largest cities in Vietnam.
Please contact me for exchange of information and/or knowledge.
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