To avoid disaster, we need shorter supply chains
Are decentralised, local supply chains the answer?
Making the invisible, visible
Before 2020, you would be forgiven for thinking very little about ‘supply chain management’.
Goods tend to arrive in our stores on time and nicely packaged up. In fact, our global supply chains have worked so consistently and so invisibly that many of us weren’t aware of how they could possibly go wrong.
In 2020, the invisible became visible. In a pandemic-induced panic, our reliable supply of toilet paper and pasta disappeared. The supermarkets couldn’t refill quickly enough. The past few weeks in the UK have seen fuel become unavailable (this time caused by a lorry driver shortage: both because of Brexit and an ageing workforce), which created chaos and disruption for many people.
Supply chain fragility may have been intensified by the pandemic, but problems showed before the pandemic too. In 2019, before the pandemic had reached many parts of the world, it was estimated that 56 percent of companies experienced a supply disruption annually. The fragility of the global supply chains has now been exposed, and while it was inconvenient to lose access to pasta and toilet paper, it will be far more consequential if we lose access to fresh food.
The impact on food
Right now, many retailers use global supply chains to get food produce: complex supply chains involving multiple actors, across multiple borders. It’s thanks to these supply chains that you can subvert the seasons: eating strawberries in Winter, and sweet potatoes in the height of summer. But at what cost?
Firstly, the taste. If you’ve ever had the luck to compare a local Italian tomato to an imported tomato, you may know that they barely taste like the same fruit. Plus, the imported tomato has travelled miles to get to you, emitting greenhouse gases with every mile, which makes it all the less sweet. Using local (read: shorter) food supply chains, instead of global, is not just beneficial in terms of taste and transport but shorter supply chains also aid smaller-scale production, more crop rotation, indigenous species, and a higher share of organic production and less food waste.
We invested in Hier to enable these decentralised supply chains: allowing local food suppliers to connect with local retailers. Hier is building the digital infrastructure for food: bringing local food to wherever you buy your groceries. It’s no small market either: the procurement volume of food, in Europe alone, is 1.3 trillion Euros.
Going full circle
Funnily enough, before the Industrial revolution, supply chains were already primarily local. New technology and inventions changed this: railroads built in the industrial revolution, semi-trucks (at the end of the 19th century) and pallets and containers (in the 20th century). Technology has consistently been used to make global supply chains more efficient - from the barcode to the telephone - but global supply chains have become a one-size-fits all solution, and what has been optimised has always been ‘price’.
Tomorrow’s supply chains will need to optimise beyond just ‘price’: optimising for reliability, community benefit and environmental cost as well. We can use technology today to better connect us to nutritious local and seasonal food: moving away from bland, unsustainable vacuum-wrapped food that’s travelled miles from where it was grown. We need to decentralise parts of the food system to make sure we get reliable access to good food.
Decentralisation of food
When thinking about ‘decentralisation’ in tech, you might first think of cryptocurrency or decentralised finance. But the principles of decentralisation can actually transform the humble arena of physical goods too.
The fluctuating prices for commodities (from petrol, timber, all the way to the price of container shipping itself) are generally caused by unexpected externalities which impact the supply chain: everything from labour shortages, ships being held at the port, and the interconnectivity of product parts. Just like some decentralised currencies aim to be a solution for the unpredictability of Fiat money inflation, decentralised supply chains offer a solution to the volatility of global supply chains. They offer an opportunity for increased self reliance, and an antidote to the unpredictable externalities that can wreak havoc on our global supply chains.
Climate change will impact supply chains
One external factor that is becoming increasingly unpredictable is climate change. It will likely change our systems in ways we cannot imagine. Extreme weather will impact supply chains due to worker availability, and retailers will need to shorten their supply chains to both reduce their own emissions as well as to prepare for fluctuations in supply and demands. We need food systems that are prepared for this.
We also need the food systems to reduce their emissions. Nearly one third of food produced in the world is wasted or lost, equalling over two billion tonnes (that’s roughly the same weight as over 200 billion African Bush Elephants’ worth of food wasted, every single day). Food waste isn’t just a problem because of the resources used producing it, but also because of the wasted resources transporting it. We need to both reduce the amount of food thrown away and reduce the emissions produced making that food in the first place.
Funding of food beyond grocery deliveries
It was summer of 2020 when we met Mark and Lara, the founders of Hier. We immediately fell in love with their amazing focus on the product and people, and invested in late summer 2020. When the task ahead is to digitize an old industry like retail and food production, it is the combination of design and people skills, more than it is a technology challenge.
Somehow many investments are still going to the consumer delivery of food, but when you look a little deeper, it is clear that some of the bigger issues lie behind the curtain. Here’s to shortening the supply chain, getting better food on the table and reducing the huge climate impact of the food industry.
Hier are also hiring! Check out their roles here.