How Are Digital Technologies Transforming Food Value Chains?

DNV GL Domino Art

Digital technologies may help you manage your supply chain more effectively while reducing costs and frictions and help you understand consumer preferences and feedback better than ever. How will digital transformation change the food industry and impact food safety and sustainability?

There are many technologies and maybe even more buzz words in the era of the digital transformation, the 4th industrial revolution, industry 4.0 or the digital revolution. The combination of several new digital technologies has disrupted some industries already, and is changing other industries with different pace. Which opportunities lie behind the digital buzzwords in our industry?

"I believe digital technologies will dramatically change our food value chains and contribute to safer and more sustainable food.” 

I will briefly explain how, by three industry specific examples:

Advanced Analytics in Aquaculture

Big amounts of data enabling better decisions

Firstly, Internet of Things (IoT) or sensors can continuously capture large amounts of relevant information, while the decreasing cost of storing data in cloud solutions, and the increased possibilities of analysing these big amounts of data, creates new insights and the basis for better decisions. For example, the sensors can capture data in biological processes, such as aquaculture. Advanced analytics on these data may create new insights and better decisions. They may contribute to improved fish health and fish welfare, reduced mortality rates, improved feed efficiency and a more sustainable seafood production.

Moreover, IoT enables the entire food and beverage industry to monitor raw goods and products all the way through the value chain, and use the information to ensure safe and sustainable products at the consumers’ tables. Players in the value chain should ask themselves: Are you capturing the opportunities sensors may give to your business? Do you know the quality of the data you will base your decisions on? And do you know how mature your organisation is in terms of managing data as your new asset?

Woman using tablet

Telling the true story directly to the consumers

Secondly, blockchain and other digital technologies will enable the communication of information from sensors directly to the consumer at the purchasing moment. 

Digital assurance may contribute to making the story true and trustable and an effective defence against counterfeiting and food fraud. 

For example, the food service industry may log and blockchain temperature information of products throughout the supply chain, from the ready meal producer to the consumer in the convenience store. In addition to the value of this information to the consumer, this may also contribute to longer shelf lives, improved cooling chain performance and reduced food waste. The flip side of making this information fully transparent to the consumer, is of course that the consumer will also know if the cooling chain was disrupted. How can you combine sensors and blockchain technologies in a way that creates a differentiator in the market place and a more efficient use of resources with less waste? And how can you communicate this information to the consumer in a transparent and trustful way?

Designed tomato for the GFSI blog post

From supply chains to networks and open innovation

Thirdly, the platform economy may disrupt the supply chain and impact the retailers by connecting the consumers more directly to the food producers, as short value chains or direct purchase become consumer values in themselves. The decrease in transaction cost and the growing e-business in the food market, may increase the power of consumers, as a larger variety of products and producers may be made available at a lower cost. In addition to deep customer insight, platforms and social media creates open innovation opportunities, by involving customers directly in product development. Through engagement, sense of belonging and loyalty your customers may increasingly become part of your brand. 

Over the last year much of my food purchases are bought either through e-retail solutions (apps on my cell phone) delivered at my house or at a pick-up point, or in niche boutiques where I get the feeling of knowing the story behind the product. How will your company be impacted by the platform economy? Will the food supply chains become less linear and more networked in the future? How will you engage the customers in your innovation processes? 

Some of you may think that I am too much of a digital or technology optimist. That food and food supply chains will never become digital, and that the food industry is very different from the other industries which have gone through a digital transformation. 

To you I would like to quote Bill Gates from the book The road Ahead, 1996: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”

I strongly believe that it is not a question of if but how the digital technologies available today, will transform our food value chains. The companies who can understand how these technologies may create value and trust and master them, will have a competitive advantage. 

I am looking forward to see you at the GFSI Conference in Tokyo, to share experience on how digital technologies may be applied to provide sustainable and safe food for consumers everywhere. I also look forward to fruitful dialogues and as a true “foodie” I am delighted to share and enjoy the artistic, beautiful and delicious Japanese cuisine.

This post was written and contributed by:

Ingunn Godal - GFSI blog post

Ingunn Midttun Godal
Global Director, Business Development
DNV GL - Business Assurance