Traceability and transparency in the agriculture industry
Traceability refers to the ability to track the movement of food products from one point in the supply chain to another. In the agriculture and food value chain, this means being able to trace the origin of raw materials and ingredients used in the production of food, as well as the location of finished products as they move from farm to fork.
Traceability refers to the ability to track the movement of food products from one point in the supply chain to another. In the agriculture and food value chain, this means being able to trace the origin of raw materials and ingredients used in the production of food, as well as the location of finished products as they move from farm to fork. Traceability systems include the collection and management of data on the production, processing, and distribution of food products, with the aim of ensuring their safety, quality, and compliance with regulatory requirements.
Transparency refers to the provision of accurate and accessible information about the production and distribution of food products. This includes information on the origin and quality of raw materials and ingredients, the environmental and social impact of production processes, and the safety and nutritional value of finished products. Transparency enables consumers to make informed choices about the food they buy and helps build trust between businesses and their customers. In the agriculture and food value chain, transparency can be achieved through various means such as product labeling, certification schemes, and publicly available data on supply chain practices.
The relationship between traceability and transparency in the agriculture and food value chain is closely intertwined. Traceability systems provide the foundation for transparency by enabling the tracking of products and information through the supply chain. Without traceability, it is difficult to provide accurate and reliable information about the origin, quality, and safety of food products. On the other hand, transparency helps to build trust with consumers and stakeholders by providing clear and accessible information about the production and distribution of food products. By providing transparent information on their supply chain practices, businesses can demonstrate their commitment to food safety, sustainability, and ethical practices, which can enhance their reputation and competitiveness in the marketplace.
The European Institute of Innovation & Technology (EIT) mentions how this topic is important in the agriculture and food value chain, under the lens of digital technologies (Figure 1)
Figure 1 –Digital Traceability in the agriculture and food industry
There are many important benefits to implementing traceability in our industry, especially considering the digital technologies potentially involved. According to EIT, digital technologies “streamline corrective actions by quickly identifying issues as well as reduce risks associated with food safety and food fraud by making it easier to track the route of a problem. They can also optimize the use and reuse of materials or resources, boosting the sustainability and cost-efficiency of the food supply chain. Digital traceability technologies can also certify products to ensure that only fair and sustainable goods make it to market - and that the authenticity of these products is communicated to the consumer.”
In order for food supply chains to become truly traceable, and for the benefits to be felt by all within the food value chain, the use of these technologies must become universal. With barriers such as price, accessibility, and acceptance, the uptake of key digital solutions such as blockchain has been limited due to alack of “technological maturity”. Another important point to be considered is the idea of value creation, capture, and sharing across the value chain. If traceability and transparency truly create value, it is crucial to understand who is going to capture and share it and how this is going to be made. One major variable to be considered is that overall consumers tend to want traceability and transparency about the food they consume, but there is much less willingness to pay for the technology and processes that enable them. To exemplify this, in a recent report by The Food Industry Association (FMI) and NielsenIQ, that communicated data from 1,035 U.S. adult grocery shoppers, 72%of respondents indicated that transparency is extremely important to them when deciding which food brands and retailers to support. Interestingly, the same report showed that there is no consensus on the consumer side on what transparency means. On the other hand, many studies showed that consumers are not willing to pay a premium for products that are traceable and/or transparent.
Challenges regarding Traceability and Transparency in the Agriculture and Food industry: A Jobs to be Done perspective:
Below we explore some opportunities for traceability and transparency in agriculture and food from a number of different angles. We use the lens of the Jobs-to-be-done framework conceived by Clayton Christensen and popularized by Alexander Osterwalder in his Value Proposition Canvas framework. The Jobs-to-be-Done (JTBD) frame work can help identify the emerging challenges and guide fintech startups to develop innovative solutions to address the needs of the future.
One way to organize the overarching jobs in this space is to consider the specific jobs to be done that that traceability and transparency support. Few customers really need traceability and transparency for their own sake – but many find them essential to make progress on important goals and capture certain kinds of value. A jobs lens asks us to understand that desired progress first and then figure out how transparency and traceability support the goal.
Using that lens, we can propose several “meta-jobs” under which we can find many specific jobs across various customers:
1. Job: Demonstrate product differentiation by transparency and traceability
Many products make claims about special provenance – a product’s origin, ingredients, process, or journey – in service of building a competitive advantage. The differentiation that a product can gain through a traceable, transparent story can command a premium price.
Ask: How much traceability does a product need to make a compelling enough case? Do we just need to know something was grown in the U.S., or do we need to know the field and picking date?
2. Job: Assure quality standards through value chain
Maintaining quality is an ongoing challenge for expansive supply chains with many intermediate steps – especially for when an animal, plant, or product must go through several stages of processing. Firms need to make sure that their supply chain is performing to specification to protect their product, brand, and customer relationships.
Ask: What impacts quality, and how can we preserve it?
3. Job: Comply with regulations regarding value chain
Regulatory authorities are increasingly demanding visibility in the origin of products for many reasons, including human rights concerns, environmental issues, and questions of industrial policy. Irrespective of the reason, firms need to find ways to comply with those regulations to stay in operation.
Ask: To solve the job of meeting a bar set by a government or other authority, what is the type and intensity of traceability and transparency that a firm needs? How do we define good-enough for a given regulatory need?
4. Job: Optimize my supply chain
Supply chains in agri-food are often complex, with many players and multiple, parallel routes through the system. Whether looking downstream toward distribution or upstream toward sourcing, every firm needs to think about what it needs from its supply chain. That can be cost efficiency, speed, flexibility, and many other priorities.
Ask: What does a given customer really need to optimize for in their supply chain, and what would it take to accomplish?
5. Job: Manage risks in the value chain
In an otherwise well-functioning supply chain, some firms still find that the level of unmitigated risk in their system is either insufficiently understood or too hard to control. Whether those risks are supply chain shocks, competitive forces, or just insurance liabilities, there are known unknowns and unknown unknowns ends that firms want to manage.
Ask: What actions does a firm need to take on a particular risk? What does it need to know about those risks to be able to take action?
DIAL Ventures, the innovation arm of the Purdue Applied Research Institute, tackles big problems facing the U.S. and the world such as food safety, supply chain efficiency, sustainability, and environmental impact. DIAL Ventures creates new companies that drive innovation in the agri-food industry which, in turn, makes a positive impact on our lives and lifestyles for years to come.
If you are interested in becoming a DIAL Ventures Fellow or Corporate Partner, contact us at info@dialventures.com.
Traceability refers to the ability to track the movement of food products from one point in the supply chain to another. In the agriculture and food value chain, this means being able to trace the origin of raw materials and ingredients used in the production of food, as well as the location of finished products as they move from farm to fork. Traceability systems include the collection and management of data on the production, processing, and distribution of food products, with the aim of ensuring their safety, quality, and compliance with regulatory requirements.
Transparency refers to the provision of accurate and accessible information about the production and distribution of food products. This includes information on the origin and quality of raw materials and ingredients, the environmental and social impact of production processes, and the safety and nutritional value of finished products. Transparency enables consumers to make informed choices about the food they buy and helps build trust between businesses and their customers. In the agriculture and food value chain, transparency can be achieved through various means such as product labeling, certification schemes, and publicly available data on supply chain practices.
The relationship between traceability and transparency in the agriculture and food value chain is closely intertwined. Traceability systems provide the foundation for transparency by enabling the tracking of products and information through the supply chain. Without traceability, it is difficult to provide accurate and reliable information about the origin, quality, and safety of food products. On the other hand, transparency helps to build trust with consumers and stakeholders by providing clear and accessible information about the production and distribution of food products. By providing transparent information on their supply chain practices, businesses can demonstrate their commitment to food safety, sustainability, and ethical practices, which can enhance their reputation and competitiveness in the marketplace.
The European Institute of Innovation & Technology (EIT) mentions how this topic is important in the agriculture and food value chain, under the lens of digital technologies (Figure 1)
Figure 1 –Digital Traceability in the agriculture and food industry
There are many important benefits to implementing traceability in our industry, especially considering the digital technologies potentially involved. According to EIT, digital technologies “streamline corrective actions by quickly identifying issues as well as reduce risks associated with food safety and food fraud by making it easier to track the route of a problem. They can also optimize the use and reuse of materials or resources, boosting the sustainability and cost-efficiency of the food supply chain. Digital traceability technologies can also certify products to ensure that only fair and sustainable goods make it to market - and that the authenticity of these products is communicated to the consumer.”
In order for food supply chains to become truly traceable, and for the benefits to be felt by all within the food value chain, the use of these technologies must become universal. With barriers such as price, accessibility, and acceptance, the uptake of key digital solutions such as blockchain has been limited due to alack of “technological maturity”. Another important point to be considered is the idea of value creation, capture, and sharing across the value chain. If traceability and transparency truly create value, it is crucial to understand who is going to capture and share it and how this is going to be made. One major variable to be considered is that overall consumers tend to want traceability and transparency about the food they consume, but there is much less willingness to pay for the technology and processes that enable them. To exemplify this, in a recent report by The Food Industry Association (FMI) and NielsenIQ, that communicated data from 1,035 U.S. adult grocery shoppers, 72%of respondents indicated that transparency is extremely important to them when deciding which food brands and retailers to support. Interestingly, the same report showed that there is no consensus on the consumer side on what transparency means. On the other hand, many studies showed that consumers are not willing to pay a premium for products that are traceable and/or transparent.
Challenges regarding Traceability and Transparency in the Agriculture and Food industry: A Jobs to be Done perspective:
Below we explore some opportunities for traceability and transparency in agriculture and food from a number of different angles. We use the lens of the Jobs-to-be-done framework conceived by Clayton Christensen and popularized by Alexander Osterwalder in his Value Proposition Canvas framework. The Jobs-to-be-Done (JTBD) frame work can help identify the emerging challenges and guide fintech startups to develop innovative solutions to address the needs of the future.
One way to organize the overarching jobs in this space is to consider the specific jobs to be done that that traceability and transparency support. Few customers really need traceability and transparency for their own sake – but many find them essential to make progress on important goals and capture certain kinds of value. A jobs lens asks us to understand that desired progress first and then figure out how transparency and traceability support the goal.
Using that lens, we can propose several “meta-jobs” under which we can find many specific jobs across various customers:
1. Job: Demonstrate product differentiation by transparency and traceability
Many products make claims about special provenance – a product’s origin, ingredients, process, or journey – in service of building a competitive advantage. The differentiation that a product can gain through a traceable, transparent story can command a premium price.
Ask: How much traceability does a product need to make a compelling enough case? Do we just need to know something was grown in the U.S., or do we need to know the field and picking date?
2. Job: Assure quality standards through value chain
Maintaining quality is an ongoing challenge for expansive supply chains with many intermediate steps – especially for when an animal, plant, or product must go through several stages of processing. Firms need to make sure that their supply chain is performing to specification to protect their product, brand, and customer relationships.
Ask: What impacts quality, and how can we preserve it?
3. Job: Comply with regulations regarding value chain
Regulatory authorities are increasingly demanding visibility in the origin of products for many reasons, including human rights concerns, environmental issues, and questions of industrial policy. Irrespective of the reason, firms need to find ways to comply with those regulations to stay in operation.
Ask: To solve the job of meeting a bar set by a government or other authority, what is the type and intensity of traceability and transparency that a firm needs? How do we define good-enough for a given regulatory need?
4. Job: Optimize my supply chain
Supply chains in agri-food are often complex, with many players and multiple, parallel routes through the system. Whether looking downstream toward distribution or upstream toward sourcing, every firm needs to think about what it needs from its supply chain. That can be cost efficiency, speed, flexibility, and many other priorities.
Ask: What does a given customer really need to optimize for in their supply chain, and what would it take to accomplish?
5. Job: Manage risks in the value chain
In an otherwise well-functioning supply chain, some firms still find that the level of unmitigated risk in their system is either insufficiently understood or too hard to control. Whether those risks are supply chain shocks, competitive forces, or just insurance liabilities, there are known unknowns and unknown unknowns ends that firms want to manage.
Ask: What actions does a firm need to take on a particular risk? What does it need to know about those risks to be able to take action?
DIAL Ventures, the innovation arm of the Purdue Applied Research Institute, tackles big problems facing the U.S. and the world such as food safety, supply chain efficiency, sustainability, and environmental impact. DIAL Ventures creates new companies that drive innovation in the agri-food industry which, in turn, makes a positive impact on our lives and lifestyles for years to come.
If you are interested in becoming a DIAL Ventures Fellow or Corporate Partner, contact us at info@dialventures.com.