The Industrialization of the agri-food chain

The agri-food industry is immersed in a process of full transformation to give a true response to the challenges that lie ahead. Raw material accounts for most of the cost structure (=70-80%), so how can we guarantee the best use? How can we optimize productivity with “live” raw materials and highly manual processes?

Elements such as climate, lack of water, natural cycles, health, make it difficult on a daily basis to guarantee supply. Faced with these situations, how can we keep the concepts of fresh and proximity in the value without renouncing the efficiency of the processes? The culture of management is deeply rooted in the land and the trade, therefore there is a lack of highly qualified personnel. Companies want to have the best team, but how can they retain talent and enhance the pros of working in a non-urban environment with high geographical dispersion? In addition, to all this we add very tight margins, in which so much variability generates business models with low predictability and high uncertainty.

In this scenario, it is critical to redefine the way agri-food companies work in order to be able to give a real response to these challenges. It is not enough to address processes of continuous improvement, we are immersed in a paradigm shift that involves redefining the system that can truly respond to current and future needs.

The business response that is being deployed for some years is geared to “industrialize nature.” Larger size of agricultural operations (more hectares under the same management criteria) to control and standardize the entire process of planting, harvesting and production becomes an essential maxim. In this way, programs can be developed to control and optimize all costs in the value chain, considering that the basic product has low added value. Improved costs and predictability become the management paradigm.

The industrialization of the agri-food chain

The challenge of “industrializing the agrifood chain” has as main objectives:

  • Align the customer’s demand with the performance of the warehouse, the production, and the field.
  • Have the appropriate information in each link of the chain.
  • Control the information with clear and shared indicators in real time.
  • To be able to carry out planning of the collection and production, optimizing the use of resources.
  • Combine qualitative information (field technicians) with digitized quantitative.
  • Redefine the organizational structure, dimensioning and requirements of the jobs.

Other possible objectives:

  • Reduce inputs in the field by reducing extra costs.
  • Reduce stocks in storage.
  • Digitize the process especially in the field phase.

To deploy a successful project of this size, it is essential to have a transversal vision that goes from the offer to the choice of the land to be exploited. It is necessary to have a good information on the sales estimate, a forecast of the demand based on historical, trends and novelties of market launch and adjust it with the actual orders. From this point on, the availability of raw material in the warehouses is checked to proceed with production planning. To supply the MMPP warehouse with the following dates, field collection is planned. This is where large unknowns start to appear due to the dispersion of information and the lack of real control.

Having field information allows a better management of the rest of the supply chain, optimizing the planning of the collection, reducing the stock in warehouses and even reducing the costs of cultivation.

The information that’s needed to have for the correct decision making is normally the physiological state of the product, its state of maturation, possible pests or crop problems, control of moisture for irrigation, expected yield, generation of waste, possible approximate dates of collection, the needs of fertilization or application of nutrients, the expected qualities as well as their sizes.

In many occasions, this information is incomplete, improvable and not stored or verified, but it has different people, which causes the process to depend on the people, not on the same process.

How to improve field information?

  1. Improving the current information system:
  • Definition of needs with the rest of the company: commercial, warehouse / production, planning ….
  • Alignment of all people in the supply chain, from the sales forecast to the field technicians.
  • Training for field technicians, buyers, brokers … Awareness of the importance of work
  • Definition of the optimal process of information and control in the field.
  • Digitization of information to have a good database.
  • Feedback with quality information for correction.
  1. Using new technologies

The use of new technologies is required to increase the quantity and quality of information in real time, so that we can control humidity for irrigation management, anticipate possible pests and diseases. Control of growth (vegetation index), content in N, S … for the application of fertilizer in the right areas. A “live” control to make the right decisions.

Industrializing nature is a challenge for cross-management, aligning the interests of all the links in the supply chain, redefining the processes and functions of people, and determining where and how to use technology. In this way we can collect internal and external information to display powerful databases in real time, which can be exploited to deploy a business model with solid and exceptional results.

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