IBM Global Business Services

White Paper

An appetite for change

How an interconnected approach to food supply management can help food
growers, producers, sellers and consumers — and planet Earth

Guy Blissett, IBM Institute for Business Value, Consumer Products Lead
 Executive summary
In many ways today’s food supply chain is a marvel—a highly fragmented and com-
plex, and ever-evolving ecosystem that delivers an astounding volume and quality of
product—sufficient food in all its various forms to feed roughly 6 billion of the Earth’s
6.8 billion inhabitants. However, in this same value chain where fresh produce is
shipped around the globe hours after being picked, globally linked financial mar-
kets dynamically set prices for agricultural commodities, and crops are increasingly
re-engineered at the genetic level, major stresses are appearing. At a planetary level
concerns are rising about food security and sustainability; How can we feed the ad-
ditional 2 billion people that will inhabit the planet by 2050, while at a participant level
concerns linger and grow about recalls contaminations, waste, spoilage and distribu-
tion inefficiencies that create shortages and embed incremental costs?

Planetary concerns center on the increased demands that 2 billion new inhabitants
will place on the food supply, and changes in consumption that accompany increas-
es in income. Based on existing trends we will likely need to increase the food supply
70-100 percent by 2050. Exacerbating these concerns are newer issues such as
climate change and drought; high and volatile energy prices; plateauing crop yields;
arable land limitations; and diversion of crops for biofuels. As a consequence, we are
seeing significant price volatility, shortages, government interventions and a growing
realization that the current model is not sustainable. Indeed, agriculture is already the
largest human use of water, comprising an estimated 69 percent of total.

At a participant level many of the issues are not new, just persistent. Consumers
continue to crave additional information about product source and contents, while
harboring lingering safety concerns. Retailers continue to wrestle with stubborn lev-
els of out of stocks and razor-thin low margins. Consumer products (CP) companies
continue to struggle with accurately sensing end demand, and synchronizing their
plans and forecasts with retailers. Farmers and growers struggle with increasingly
pernicious weather, rising input costs, uncertain demand and volatile market prices.

Page 2
Other persistent problems—such as
food spoilage and waste, product
contaminations and recalls; and often
convoluted farm subsidies and trade
policies—further complicate an already
challenging landscape.
Clearly, a smarter approach to manag-
ing our food value chain is needed. And
while technology alone cannot solve the
crisis, its application to create a value
chain that is increasingly instrumented,
interconnected and intelligent is essential.
Figure A. The Food Value Chain...a highly simplified representation
In this whitepaper, we will summarize
the current structure of the food value
chain, assess its current state, and
identify the capabilities and attributes
necessary for a smarter food value chain.
Structure of the current food
value chain
The food value chain — comprising liter-
ally tens of thousands of participants of
varying size and sophistication spread
across the globe — is a daunting enter-
prise to summarize. For our purposes, we
have grouped and summarized partici-
pants into the following value chain (see
Figure A). While this figure represents a
gross simplification of the web of partici-
pants and their interactions it does enable
a structured assessment of the existing
and emerging stresses, and provides a
framework for considering solutions.
Page 3
In addition to its complexity, the food
value chain can also be viewed as a
study in contrasts. At each step the
participants and their activities vary
across the spectrum in terms of dimen-
sions such as scale, breadth, scope,
sophistication and integration (see
figure B).
Figure B. Food Value Chain particpants and their activities...a study in contrasts
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It is notable that some organizations act Commodity and specialty products provid-
as highly focused specialists developing ers / primary producers
unique capabilities and expertise in a This complex and fragmented group
specific competency (e.g., raising broiler and can be clustered around the follow-
chickens in their thousands), while ing competencies:
others operate across multiple com-
• Agriculture: Growers of legumes,
petencies reaping benefits of vertical
pulses, wheat, rice, fruits, vegetables,
integration (e.g., global beverage and
corn, and other crops. They range
snack company integrated all the way
in size from the small family farms to
upstream to potato farmers and sup-
titans such as Archer Daniels Midland
pliers of sugar alternatives). Assorted
(ADM), Bunge, and Cargill.
cooperatives, trade associations, and
market organizations also play a role
• Beef, chicken and pork farmers: in-
aggregating product, collecting informa-
cluding cow/calf operations, stocker
tion, representing industry interests and
and backgrounding operations,
sharing knowledge.
feedlots, ranchers, and Concentrated
Animal Feeding Operations (CAFO).
• Dairy farms and cooperatives: pro-
ducing cheese, milk and milk protein
and other derivative products.
• Fisherman and fish farms: that catch
and/or farm fish, shrimp and shellfish
Component converters, processors, abat-
toirs, packers and repackers
While operations at this step are
sometimes highly automated and tightly
integrated with those of the farmers
and growers, they are just as likely to
be performed manually and dispersed
across a web of small players.
a) Converters of raw / bulk crops,
livestock and other foods into com-
ponents —slaughtering, deboning,
peeling, cleaning, sorting, slicing,
freezing, and otherwise storing,
b) Processors that change the com-
position of the product through
cooking, mixing, grinding, and/
or other chemical, mechanical,
thermal operations
Secondary and tertiary suppliers
Chemical, pharmaceutical, industrial
and specialty companies that manu-
facture and market the antibiotics, pes-
ticides, fertilizers, seeds, and genetic
material increasingly a component of to-
day’s food value chain. Examples include
Monsanto, BASF, DSM, Potash Corp.
Brokers, distributors, exporters,
importers, traders
This portion of the supply chain en-
compasses a massively diverse group
of large and small players that typically
add little to no value to the physical
product itself, in fact in many cases they
never even “touch” the physical prod-
uct. Their role is to facilitate movement,
aggregation and trade. In Japan, mega-
players such as Itochu, Mitsubishi and
Mitsui are active in each of these areas.
Consumer products companies
Ranging from global players that own
and manage portfolios of familiar prod-
ucts and brands (e.g., Danone, Unilever,
Nestlé, Arla, Heinz, and Kraft), to local
and regional players focused on a single
brand or category (e.g., Kikkoman,
Weetabix, Utz, and Bush Brothers) to
the increasingly important private label
manufacturers who make products
for retailers under their own labels. As
competition increases, critical inputs
become scarce and/or expensive, and
the geographic scope of operations
expands, CP companies are playing an
increasingly active role upstream assist-
ing and integrating with suppliers and
connecting with end consumers to un-
derstand their needs and preferences.
Food and Foodservice Wholesale distributors
These entities bridge the gap between
CP companies and retailers, enabling
CP companies to efficiently sell and
distribute products to diverse and
numerous retail outlets, and delivering
incremental services to the customers .
In many markets multiple tiers of whole-
saler and distributor may exist between
the primary manufacturer (i.e., the CP
companies) and the retailer or restaurant.
Food retailers and restaurants
Food retailers used to consist almost
exclusively of traditional grocery stores,
kiosks, and restaurants but now food
is sold through every type of outlet
imaginable, including online. Examples
range from global powerhouses such
as Carrefour, Trust-Mart, Tesco, Panta-
loon and Walmart to individually owned,
single store locations. Restaurants also
range from global fast food chains such
as McDonalds, Jollibee, Taco Bell and
KFC to single unit, individually owned
restaurants. These organizations run
the gamut in sales volume and degree
of technological sophistication.
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Food consumers
At the end of 2008 there were ap-
proximately 6.8 billion food consumers
on the planet, and by 2050, two billion
more will join them. Although consum-
ers the world over crave safe, healthy,
abundant food choices at relatively
low cost, they are extremely difficult
to please and characterize. They want
more information about the source and
contents of products and are connect-
ed, concerned and empowered to get
that information and share it.
Stresses on the current system
The current food value chain does many
things very well, from producing pro-
digious volumes of food at a relatively
low direct-end price to the consumer, to
innovating around processes, products,
pricing and packaging. However numer-
ous factors are stressing the chain at
both the participant and planetary level.
Participant Stresses
Participant stresses — typically business
related — impact or occur at the partici-
pant level, rather than a planetary level.
Some business stresses — such as
contaminations and recalls — cut across
the entire chain and even overlap with
planetary concerns. Others — such
as high failure rates for new product
introductions — are more localized in
their impact.
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Given the complexity of the food value
chain effective collaboration on issues
and stresses is essential. Progress has
been made toward developing and
adopting standards that facilitate collab-
oration, however significant challenges
remain especially in the upstream end
of the chain. Globalization, specializa-
tion and fragmentation of the food value
chain are exacerbating longstanding
issues as products get handled by more
entities spread across a wider geography.
A sample of cross chain and individual
participant level stresses follows:
Contaminations and recalls
This issue took center stage in 2008
and 2009 with a series of highly
publicized recalls around the globe of
products as diverse as spinach, milk,
peanuts, ground beef, and jalapenos
sickened thousands. Awareness of
the food safety issue and its cross
channel impact has been growing and
consumers the world over are increas-
ingly concerned about the safety of the
food they eat and farmers feeling the
financial impact of recalls. A sample of
contaminations and recalls since 2005
is shown in figure C.
The global trade in food, myriad regula-
tions and inspection standards, and
the complexity of the processed food
we eat are all complicating efforts to
improve food safety. In the U.S. for
example imports account for nearly 60
percent of the fruits and vegetables
consumed, and 75 percent of the
seafood. However, only one percent of
those foods are inspected before they
enter the country.
Food safety issues present problems for
more than just consumers. Food grow-
ers and consumer product manufac-
turers are facing a crisis of confidence
from their customers while they struggle
to institute appropriate safety measures
in the face of rising costs. Government
agencies that regulate food safety are
also increasingly under fire as they
try to answer the public’s demand
for greater accountability with limited
staff and resources.
Agricultural entities
Agricultural entities face an onslaught
of unique stresses. Competing in the
increasingly competitive global market,
these organizations must often con-
tend with extreme price volatility, due in
part to biofuel production fluctuations;
widespread tariffs and import quotas;
and sometimes perverse production
incentives such as those currently in
place for European milk and sugar, and
U.S. corn.
 Figure C. Product contaminations and recalls...a major stress on the Value Chain
Additionally, costs are on the rise in
many areas of the industry. High energy
costs are forcing production costs
up because oil, natural gas and their
derivatives are essential components
to modern agriculture, both to fuel
machinery and as ingredients in fertil-
izers and pesticides. Additionally, many
agricultural entities are under increas-
ing pressure to pay a premium for the
water they use to grow crops or raise
livestock. Europe already has such
a water pricing system in place and
other agricultural producers are bracing
themselves for this potentially devastat-
ing cost increase.
The future will likely bring more, not
fewer pressures for these organizations,
including:
• Rising demand for sustainable practices
• Growing concern about water usage,
waste and runoff
• Increased need for agility due to
climate changes
Consumer Products companies
The primary business of CP companies
is to delight customers and consumers.
Today they struggle with an increas-
ingly concentrated and demanding
customer base who are just as likely to
be competitors. Another stress comes
in the form of a rapidly growing number
of increasingly affluent consumers, who
are themselves concerned, connected
and empowered to gather and share in-
formation. IBM calls this dynamic group
Omni Consumers.
Many CP companies are already
responding to these changes but rec-
ognize they have yet to find workable,
comprehensive solutions. Connec-
tions with consumers are tenuous and
distrust of companies, products and
brands remains high. At the same time
acceptance of private label products is
growing.
Additionally, pressure is mounting for
CP companies to reliably measure the
impact of their operations and those
of their suppliers. Walmart recently
announced creation of a sustainability
index that may soon set a benchmark
for the industry. Walmart leaders say
they are creating the index due to the
planet’s increasing global population,
decreasing natural resources and in
response to consumer demand.
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Lastly, CP companies are caught be-
tween a financial rock and a hard place
with consumers unwilling to pay more
for their food and rising input costs.
Indeed cocoa, tea and other commodi-
ties have hit record highs within the
past 12-18 months.
Wholesalers/distributors
Wholesalers and distributors are under
pressure from both upstream and
downstream value chain partners to
evolve their role and offer enhanced ser-
vices. As grocers and restaurant chains
handle more of their own distribution
and turn to increasingly capable mega-
distributors and third-party logistics
providers, food distributors are under
attack like never before. They’re also
being squeezed by unprecedented cost
pressures, product proliferation and dis-
tribution complexity. In many emerging
markets the multiple tiers of distributor
further complicate the coordination
and collaboration so necessary for
efficient operations.
Retailers and restaurants
As the number of channels through
which food is sold has proliferated so
have the challenges. Retailers now
prepare foods, own brands and sell
meals. Prepared food is sold through
gas stations, hardware stores, coffee
shops and kiosks. The proliferation
of quick service restaurants (QSR)
globally has exploded requirements
for food service and food is delivered
to your home, office or other location.
At the same time traditional channels
remain, such as the Dabbawallas
Page 8
in India, who hand deliver 170,000
homemade meals to office workers
each day. As previously mentioned,
retailers are under increased pressure
to be more responsive to notoriously
fickle customer demands. In a dif-
ficult economy and an oversaturated
marketplace, attempting to increase
customer responsiveness and remain
profitable in the face of intense com-
petition can be a daunting task.
Consumers
A recent, steady, stream of food
recalls and safety warnings have
left many consumers fearful of the
food they consume and distrustful
of companies, products and brands.
Consumers are increasingly vocal
in their demands for safer food and
increased transparency about the
origin and contents of food. Con-
sumer demands are also growing for
functional foods that deliver added
health and/or nutritional benefits.
To that end, many consumer prod-
ucts manufacturers are focusing on
successfully launching new items to
satisfy the increased preference of
consumers for health and wellness.
In the last five years, there has been
38 percent increase in marketing food
and beverages as “better for you.”
Satisfying this concerned, connected
and empowered consumer is an ever
evolving stress on the value chain.
Planetary concerns
At the heart of planetary concerns are
the additional two billion people ex-
pected to inhabit the planet by 2050,
up from 6.8 Billion at the end of 2008.
These consumers are increasingly
likely to live in a city, and as their in-
come rises their consumption of meat
and dairy products will also likely rise.
These factors will place tremendous
pressures on a food value chain al-
ready straining to feed the world.
The global food value chain is a study
in contradictions. Large segments
of the population are subjected to
hunger and scarcity alongside popu-
lations enjoying enormous excess.
Tragically, at the same time, vast
amounts of food is spoiled or wasted
at every stage of the production
process; some experts estimate up to
50 percent may be lost between farm
and dinner table. At the same time
geographic regions are increasingly
subjected to alternating periods of
excessive rainfall, and then drought.
While the local food movement is
gaining increased traction, the major-
ity of food is produced far from where
it is ultimately consumed, being
shipped thousands of miles before ar-
riving in your local store or restaurant.
Although for many consumers it may
still be hard to appreciate the planetary
implications of the food they eat. In-
creasingly the impact of the global food
value chain is being measured, com-
municated and appreciated. From the
land and water required to raise cattle
or grow grain to the energy required to
create, transport and distribute food
products and the amount of food that
is wasted or spoiled along the way vis-
ibility to these costs is increasing.
From a planetary perspective, the prob-
lems are many and serious. How can
food growers and producers continue
to meet consumers’ demands efficiently
amidst price volatility, shortages, climate
changes and government interventions?
How can consumers ensure the food
they eat is safe, ethically produced,
healthy and affordable? And how can
the players in the historically-siloed food
value chain integrate their thinking and
their processes with each other to cre-
ate a smart, sustainable system that will
benefit the Earth and its inhabitants for
many generations to come?
In the next few paragraphs we will focus Consumption
in on a couple of the major planetary Exacerbating the impacts of population
stressors on the global food value chain: growth are changing consumption pat-
terns. In 2008 for the first time humans
Population
ate more farmed fish than wild fish, from
Although many experts believe that we
tilapia, to salmon, to cod. Other pat-
currently produce enough food to feed
terns are also changing. It is well docu-
the planet’s inhabitants, the world’s
mented that as incomes rise, so does
population is growing. At the end of
consumption of meat, fish and dairy.
2008, the world’s population reached
Between 1990 and 2005 China’s popu-
6.8 billion. By 2020, that number is ex-
lation increased by approximately 161
pected to rise to nearly 8 billion and by
million (14 percent) and over the same
2050 the world’s population may well
time period per capita pork consump-
exceed 9 billion. This unprecedented
tion nearly doubled, going from 19.7
population growth will likely drive deep
Kg to 37.9 Kg. The resulting increase
changes for every member of the global
in Chinese annual pork consumption of
food value chain who will be forced to
27.1 M tonnes represents roughly 360
do continually more with less.
million additional pigs, which require
155,000 km2 of farmland, an area
Estimates are that the incremental
roughly the size of England and Wales.
population, coupled with changing
consumption (see next section) will
With global demand for meat and
require a 70 percent increase in global
poultry expected to rise 25 percent by
food production. The acreage needed
2015, many difficult questions loom.
for such an increase in production is
How can food producers meet the ris-
estimated at approximately 300 million
ing demand? Are existing methods for
acres, an area roughly three times the
fattening livestock sustainable, safe and
size of California.
ethical? How can consumers balance
their need for affordable food against
For a growing number of countries the
their desire for responsible products?
issue of food security is taking on a
Where will we find the necessary land?
whole new level of relevance and driv-
Finding answers for these and related
ing some major shifts in ownership of
questions is crucial for developing food
agricultural resources.
production processes that are optimal
for all members of the global food value
chain, and for planet Earth. Especially
since these foods require large land
areas, massive quantities of water,
Page 9
prodigious amounts of energy and Water-related issues will likely increase Kilocalorie / BTU
generate significant volumes of waste. in number and complexity as popula- Energy – and more specifically oil and
An additional concern is that overcon- tions rise, urban areas expand, and natural gas – is perhaps the second
sumption of these foods and changes climate change, drought and farming most important input to today’s food
in lifestyle are a contributor to the global practices affect crop yields and avail- value chain. Sixty years ago, food
obesity and health crisis. able arable land. In 1950 there was producers could create a calorie of food
1.2 acres of arable land per person, by with less than half a calorie of fossil
H20
2010 it is forecast to be just 0.52 acres. fuel. Today, a single calorie of modern
Until quite recently water — arguably the
One manifestation is a burgeoning supermarket food may require up to 10
single most important input to the food
global trade in virtual water, as countries calories of fossil fuel to produce. One
value chain — was a frequently under-
with limited water acquire overseas study conducted in 2000 estimated that
addressed issue in many food chain
farmland to bolster domestic food ten percent of the energy used annu-
discussions, its continued availability
security (e.g., Saudi Arabia, Abu Dhabi ally in the U.S. was consumed by the
at little to no cost considered a given.
and Qatar acquiring farmland in Sudan, food industry.
However there is a growing apprecia-
Egypt, Ukraine, and Pakistan).
tion that agriculture is the single largest
human use of water and that current Governments will likely play an increas-
policies and practices are very likely ingly active role in finding a balance
unsustainable. The underlying issues across industrial, agricultural, environ-
are myriad but include degradation of mental and municipal water uses.
aquifers, rivers and lakes to support
crop irrigation, risk of runoff from the
lagoons of animal waste created by
concentrated animal feeding operations
(CAFO), continued high levels of food
waste and spoilage in the supply chain,
deforestation that degrades water
retention as developing world farmers
seek new, productive acreage, and
consumer thirst for bottled water, soft
drinks and beer.

Figure D. Water...an essential component in food production and distribution

Page 10
Increased demand for biofuels such
as ethanol has generated a unique
set of problems with the world’s food
supply. Biofuels gained popularity as a
way to potentially wean countries from
their reliance on oil and combat rising
fuel costs. But today, an estimated 25
percent of U.S. corn is now converted
to ethanol and goes to fuel vehicles
rather than people or animals. In the
meantime, high oil prices contribute to
higher food prices by raising the cost of
food-production-related items such as
fertilizer and transportation.
CO2 / °Fahrenheit / °Celsius
A growing chorus of reasoned and
informed voices are raising the alarm
about the global impacts of climate
change on agriculture. At a time when
the energy conversion ratio for many of
our foods continues to trend towards
inefficiency and the environmental im-
pact of the food value chain is increas-
ingly documented and understood,
climate change represents perhaps the
most important stress on the global
food value chain. However the impact
of climate change likely extends beyond
the immediate and visible. A recent
report from the United Nations Food
and Agriculture Organization anticipates
climate change will also increase food
safety risks (increasing incidence of
contamination by Salmonella, Campylo-
bacter, E. coli and Salmonella).
Let’s build a smarter food supply
While technology alone cannot deliver a
solution to the myriad stresses impact-
ing the food value chain, its application
to create a smarter food value chain—
one that is increasingly instrumented, in-
terconnected and intelligent—is essential.
Why will a smarter food value chain be
instrumented? Because it will use sens-
ing and tracing technologies, such as
satellites, radio frequency identification
(RFID) and barcodes, heat and moisture
monitors, and global positioning sys-
tems (GPS) to enhance overall supply
chain visibility as meat, fish, dairy and
produce moves from the farm or field to
the fork, lowering waste and spoilage
and reducing costs. Sensors can also
enable more efficient production meth-
ods by reducing irrigation, pesticide
and fertilizer requirements, boosting
yields and monitoring moisture, tem-
perature and airflow during storage to
reduce spoilage.
A smarter global food value chain will
also be interconnected—with the dispa-
rate ranches, farms, packers, feedlots,
storage bins, manufacturing and pro-
cessing plants, warehouses, distribution
centers, and retail stores sharing infor-
mation and insights. This connectivity
is increasingly important as food today
is rarely consumed where it is grown or
raised, frequently exported to low cost
markets for processing or packaging,
then re-exported as a finished product
for consumption. For example, cod
caught off the coasts of Norway may
be shipped to China for processing
into filets, only to be shipped back to
Norway as a finished product for sale to
consumers. This inflates logistics costs
and increases waste due to spoilage,
damage or contamination.
Finally, a smarter food value chain will
be intelligent—capturing, leveraging and
sharing standardized data and inte-
grated information to generate insights
on optimizing the value chain. Smart
technology can improve the complex
process that is the production, distri-
bution, storage, selling, consumption
and disposal of food. Elements include
improved planning and coordination,
efficient storage and dynamic routing,
optimization for cost, carbon and other
attributes and improved traceability. The
result can be more, safer, higher quality
food delivered when and where it is
needed, and with reduced waste and
an extended shelf life.
Page 11
Elements of a smarter food supply can
be found and imagined for application
at every step in the global value food
chain:
Commodity and specialty products provid-
ers / primary producers
Given the fragmentation and historic
lack of technological sophistication
among many participants in this area
of the supply chain there are many
opportunities for greater instrumenta-
• Sensors can automatically adjust
tion, intelligence and interconnectivity,
including:
• Farmers can use GPS and ad-
vanced sensor technology to monitor
weather patterns, assess soil and
• Systems and tools can be used to
crop conditions, and adjust their
water, fertilizer and pesticide usage
for optimal efficiency.
• Farmers, growers and even fishermen
in less developed regions are using
mobile phones to access market,
scientific, and environmental data and
knowledge through services such as
• Serialization and tagging technol-
Farmers Friend in Uganda, 12582.
com in China, mKrishi in India. In this
way they can boost yields as well as
their own returns by boosting price
realized and reducing production costs.
Page 12
• Sensors technology and actuators
can be used to identify and respond
to threats across the supply chain
(e.g., excessive humidity or heat,
or contamination). Companies like
Total Grain Management offer such
technologies that monitor conditions
in grain silos and adjust humidity and
heat to reduce spoilage and forma-
tion of potentially harmful mycotoxins.
water usage based on local and re-
gional dynamics (e.g., fluctuations in
seasonal/daily industrial or residential
water requirements
drive standardization of food related
processes to mitigate risk and reduce
both spoilage and waste. A powerful
example of this dynamic can be seen
in the increasing adoption of pro-
grams such as the Consumer Goods
Forum’s Global Food Safety Initiative.
ogy, coupled with the application
of standardized nomenclature for
participants, locations and products,
enables true end to end traceability
across the supply chain.
• Integrated communication systems
enable those at the top of the food
value chain to seamlessly share in-
formation about anticipated growth
and demand with downstream, cre-
ating a stronger link between supply
and demand
• Application of genetic manipulation
and nano-technology to animals
and crops to deliver drought and
pest resistance, nutrition and other
functional benefits. Already 64% of
the world’ soybeans and 24% of corn
is genetically modified
Consumer products companies
Smart CP companies can
• Leverage the widespread adoption
of data standards such as GS1, the
power middleware and other com-
munications platforms to continu-
ously coordinate inventories, produc-
tion plans and sales forecasts with
customers and suppliers to create a
consistent, seamless, link between
groups.
• Embrace and enable the concepts
and principles of Open Innovation
by connecting with a diverse set of
internal and external stakeholders
and other interested parties to ac-
cess ideas, technologies, ingredients,
and other assets. In the process
accelerating the new product creation
process, lowering costs and boosting
success rates.
• Reduce water usage in production,
packaging and products themselves
by marketing concentrated versions
of liquid based products (e.g., laundry
and dish detergent), reusing water in
production processes,
• Deploy advanced monitoring tools to
listen and understand the concerns
of customers and consumers about
products, brands and companies
in areas such as traceability, social
responsibility, sustainability, and apply
advanced analytics to convert those
observations into actionable insights
such as new products, promotions
and distribution strategies.
• Deploy sensors (e.g., RFID tags,
thermometers and psychrometers) to
track location and monitor heat and
humidity throughout their production,
packaging and storage operations
and connected intelligent actuators
to automatically effect changes to
processes, conditions and operations
to boost efficiency, service and safety.
• Dynamically optimize their supply
chain operations against both tradi-
tional metrics (e.g., $ cost, customer
service, asset utilization) and new
metrics (e.g., fuel, H20, and C02).
Wholesalers and distributors
Smart wholesales and distributions
are deploying RFID, 2D barcodes, and
other identification technologies to
track products as they move through
the chain. Such technologies enable
companies to continuously coordinate
inventories, production plans and
sales forecasts with retail or restau-
rant customers and CP company
suppliers for uninterrupted planning
and communication.
Additionally, smart wholesalers and
distributors can optimize supply chain
software to minimize distribution costs
(e.g., storage, transportation) for
multiple positive outcomes, includ-
ing increased profit and a decreased
carbon footprint.
Retailers and restaurants
In this frequently oversaturated mar-
ketplace, many retailers and restau-
rateurs are finding they must take a
multi-pronged approach to retaining
customers and attracting new ones.
Strategies include:
• Maintaining a seamless connection
with consumers that transcends their
location, allowing them to dynami-
cally and continuously search, review,
purchase and take acceptance of
products and services leveraging
devices such as mobile phones, in
store kiosks, and hand held devices,
identification and preference informa-
tion garnered from web searches,
loyalty cards and purchase history,
supporting technologies such as
video surveillance, GPS and web
monitoring, and advanced text, data
and video analytics.
• Improving the in-store experience.
This can be accomplished by provid-
ing more value added services to
consumers through in-store offerings
such kiosks, shopping cart PCs, or
self checkout features as well as out-
of-store offerings such as Website
interactions or services.
Page 13
• Adjusting forecasts, orders and
inventories based on weather, sea-
sonal, calendar, competitive, price,
availability and other conditions
• Ensuring in-stock positions to
reduce lost sales, experimenting
with new formats and channels (See
the IBM report on multi-channel)
http://www-935.ibm.com/ser-
vices/us/index.wss/ibvstudy/imc/
a1016279?cntxt=a1000063
• Continued challenges coordinat-
ing promotions, new product
introductions and day-to-day
business with CP suppliers - See
the press release on data sharing:
http://www-935.ibm.com/ser-
vices/us/index.wss/summary/imc/
a1031441?cntxt=a1000063
• Developing the capabilities needed to
support rapidly growing private label
business (e.g., retailers increasingly
need brand management, shopper
insights, marketing capabilities)
Page 14
Consumers
Usually, considered the end of the
global food value chain, consum-
ers are still driving many changes
upstream. “Smart” consumers use
technology in myriad ways to become
even smarter, including:
• Using online and mobile coupons
• Selectively shopping online based on
availability, price and convenience
• Researching products and compa-
nies online — both through structured
and controlled content such as com-
pany Websites and through unstruc-
tured and uncontrolled content such
as social networking sites, online
communities and blogs
• Sharing information, insights and
opinions in real time with other con-
sumers and directly with manufacturers
and other stakeholders such as NGO
• Investigating products and their impacts
Sequencing the cocoa genome
IBM Research, the U.S. Department of Agri-
culture and Mars, Incorporated are teaming
up and through their collaboration, they
hope to sequence the genome that makes
cocoa, the key ingredient of chocolate.
Researchers plan to use IBM’s computa-
tional biology technology and expertise to
develop a detailed genetic map, identifying
the specific genetic traits that produce
higher cocoa plant yields and resist
drought or pests.
But like any sweet treat, the results of
this research will be better when shared.
Mars will make the genome information
available for free through the Public Intel-
lectual Property Resource for Agriculture
(PIPRA), which supports agricultural
innovation for both humanitarian and
small-scale commercial purposes.
Conclusion
The stresses on the food value chain are
pervasive, profound and persistent and
while solutions are not easy, technology is
no longer the barrier it once was. A smart-
er food value chain is not just possible,
but imperative. By leveraging the collective
and synergistic power of intelligence,
instrumentation and interconnectivity we
can make that imperative a reality.
Why IBM?
Technology is shaping how food grows,
how it tastes and how it gets to your
plate. A smarter global food system would
help eliminate waste, improve quality and
ensure safety. IBM has the technology
solutions and expertise to make it happen.
To find out how we can help your organi-
zation build a smarter food supply chain,
contact your IBM representative or visit:
http://www.ibm.com/ibm/ideasfromibm/
us/smartplanet/topics/food/20081208/
index.shtml
For further information
Getting Real About the High Price of
Cheap Food (Time Magazine, August 21,
2009) http://www.time.com/time/health/
article/0,8599,1917458-1,00.html
Cargill’s Inside View Helps It Buck Down-
turn (The Wall Street Journal, January
14, 2009) http://online.wsj.com/article/
SB123189501407679581.html
Health Ills Abound as Farm Runoff
Fouls Wells (The New York Times,
September 17, 2009) http://www.
nytimes.com/2009/09/18/us/18dairy.
html?scp=2&sq=runoff&st=cse
Page 15
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