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IBM Retail White Paper | Technology & Smarter Food Supply Management

IBM Retail White Paper | Technology & Smarter Food Supply Management

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Published by IBM_Retail
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.
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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Published by: IBM_Retail on Jun 29, 2010
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07/26/2010

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IBM Global Business Services
White Paper
An appetite for change
How an interconnected approach to food supply management can help foodgrowers, producers, sellers and consumers—and planet Earth
Guy Blissett, IBM Institute for Business Value, Consumer Products Lead
 
Page 2
Executive summary
In many ways today’s ood supply chain is a marvel—a highly ragmented and com-plex, and ever-evolving ecosystem that delivers an astounding volume and quality o product—sufcient ood in all its various orms to eed roughly 6 billion o the Earth’s6.8 billion inhabitants. However, in this same value chain where resh produce isshipped around the globe hours ater being picked, globally linked fnancial mar-kets dynamically set prices or agricultural commodities, and crops are increasinglyre-engineered at the genetic level, major stresses are appearing. At a
 planetary 
levelconcerns are rising about ood security and sustainability; How can we eed the ad-ditional 2 billion people that will inhabit the planet by 2050, while at a
 participant
levelconcerns linger and grow about recalls contaminations, waste, spoilage and distribu-tion inefciencies that create shortages and embed incremental costs?
Planetary 
concerns center on the increased demands that 2 billion new inhabitantswill place on the ood supply, and changes in consumption that accompany increas-es in income. Based on existing trends we will likely need to increase the ood supply70-100 percent by 2050. Exacerbating these concerns are newer issues such asclimate change and drought; high and volatile energy prices; plateauing crop yields;arable land limitations; and diversion o crops or biouels. As a consequence, we areseeing signifcant price volatility, shortages, government interventions and a growingrealization that the current model is not sustainable. Indeed, agriculture is already thelargest human use o water, comprising an estimated 69 percent o total. At a
 participant
level many o the issues are not new, just persistent. Consumerscontinue to crave additional inormation about product source and contents, whileharboring lingering saety concerns. Retailers continue to wrestle with stubborn lev-els o out o stocks and razor-thin low margins. Consumer products (CP) companiescontinue to struggle with accurately sensing end demand, and synchronizing theirplans and orecasts with retailers. Farmers and growers struggle with increasinglypernicious weather, rising input costs, uncertain demand and volatile market prices.
 
Page 3
Other persistent problems—such asood spoilage and waste, productcontaminations and recalls; and otenconvoluted arm subsidies and tradepolicies—urther complicate an alreadychallenging landscape.Clearly, a smarter approach to manag-ing our ood value chain is needed. Andwhile technology alone cannot solve thecrisis, its application to create a valuechain that is increasingly instrumented,interconnected and intelligent is essential.In this whitepaper, we will summarizethe current structure o the ood valuechain, assess its current state, andidentiy the capabilities and attributesnecessary or a smarter ood value chain.
Structure of the current foodvalue chain
 The ood value chain—comprising liter-ally tens o thousands o participants o varying size and sophistication spreadacross the globe—is a daunting enter-prise to summarize. For our purposes, wehave grouped and summarized partici-pants into the ollowing value chain (seeFigure A). While this fgure represents agross simplifcation o the web o partici-pants and their interactions it does enablea structured assessment o the existingand emerging stresses, and provides aramework or considering solutions.
Figure A.
The Food Value Chain...a highly simplifed representation

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