Using data to address fragility in food supply chains
The global COVID-19 pandemic has turned “supply-chain disruption” from obscure industry jargon into a regular discussion point in the media, often with a focus on the food and agricultural sectors. In the United States, $1.32BN worth of perishable food has gone to waste from March to May as producers have faced a massive surplus, limited storage, and marketing channels shut down due to COVID-19 lock-down. From Ghana to Uganda, agricultural producers in Africa are facing remarkably similar challenges brought on by the virus––leaving crops rotting in the fields or at the depots waiting for trucks that never arrive. The global crisis has highlighted fragility in food supply chains from the local labor and trucking bottlenecks to the dependency of globally sourced food on environmental, social, and political predictability.
The predictable return of the unpredictable
While agriculture is generally viewed as a higher risk segment of the economy than others, every stakeholder in agricultural value chains now must navigate the additional risks introduced by the pandemic. Efficiencies that were at an advantage during a period of relatively stable growth and globalization are suddenly a liability when seasonal labor, just-in-time delivery to market, access to finance, and predictable consumer markets are suddenly in doubt everywhere. This means effective risk-management is now central to many organizations’ survival.
Many mature risk management approaches focus almost exclusively on direct, quantifiable risks to an organization such as interest rate changes. From our vantage point at the agribusiness level of the value chain, we know that many risks to agribusinesses ultimately affect their downstream business partners but are difficult for those partners to measure or manage. What if those indirect and unmeasured risks of suppliers were possible for processors, brands, and financiers to manage? If we could create more measure and management of the risk in the value chain, better business planning, lower-cost financing, and more sustainable investments, we might be able to make the value chain more resilient to the type of shocks almost every organization on the globe now has to navigate.
Addressing fragility in food supply chains
To meet this challenge, SCOPEinsight developed, with input from our clients and partners, specific risk analytics. We then linked the analytics to our unique database professional and performance data for agribusinesses across 40 countries. Together, this has created unprecedented insight and visibility into risks across numerous value chains.
While usually private sector actors do relatively well in managing the direct stakeholders and direct risks, usually there is limited motivation, ability, and investment in managing the indirect risks; thus, not only leaving a spectrum of risks unmitigated but also missing a significant opportunity of value creation.
Through our business intelligence portal, we provide insight into the direct AND indirect risks so that our clients can a range of risk insights on their previous and current value chain projects. By extending the current way stakeholders account for their direct and indirect supply chain risks and providing them visibility on their agribusiness suppliers, we hope that what has begun as a public health crisis will end with new ways for stakeholders in the food system to recognize how a risk to one enterprise rapidly becomes a risk to everyone.
Sneak preview: Risk analytics via the SCOPEinsight Business Intelligence Portal
Below are a few screen grabs from our Risk Analytics on the Portal.
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