Importance of Supply Chain Visibility post COVID-19
23 Nov 2020
The coronavirus pandemic has accelerated the importance of brand transparency and food safety in 2020.
This trend had already come under renewed focus in recent years due to several different factors, including digitalization, globalization, and ethical consumerism. COVID-19 has influenced this as more people shop online due to government lockdowns, affecting both brick and mortar and e-commerce channels. As more consumers research products online, digital solutions will be critical to reassuring consumers that products are what they say they are. This article provides an in-depth view of the emerging technologies that could potentially change supply chain visibility as we know it, and their future viability in food tracing.
Product Transparency in the New Normal
The global pandemic has accelerated consumer interest in supply chain transparency as health, hygiene, and food concerns become top of mind. Heightened public concern around hygiene and food safety is expected to see more consumers scrutinizing the brands they purchase. Digital traceability solutions can provide much-needed reassurance to consumers. These tools, which include features such as smart labeling and digital tracing, could provide contact-free and secure product information at speed and scale.
Food Safety Assurance
Food safety is an important purchase consideration for most consumers around the world, something that has been further amplified by COVID-19. Global consumers increasingly seek reassurance over safe food production and handling as health and hygiene factors gain importance.
Digital sensors, such as radiofrequency ID (RFID) tags, are a type of technology that has experienced rapid usage growth amongst FMCG manufacturers in the last decade. This technology is highly sought after due to its effective food tracing capabilities at pace and at scale, allowing for the precise tracking of food items from producer to end-consumers.
In June 2020, Indian fresh produce supplier Ninjacart launched Foodprint, a traceability initiative that aims to support its online distribution service. This venture was launched following the closure of major wholesale fresh produce markets, and growing food safety concerns amid COVID-19. The Foodprint initiative uses RFID tags to trace goods from over 50,000 farmers across India all the way to end-consumers. Consumers can also access real-time data using Ninjacart’s mobile app. Partnerships with major food delivery platforms and retailers such as Swiggy, Dunzo, and Zomato have helped Ninjacart experience rapid growth in its loyal consumer base.
Fonterra and NZMP also use robust tracing throughout their supply chain in order to ensure the highest food safety standards. Fonterra’s comprehensive tracking system allows the tracing of most Fonterra products all the way through the supply chain, and back to the farm where the milk was sourced from in under three hours.
Using Blockchain to Guarantee Quality & Authenticity
Increased visibility over supply chain activities can help consumers to understand the origin of a product. Technologies such as blockchain can help certify product authenticity and protect against food fraud to build on consumer confidence. End-to-end visibility can also offer quality guarantees for premium products by validating the origin of ingredients.
Global consumers cite non-GMO, organically produced, and country of origin as their most important ingredient considerations when shopping in-store.
Interest in brand sustainability has also become more pronounced in both developed and emerging markets, with 1 in 3 consumers looking to buy sustainably produced items, according to Euromonitor International’s Voice of the Industry Digital Consumer Survey conducted in November 2019. To address the increased consumer demand for product information relating to quality and authenticity, many businesses have turned to QR codes and smart labels that can be scanned using smartphones when shopping in-store.
In 2019, French retailer Carrefour partnered with IBM to launch blockchain-based QR codes for 20 private label dairy, meat and fresh grocery products. The initiative has so far proved popular in China, Italy and France with consumers spending as long as 90 seconds reading about products through these on-pack QR codes.
Governments are also taking advantage of the benefits of blockchain technology in the supply chain. In January 2019, the South Korean Ministry of Agriculture, Food and Rural Affairs launched a blockchain-led platform to trace beef in cattle farms and slaughterhouses to help counteract food fraud and address food safety concerns.
High costs of implementation, technology maturity and uncertainty over performance remain additional barriers constraining investment. Despite the challenges, the growing use of blockchain with QR codes gives it the potential to reshape labor-intensive food certifications and services to enable a more transparent as well as reliable farm-to-fork journey.
Food safety is expected to take centre stage post-COVID-19 due to heightened public concern around hygiene, making supply chain transparency essential for garnering consumer trust and building credibility. Digital traceability solutions such as QR codes, Blockchain and RFID tags are gradually becoming an integral part of the consumer shopping journey. These technologies have the potential to re-build transparency and win back consumer trust, making claims such as organic more powerful for both producers and consumers.
For more information, refer to Euromonitor’s report titled Digital Traceability: A Future of Transparency in Food Sourcing, written by Trishna Shah.
Disclaimer: The views and statements expressed above are the opinion of Euromonitor, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.
About the authors
Ayusha Amatya is a Research Analyst at Euromonitor International with a focus on Food and Nutrition. Originally from Nepal, Ayusha worked in brand management for pharmaceuticals and nutraceuticals in Kathmandu before moving to Sydney.
Ayusha carries out research across the Food & Nutrition vertical to analyze key trend developments within the FMCG industry.
Ayusha advises clients across packaged food, retailing, consumer foodservice, and pet care with strategic insights and market trends.
Stevani Susanto is a Research Analyst at Euromonitor International with a focus on Food and Nutrition. Based in Sydney, she has more than 1.5 years of experience in the industry.
Stevani is responsible for research across the Food & Nutrition vertical, analyzing trend developments within the FMCG industry, as well as providing strategic insights detailing key industry trends and competitive landscape.
Stevani advises clients across packaged food, fresh food, pet care and consumer foodservice, recently representing Euromonitor International at New Zealand Pet Food Manufacturers Association 2020 conference.