The results show IoT-connected sensors and
systems in food and beverage supply chain logistics offer real-time visibility
and data-driven analytics, allowing stakeholders to improve performance, cut
operating costs, conduct predictive maintenance to avoid downtime, and even
decrease energy usage or reduce negative environmental impacts.
Keywords: agriculture; digitalization; digital technologies; IoT; logistics;
supply chain; effectiveness
1.
INTRODUCTION
The European Green Deal (2020) sets out
how to make Europe the first climate-neutral continent by 2050. It outlines a
new, sustainable and inclusive growth strategy aimed at improving people's
health and quality of life, boosting the economy, caring for nature and leaving
no one behind. The strategy of Farm to Fork is at the heart of the Green Deal.
It addresses the challenges of sustainable food systems and seeks to ensure a
sustainable livelihood for primary producers who are still lagging behind in
terms of income, which is essential for the success of the recovery and the
transition.
Given the complexity and the huge
number of actors involved in the food value chain, the crises such as the
Covid-19 affect the food chain in different ways. Although there has been
sufficient food supply in general, this pandemic has presented many problems,
such as logistical disruption of supply chains. In today's intensely
competitive global marketplace, businesses' pressure to find new ways to create
value and offer it to their customers is growing ever stronger. The growing
need for the industry to compete with its goods in a global economy across
cost, quality, and service dimensions has contributed significantly to the need
to develop a more efficient logistics system.
Technology has been completely revolutionizing
the present era, and digitalization can bring new opportunities for companies
by improving the whole value chain (Kilimis, 2019). The agricultural sector is
no exception. Digital transformation can bring new opportunities for agri-food
companies and open up new growth paths for development. One of the most
significant contributions to future sustainability would come from a radical
transformation of the agriculture and food (agri-food) value chain (CEPS,
2019).
2.
LITERATURE REVIEW
2.1.
Digital Transformation of the
Agri-food sector
The applications of digital
solutions in the agri-food sector are very diverse. It can help extend shelf life,
monitor freshness, display information on quality, improve safety, and improve
convenience. Rotz (2018) emphasizes the technical and organizational challenges
of digitalization in the agri-food. Lack of awareness, especially among the
rural farmers, low level of digitalization of agri-food companies, and low
incomes of rural farmers, together with high costs of ICT infrastructure,
insufficient personnel to handle ICT facilities, and the absence of local
content of language on internet are making digital transformation a challenge
(Salampasis, 2013).
Many problems exist throughout
agriculture, such as irrigation, the use of pesticides, fertilizers, the
monitoring of crops, land and livestock (López-Morales, 2020). Potential
applications of ICT solutions in agri-food are very diverse, including, among
others, software for supply chain or financial management, mobile applications
for farm management, agricultural land use optimization, precision agriculture
applications and other which fall into other categories of ICT-enabled services
(Salampasis, 2013).
Motivated by digital transformation,
the agricultural sector is offering its farms with new services and devices
(drones and satellite images, sensors, actuators, weather information) to
optimize resources, increase efficiency and at the same time reduce the effect
on the environment. (López-Morales, 2020).
Digital transformation can
significantly contribute to the improvement of products and/or services and
management of operations in a more efficient way. It can also trigger costs
reduction or can help to gain a competitive advantage in the market. Ulas
(2019) pointed out several driving factors expediting digital transformation:
globalization, advancement of technology and innovation, electronic commerce,
and social media. The idea of an interconnected world has also gained attention
from the industry sector, and the vision of the digital revolution is emerging,
popularly known as Industry 4.0 (Kang, 2016).
Experts highlight four areas for
which digitization technologies will have the most significant impact:
productivity, revenue growth, employment, and investment (Russmann et al.,
2015). The development of Industry 4.0, artificial intelligence, Internet of
Things (IoT), blockchain, cloud computing, augmented reality, 3D Printers,
chatbots, Big Data, and nanotechnology have been speeding up the process of
digitalization.
"Digital agricultural
revolution" is a new term explaining the changes as the Agri-food
industry's traditional approach is undergoing a fundamental transformation. As
stated by Schwab (2016), no doubt, it offers significant opportunities through
the availability of highly interconnected and data-intensive computational
technologies as part of Industry 4.0.
2.2.
The role of logistics in the
Agri-food sector
The term "logistics" could
be interpreted in many different ways. Various authors emphasize on different
aspects of its definition. Logistic is the core of production and marketing
organization (Movahedi et al., 2009). The quality of marketing depends on how
the products are delivered to the final customer. The value of logistics for
the agri-food industry has become more widely recognized by organizations
worldwide.
Agri-food logistics is an important
part of the economy and an interconnected system that controls, coordinates,
and organizes different flows of logistics, ranging from production through
points of storage, processing, and trade to the final consumer. The aim is to
provide the final consumer with uninterrupted supplies of safe food products
with minimum logistics costs and under environment-friendly conditions
(Wajszczuk, 2016).
When it comes to agricultural
logistics, we need to look more broadly and include the supply chain concept.
Supply chain management is a core component of the performance of companies'
value chains (Hult, 2007). Supply chain management is the management of trading off products and information in the
logistics process of companies ranging from sourcing raw materials to delivery
to the customers (Felea, 2013).
The supply chain includes a
substantial number of manufacturers, suppliers, and consumers and is
undoubtedly responsive to the complexities of the supply chain. Subsequently,
it is one of the key concerns in the supply chain management sector
(Emamisaleh, 2018). Logistics is a supply chain activity that plans,
implements, and manages the reliable, efficient transportation and storage of
products, services, and information to meet consumer needs, services, and
related information to meet consumer needs (Croom, 2018).
Whereas logistics is an integral
part of supply chain management, it provides the most important link between
the manufacturer and the customer and could be defined as the movement of
products and goods from the manufacturer or supplier to their final customer.
The supply chain comprehends all of those activities concomitant with stirring
goods from the raw-materials phase through to the end-user (Bertodo,
2002).
The successful performance of
agriculture depends on ensuring the proper supply of agricultural products to
the appropriate market. Over the last years, supply chain management has
presumed a noteworthy role in a firm's performance and has attracted thoughtful
research attention (Jain et al, 2010).
In the current turbulent times,
agricultural enterprises' logistics is affected by globalization
and the dynamic growth of new technologies. Supply chain
management is quite complex and involves several aspects and viewpoints,
all of which have an ultimate objective: to deliver
the finished product to the client as quickly as possible and
at the lowest cost possible.
Supply chain management comprises a
multifaceted set of systems and processes, including procurement and
procurement, product design, product development, collaborative planning,
forecasting, replenishment, and distribution (Chen, 2004). Successful and
efficient implementation of these systems is essential for efficiency and
performance and sustainable competitive advantage. Supply chain management is
well defined as a set of processes or activities undertaken in a firm to
facilitate its supply chain's operational management (Ibrahim, 2014).
Researchers had identified six
dimensions of supply chain management comprehensive literature review and
integration activities: strategic supplier partnerships, relationships with
clients, sharing of quality information, operational lean practices but also
postponement (Mogaka, 2020). Considering agri-food business, supply chain
management means reach agro products to the market in time.
2.3.
Main challenges of logistics in the
agri-food sector
The field of supply chain processes
and logistics for agriculture and food produce is to some degree,
unpredictable. Over time, the supply chain mechanism for such products has
grown into an increased chain of facilities, such as in-time deliveries,
centralized specialized manufacturing processes, and the maintenance of low
loading rates. Agri-food companies produce raw materials for agricultural
processing and fresh products, which are delivered to the consumer directly or
indirectly.
The quality of raw materials,
products and the costs generated by agri-food companies enterprises will have a
significant impact on the efficiency of the entire supply chain. Due to the
direct interaction with the environment and living organisms, the type of
production technologies and logistics will affect these costs and quality
(Wajszczuk, 2016).
Mathur (2018) specified if a company
can start measuring customer satisfaction related to what a supply chain can do
and also link customer satisfaction in terms of profit or revenue growth, then
you can attach customer values to profit and loss, and even to the balance
sheet".
Essential success elements for
retailers and manufacturers are the efficiency of the logistics and the
technology used. The entire process needs to be controlled effectively to
ensure that correct product(s) are delivered, to the right location, in the
proper condition, within a reasonable period of time while maintaining cost
efficiency for all parties involved. It is essential
to highlight the maintenance and spare parts and tools, specifically
among the supply chain activities. In a nutshell, the challenges
to meet are a quick and reliable delivery of the spare parts
inventory at minimum costs (Lozano, 2017).
Wajszczuk (2016) summarizes the many
studies conducted, identifies that the main challenges related with logistics
are the issue of receiving aligned-quality goods from various small farmers,
different sources of supply of raw material batches, contamination issues, the
presence of numerous and independent links in the entire supply chain,
formation of very long marketing channels, where an unequal balance of power
appears in the supply chain, poor infrastructure and limited access to the
required means, difficulties in establishing horizontal farm cooperation,
mainly due to the lack of trust, mostly in developing countries (the lack of
proven business models, modern storage infrastructure, ICTs, etc.).
The sustainability of the supply
chain has been investigated from various dimensions (Beske, 2014). Companies
are being impacted by multiple factors, as government initiatives,
stakeholders, and customers to apply sustainable supply chain initiatives
(Varsei, 2014). Moving toward sustainability is essential. Due to the existence
of pressures derived from the environment forcing agri-food companies to
followed sustainability standards, they need to be committed to sustainable
thinking (Emamisaleh, 2017). McKinnon (2012) emphasizes the importance of
optimizing vehicles' use as a very effective improvement for sustainability,
creating both environmental and economic benefits. Thus, the pursuit of
sustainability is a significant challenge for agri-food companies.
2.4.
Measuring the effectiveness of the
logistics system
The assessment of the logistics
system's effectiveness plays a crucial role in the performance of the physical
distribution of products and businesses' smooth running (Oettmeier, 2016). A
very common problem concerning the logistics system design is that projects
lack a well-structured framework for analysis. As a result, oversophisticated
systems that are not responsive to the market and business environment changes
are developed.
Every logistics system has a clear
goal: to collect and efficiently ensure a timely movement of supplies, goods,
and equipment to the requested locations at a rational cost (Hall, 2008).
Effective logistics management helps optimize the current production and
distribution processes and significantly reduce costs and improve services
(Rushton, 2014).
In general, the ratio between the
profits and the costs arising from the supply chain helps to evaluate the efficiency
of the logistics system. Elements such as the aggregate costs of logistics, the
level of logistics service quality, the performance of the business system, the
overall duration of the logistics processes in the system, and its quality
(logistics services' level) are common KPIs or key performance indicators for
any logistics system (Tyapuhin, 2007).
The latter ones are widely used in
the comparative evaluation of business entities and their logistics systems,
and, as such, they are measurable. Moreover, these KPIs are the backbone of the
planning of operations, tactics, and strategies of modern companies and the
monitoring of the effectiveness of the logistics system and business entity's
management accounting system.
Elements such as transportation
costs, storage costs, goods-processing-affiliated costs, inventory management
costs, order management costs, costs related to the exploitation of logistics
information systems, stock's formation costs, and raw material maintenance
costs, finished products' costs, the costs of potential damages arising from
the manifestation of the logistics risks or from the insufficiency of logistics
services comprise a general classification of logistics costs by functional
areas (Arshinina, 2020).
To continue with it, the evaluation
of logistics services quality is a necessary undertaking that is evaluated
directly during its provision. Also, it is important to place the logistics
services on a high-level corresponding with the potential consumer's needs. To
sum up, the extent of congruity between the logistics system's consumer
expectations and the actual level of this service's provision defines the
logistics services' quality. The level of logistics service provision is
expressed through a set of quality criteria such as the physical environment of
the service, consumer behavior, the reliability of the logistics service
provider, responsibility, maturity of the service, and security (Tyapuhin,
2007).
Logistics system resources are the
inputs, whereas the outputs reflect the results, and the quality of all
logistics services depends on their structure, quantity, and composition. For
this reason, it is necessary to assess the accuracy of the time and the place
of delivery, range and the quantity of products supplied, quality indicators,
products supplied, and compliance with the prices on the market so that we
could formalize the procedure on how to evaluate the efficiency of logistics.
3.
DATA AND METHODOLOGY
3.1.
Research methodology
Applying technologies to any parts
of the food supply chain finally enables stakeholders to collect and analyze
the data, which previously was not accessible. The result becomes the
foundation for further improving existing agri-food value chain logistics
processes and creating new ones. The Internet of Things (IoT) technology is one
of the crucial elements of effective logistics in any industry (Da Xu, 2014).
The rising usage of smart sensors, smart carry bar codes, different tags,
enabling precise, real-time tracking through the entire food supply chain – are
good examples of how IoT makes logistics more effective.
The purpose of this paper is to
analyze the role and impact of digital technologies, the IoT in particular, in
logistics of the food supply chain and underline what is the effectiveness of
logistic system when the technology is applied in real-world conditions.
The research objective is to analyze
and create new knowledge about digital technologies used to improve and make
more effective the food supply chain processes. An exploratory case study
methodology helps to investigate a large consortium based on IoT technologies,
implemented in pilot cases on farm level and measuring their performance over
the period of four years. The paper seeks to understand better and provide
insights on how digital technologies, IoT in particular, in logistics are being
used to bring more value to the food supply chain.
This is an interpretative study, and
the method of semi-structured interviews and document review for collecting the
data was used. Experts on the agri-food sector's digitalization were selected.
They had no less than ten years of experience working with digital innovation
technologies, tools, creating the products, implementing them into the market,
and making analyses. At least five experts were selected who directly took part
in employing the IOF2020 project. A total number of 15 interviews were
conducted. The different analysis methods of final data were implemented to
reach the paper objective.
3.2.
Collected empirical data
Referring to the IoT in the
agri-food sectorial context means that particular layers of the system, usually
three (device, network, and application) are applied (Villa-Henriksen, 2020).
Such application enables gathering data from each step of the agri-food supply and
value chain processes. IoT technologies are considered the most important
digital innovations that influence the biggest amount of valued data collection
in the agri-food sector (Tzounis, 2017).
It is expected that by 2050, IoT technologies have the biggest potential
to increase agricultural productivity by 70%, for example, achieving higher
crop yields with less cost, improve the nutritional value of the food
significantly, in livestock improve care quality and herd productivity (Sarni,
2016).
A significant amount of food in many
cases is wasted due to logistics problems. The most significant loss occurs
during transportation and storage. In total, it is over 20% of the world's food
production. IoT solutions applied to the food supply chain can reduce this
number by 10-15 % (PWC report, 2016).
During the COVID-19 crisis, there
were many restrictions to transportation. Due to that, a significant disruption
in the food supply chain has emerged. The transportation of the fresh food and
maintaining the quality, from farm to the table or distributing and then
collecting from the warehouses and delivering to the consumer, has become
crucial. Technologies and especially IoT, have become the primary tool to fight
it.
Digitalization of the agri-food
sector is one of the priorities moving towards the EU's twin transition. The
Commission has approved various large-scale projects to accelerate digital
innovations into the sector. During five years, a vast number of various use
cases have been approved and successfully applied in everyday food supply and
value chain processes. Usage of sensors, smart planning, smart animal health
monitoring, plant diseases monitoring systems, etc., are helping farmers to
continue their daily operations while reducing their environmental impact and
maintaining their competitiveness in the market. EU funding has laid a solid
foundation for such possibilities and solutions to be commercialized and
available to the market.
IoF2020, DEMETER, ATLAS, and
SmartAgriHubs are four large-scale piloting initiatives that have secured a
total of €80 million for research and innovation into the application of
emerging technologies for the agricultural sector. IoF2020 was founded in
January 2017 to promote the IoT in the food and agriculture industries. This
initiative, which has received a €30 million investment, puts together two
ecosystems – agribusiness and advanced ICT suppliers – that have boosted
digital innovation in agriculture. This is why the IoF2020 has been chosen as a
use case to analyze.
The IOF2020 project's main objective
is to set a strong foundation for implementing IoT technology in agri-food to
provide safe and healthy food, help farmers stay competitive, and increase the
competitiveness of the food supply and value chain in the EU. The project's
main result is the consolidated EU leading position in the global IoT industry.
It has created a healthy ecosystem through the whole food value chain: farmers,
the food industry, technology providers, and research institutes. Led by the number
one in agri-food research Wageningen UR University, IoF2020 was joined by 73
partners, acting in 22 EU member states. It is by no means the biggest
pilot-project of its kind.
There are 19 use cases divided into
five types of trials: Arable, Dairy, Fruits, Vegetables, and Meat. The pilot's
purpose was to demonstrate the use of innovative digital IoT solutions for a
vast number of application areas.
The project has taken a multi-actor
approach choosing key performance indicators (KPI's) closely related to user
acceptability, stakeholder engagement, sustainable business models, new
components improving the technology and market readiness levels. These factors are significant in analyzing
the effectiveness of the logistics of the food supply chain.
In general, KPI is a value that
indicates the degree to which a strategic goal has been accomplished. In
selected pilot use cases, KPIs are used to determine if established goals have
been met at different levels. Each use case measures the effect of the IoT solution
on various industries, business priorities, and society at large. Consequently,
primary success metrics show observable performance in meeting the critical
market goals.
In the scope of IoF, three levels of
KPIs are indicated: operational (number of sensors installed, number of farmers
participating, number of ICT component used), strategic (yield increase,
efficiency, improved market access, less water use, work time efficiency, etc.)
and visionary (less CO2, user satisfaction, work stress reduction, farmers'
livelihood, etc.). For the analysis, strategic and, in some cases, visionary
KPIs have been considered.
A well-coordinated distribution plan
for use case results and project learnings, backed up by customers and
consumers, guarantees a high degree of business exposure and a quicker learning
curve. As a result of IoF2020, data-driven farming, autonomous operations,
virtual food chains, and personalized nutrition for European citizens are now
feasible.
The pilot use cases demonstrated
solid results on IoT technologies; for example, on an average farm using IoT,
the yield rises by 3.75%, and energy costs drop 27 to 36 euros per hectare,
while water use for irrigation falls by 12%.
Based on the experts' suggestion,
the most suitable for analysis pilot cases in agri-food supply chain logistics
based on IoT technology was chosen. They were selected from three areas of
trials: Arable, Fruit/Vegetable, Beverage. According to experts, these are some
of the most important areas where the food supply chain logistics must be
effective and sustainable.
3.2.1.
The
internet of things and logistics in arable farming
3.2.1.1.
General
information of Traceability for Food and Feed Logistics use case No.1 (UC.1)
The implemented pilot project's main
objective is traceability of food and feed logistics. The use case has
developed a smart system that ensures adequate feed logistics and maximum
traceability of the distribution process. It incorporates a revolutionary method
that secures and authenticates the transportation of the goods in the agri-food
chain, ensuring that feed and food are shipped without fear of losing quality
and being contaminated. For the capability to control and monitor such a
process in a healthy and traceable procedure for their goods before they leave
the factory, producers of animal feed and human food devote a significant
amount of time and money.
The use case has overtaken the task
to provide the system that can control the goods' transport and delivery to the
customer's silo or warehouse. It has provided an additional management system
to ensure that these items are shipped and distributed correctly. As a result, it highly eliminates the
possibility that products will be shipped to the incorrect storage or polluted
and spoliated and cause harm to the consumer.
An integrated IoT-based automatic
storage detection system can ensure that the proper merchandise is shipped, as
well as keeping track of its transportation and registration information. The
use case demonstrates that the whole procedure is entirely traceable, and the
possibility of pollution is reduced.
3.2.1.2.
The impact
made by the technology in the UC.1
In this case, logistics in the food
supply chain addresses essential food safety issues and sustainability
requirements while increasing productivity and significantly rising user
satisfaction. The target group of the users was animal feed and bulk-goods
buyers. Nevertheless, the use case has targeted farms, consumers, supply chain
managers, warehouse/silo owners directly.
The increase in consumer trust in
food delivery and the availability of sufficient knowledge to make food choices
reflect consumer satisfaction. This data was structured, analyzed, and shared
with customers and other stakeholders.
Consumer trust is one of the crucial
factors in the food supply chain, so the IoT technologies in the use case were
projected to solve that. Consumer confidence in food on the market can be
strengthened, and this particular use case with the application of the IoT tool
has proved this.
3.2.1.3.
Supply
chain management in the UC.1
This particular use case has an
obvious supply chain process, which needs to be improved in management. The
crucial role here plays the relations with clients, strategic supplier
partnerships, and of course, the sharing of quality information.
The supply chain starts at the
silos/warehouses level and continues to the end-users. In between, some
processes could affect the final delivery result. Controlling and monitoring
such processes as trailer equipment and loading procedure, silo device, and the
unloading procedure is essential.
The possibility to share accurate
information with drivers, logistics managers, consumers – creates added value.
Operating such data brings different value propositions to different
stakeholders. For example, a farmer gets the transparent process, which
requires less paperwork and is equipped with online monitoring and digital
signature. It helps with the easy delivery of the right food to the right animal.
The transport manager enjoys less
paperwork and holds data on which exact quality bulk-goods are being delivered,
and tracks the trailer's exact location. For the driver of the trailer, the
automatization means reliability in the process and less human error, and on
such times as COVID-19, it makes a human contact-free process.
The measurable value created for the
customer: significant reduction of the risk of wrong warehouse or silo delivery
up to 90%, which helps maintain good quality relations with the clients.
Overall the logistics controlled by such a system become leaner in management
processes.
3.2.1.4.
Logistics
food supply chain challenges solved in the UC.1
The use case significantly
contributes to solving logistics' main challenges in the agri-food sector. The
implemented system tends to reduce the risk of animal feed contamination up to
20% and reduce human food contamination up to 22 %.
When the food during the handling
and transportation gets polluted, it increases food waste. In many cases, the
cleaning processes can be applied, nor is it possible to clean to the point
that it would gain previous quality back. So, the reduction of waste by
contamination is also an important value proposition created by the use case.
Simultaneously, increased security of bulks goods delivery is observed, which
lowers the lack of trust in the whole supply chain.
The food supply chain stakeholders
are provided with the possibility to trace the food and its quality up and down
the supply chain. Improved traceability up to 25 % is
expected using the system.
3.2.1.5.
Measured
effectiveness of the food supply chain in the UC.1
Performance and the impact of the
use case overall consists of all the value propositions which arise from it:
reduce risk of animal and human feed contamination, reduce waste by
contamination, improve traceability, increase the security of bulks goods
delivery. Measuring the effectiveness, it is important to underline the
reduction of recovery costs and reduce additional transport compared to the usual
logistic process. Moreover, the increase of user satisfaction using IoT systems
on silo devices is 7.9 (on the scale from 0(not satisfied) to 10 (extremely
satisfied)) and on trailer equipment 7.65 (on the scale from 0(not satisfied)
to 10 (extremely satisfied)).
Real-time data distribution and
tracking of all trailers, secure delivery procedures via traceability from the factory
to customer, accurate monitoring of the discharging process, direct warning in
the event of anomalies during deliveries, data collection for analysis and
prevention, and enhanced food safety all contribute to a new and easily
measurable value in the food supply chain.
Overall, the use case demonstrates
improvement in the business system's performance, rising user satisfaction, and
service quality. Furthermore, it reduces the cost of
recovery and transport.
3.2.2. The internet of things and logistics
in fruit supply chain
3.2.2.1.
General
information of Intelligent Fruit Logistics use case No.2 (UC.2)
The IoT-based tool enables
traceability of trays, anti-theft functionality, and temperature monitoring.
The system connects different parts of the fruit supply logistics: the farm
production, processing industry, transport, and finally retailer and
end-consumer.
Since the fruits and vegetables are
perishable, returnable transport items (RTI) are essential in bringing products
to the market. Millions of different kinds of RTIs are used daily, both in and
outside the supply chain. These stakeholders feel an urgent need to remove
inefficiencies to assure product quality and security while protecting company
assets.
3.2.2.2.
The impact
made by the technology in the UC.2
It was discovered that the method
could go beyond simply being a monitoring and tracking system. It can also
collect data, store it, and retrieve when needed. The amount of collected data
can be vast and overwhelming in detail. However, the system can quickly analyze
complex value chains or commodity flows and deliver the output simply and
understandably.
As a result, by relieving pressure
on supply chains or commodity flows, the approach positively impacts sensitive
market situations. Customers can receive a single project-based implementation
and end-user training to help them use the innovative trays independently.
Customers and the entire supply chain need to know where those assets are at
any given time. It is crucial to consider the number of RTIs required during
peak harvesting seasons versus the number required during the quieter winter
months.
Using closed scenarios and targeted
data provides a more precise and informative analysis and evaluation. So IoT
technology contributes to gathering the big data that was missed out and
analyzing it and provides results that can contribute to optimizing everyday
business planning processes.
3.2.2.3.
Supply
chain management in the UC.2
The system enables players to see
issues across the supply chain by providing information on bottlenecks, thereby
facilitating pinpointing opportunities for expansion, developing new processes,
analyzing trends, and increasing the supply of raw materials efficiency. So,
the quality information and its analysis are making a big difference for the
stakeholders.
All along the line, there is a
tremendous potential for increasing management effectiveness of the supply
chain and finding bottlenecks or any other problems at an early stage, which
attributes to maintaining the best possible partnerships with suppliers and
clients and creating new ones based on efficient management of processes.
3.2.2.4.
Logistics
food supply chain challenges solved by the UC.2
RTI flow lacks transparency and
cannot be fully tracked by the service provider. At the same time, all value
chain stakeholders cannot experience optimal customer support, which leads to a
lack of trust and inefficiency.
The UC.2 shows that the market needs
to adjust very quickly to rising demand in the supply chain, and every
stakeholder must be highly adaptable to respond to it. The analysis of big data
helps not only solve the existing challenges but what is very important – helps
to predict the upcoming pressure on the food supply chain.
When consumer needs and expectations
have been estimated, every end-user is assured of the expected supply. The
process becomes efficient, and the sustainability increases significantly.
The system assesses the freshness of
shipped goods such as fruits, and eventually, it can be adapted for the
shipment of vegetables. This means a significant reduction of spoilage and
contribution to preventing food waste.
3.2.2.5.
Measured
effectiveness of the food supply chain in the UC.2
The real-time product monitoring
brings the service quality to the next level—the pool efficiency increases by
25%. The high-security level for distribution is increased by 15%.
Food quality and traceability are
also some of the main achievements in this use case. Improved traceability
infrastructure by 50% strongly contributes to preserving product quality and
increasing the supply chain system's performance.
By improving the logistics and
packaging, the use case achieved an increase of food safety by 5%, reducing the
food waste by 5 %. Moreover, the service quality was raised by the quicker
reaction time on real-time data, which improves by 5%.
The production costs lowered – the
RTI loss rate goes down to -5.5%, and the recovery rate goes up by 80%.
3.2.3.
The internet
of things and logistics in manufactured food - beverages supply chain
3.2.3.1.
General
information on the Beverage Integrity Tracking use case No.3 (UC.3)
It prevents variability in wine
quality during transportation, wine production, and management, which is
supported by smart sensors that monitor everything from temperature, humidity,
and shock. Tracking and monitoring go from wine producer to consumer based on
the IoT system.
The logistics path from manufacturer
to customer is a process that can degrade beverage quality. This use case aims
to eliminate such risks by equipping the beverage supply chain stakeholders
with extensive data analysis of the distribution process.
An automated system tracks the
entire wine and beverage distribution chain to prevent harm from
integrity-related issues during shipping and storage. Also, it develops a
direct relationship between producers and retailers, and builds a vast database
to schedule secure shipments, enabling new and customized IoT-based security
solutions. The use case provides software as a service to monitor
distribution-related variables, including temperature and humidity, to help
control beverage quality.
3.2.3.2.
The impact
made by the technology in the UC.3
Multi-actor data analytics in the
beverage industry is still an empty field. Integrity management systems have
not yet been established in the same depth in this supply chain as they have in
other industries. The main reason behind that is the complexity and too many
stakeholders involved in the process, making it difficult to control. The
provided system disrupted the supply chain with the provided capabilities to
control and acquire the data.
The system which monitors beverage
delivery routes and keeps a data record of every transaction brings much more
transparency to the stakeholders and enables them to take full advantage of the
features brought by data analytics. Data provides monitored locations and
changes of the beverage containers and expands the information with environment
details contained in those boxes. For the consumers becomes possible to track
their wine bottle back to the winery. It gives visibility and traceability to
the beverage supply chain.
3.2.3.3.
Supply
chain management of the UC.3
The system aims to gather much
information about temperature during shipping, a shock that causes bottle
ruptures, closure leakage, and the percentage of bottles with defects like cork
taint, label damage, pressure loss, and oxidation.
The database can also provide
information on customer satisfaction, marketing problems, and communication
effectiveness.
This data collection is beneficial
for the wine and beverage industry, and it is now available to many value chain
actors for the first time.
Such a supply chain management,
providing quality information strengthens the relations with clients and brings
a significant value for the strategic partnerships. Seeing all of the parts and
pieces of the supply chain, the link is made with all the stakeholders.
This is particularly important in
closing the gap between wineries and wine shops since their connection
previously was the importers' responsibility.
3.2.3.4.
Logistics
food supply chain challenges solved by the UC.3
When delicate products, such as food
or drinks, enter the supply chain, the environment with the various parameters
must be strictly monitored of the proper temperature and freshness to keep the
quality from the beginning point to the end-consumer.
Different stakeholders, such as
producers, carriers, dealers, retailers, and insurance firms, are involved in
the beverage logistics industry. Stakeholders have identified the practical
issues of the everyday beverage supply processes and an impact on the system to
validate the integrity of logistics. With so many stakeholders taking part in
the management of the logistics in order to improve the service, many
bottlenecks must be solved.
UC.3 brings lean practices into the
beverage supply chain, controlling so many processes and stakeholders, it is
usually very complex and complicated. In this case, used by operators, is first
and foremost a tool that visually presents the documented beverage journey and
serves as evidence of delivery at the goods' final destination.
Finally, it offers valuable information
to help retailers understand market demands and sell the product.
The beverage supply chain
experiences increased sustainability. Traceability of the beverage from the
first stop to the consumer brings transparency and ensures quality products.
3.2.3.5.
Measured
effectiveness of the food supply chain in the UC.3
The UC.3 made a breakthrough in cost
reduction and monitoring of wine and beverage quality during transport. This
directly led to the improvement of the distribution conditions and an increase in
the logistics' overall satisfaction. The satisfaction index (usefulness of the
tool from 1(not useful) – 5 (very useful)) 4 was achieved.
Improvement in transport quality and
reduction of product damages enabled to achieve the beverage supply chain's efficiency.
Product returned due to damage claim was measured 5 (asked if data was useful
to reduce complaints of the damage and improve product handling from 1(not
useful) – 5 (very useful).
An increase in client satisfaction
is 4 (asked if the tool is useful in helping to have a stronger relationship
with the client from 1(not useful) – 5 (very useful)).
Connecting producers and retailers,
a crucial factor which became possible due to supply chain visibility is 4
(asked if chain visibility improved with the provided data from 1(not improved)
– 5 (significantly improved)).
The system helped increase IoT user
satisfaction due to improved transportation, reduced GHG emission, and reduced
shipping costs.
4.
RESULTS AND DISCUSSION
As the analysis of the pilot use
cases implemented in the food supply chain revealed, the Internet of Things
technology is revolutionizing logistics.
The mass connectivity of parcels to
the end-consumer is enabling supply chain and logistics stakeholders to conduct
real-time tracking and management decisions that increase operating
performance, asset monitoring, and at the same time keeping the quality of the
products and contributing to the Green Deal goals, such as reducing food waste
and GHG emissions.
Table No.1 presents accumulated
analysis results from all three uses cases performance indicators connected to
the IoT technology.
Table 1: Summary of the results
collected during the research and from the IOF2020 project documentation
|
Di-men-sion
|
Categories
|
Indicators
|
Technology
impact*
|
Food
supply chain management**
|
Challenges
solved***
|
Use
case
|
|
Economic
|
Productivity
increase
|
Preserve product
quality
|
Yes
|
Yes
|
Yes
|
UC.2, UC.3
|
|
Reduction of loss
rate
|
Yes
|
Yes
|
Yes
|
UC.2
|
|
Recovery rate
increase
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2
|
|
Increase security of bulks-goods delivery
|
Yes
|
Yes
|
Yes
|
UC.1
|
|
Efficiency
improvement
|
Reduced product return due to damage claim
|
Yes
|
Yes
|
Yes
|
UC.3
|
|
Real time product monitoring
|
Yes
|
Yes
|
Yes
|
UC.2
|
|
Increased reusability of transport
|
Yes
|
Yes
|
Yes
|
UC.2
|
|
Improve Logistics
and Packaging
|
Yes
|
Yes
|
Yes
|
UC.2
|
|
Cost reduction
|
Production costs
reduction
|
Yes
|
N/A
|
Yes
|
UC.1, UC.2,
UC.3
|
|
Reduce additional
transport
|
Yes
|
Yes
|
Yes
|
UC.1
|
|
Reduce shipping
costs
|
Yes
|
Yes
|
N/A
|
UC.3
|
|
Reduce recovery
costs
|
Yes
|
Yes
|
N/A
|
UC.1
|
|
Quality
improvement
|
Improve
distribution conditions
|
Yes
|
Yes
|
Yes
|
UC.3
|
|
Increase transport
quality
|
Yes
|
Yes
|
Yes
|
UC.3
|
|
Reduce risk of animal food contamination
|
Yes
|
N/A
|
Yes
|
UC.1
|
|
Reduce risk of human food contamination
|
Yes
|
N/A
|
Yes
|
UC.1
|
|
Environmental
|
Reduced waste
|
Reduce product
damages
|
Yes
|
Yes
|
Yes
|
UC.3
|
|
Reduce food waste
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2,
UC.3
|
|
Reduce waste by
contamination
|
N/A
|
Yes
|
Yes
|
UC.1
|
|
Lower emissions
|
Reduce GHG
emission
|
N/A
|
N/A
|
Yes
|
UC.1, UC,2 UC.3
|
|
Resource use
efficiency
|
Lower paper
documentation use
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2,
UC.3
|
|
Facilitation of
equipment
|
Yes
|
Yes
|
Yes
|
UC.2
|
|
Social
|
Transparency of
food chain
|
Increased supply chain visibility and traceability
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2, UC.3
|
|
More data
available
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2, UC.3
|
|
Trust on the quality of food products
|
N/A
|
Yes
|
Yes
|
UC.1, UC.2, UC.3
|
|
User satisfaction
|
Increase IoT user
satisfaction
|
Yes
|
Yes
|
Yes
|
UC.1, UC.2, UC.3
|
|
Satisfaction index
|
N/A
|
Yes
|
Yes
|
UC.3
|
|
User satisfaction
|
N/A
|
Yes
|
Yes
|
UC.1
|
|
Increase client
satisfaction
|
N/A
|
Yes
|
Yes
|
UC.3
|
|
Connect
producers-retailers
|
Yes
|
Yes
|
Yes
|
UC.3
|
*productivity, revenue growth, employment, investment;
**strategic suppliers partnership, relations with
clients, sharing quality information, operational lean practices;
***quality products, traceability, contamination, lack of
trust, increased sustainability
Source: Created by authors
4.1.
Consolidating a Fragmented
Infrastructure – raising effectiveness
In notoriously complex food supply chains with the vast number of
stakeholders and tons of different levels of processes turned visibility task
into an unnecessarily long and drawn-out process. The process that hardly
anyone could take up the challenge to solve. Thousands of supply chain puzzle
pieces would never fit together and, in many cases, fall apart. Or so it was
until digital technologies stepped in.
As shown by the use cases achieved goals, IoT has simplified supply network
management and streamlined operations and reduced operational expenses,
increased quality of transportation, and connected all the players along the
chain. Data was the missing puzzle piece to set everything in order. The pilot
cases reduced the number of supply chain management components.
As a result, operational costs are
being reduced even while food and beverage production capacity is growing.
Digitalization experts stated that IoT technology is expected to significantly
impact logistics in the food supply chain by reducing operational costs by at
least 50 percent over the next five years and helping double the shipping
amounts.
IoT technology is
driving the agri-food sector towards greater collaboration. The potential of
food supply chains as full-scale collaborative ecosystems is vast. The digitalized distribution system
transforms the food supply chain into secured, based on providing outstanding
and precise data in a highly scalable manner for every player and helping the
emergence of innovative business models reliant on big data. The knowledge
obtained from such a single network enables stakeholders to improve supply
chain productivity.
4.2.
Improving Security, Transparency,
and Traceability
As described by the experts and based on the use case findings, food
traceability and transparency of the whole food supply chain are among the most
significant issues in the agri-food sector. The traceability in food supply
chain logistics is referred to the availability to collect the data and ensure
the quality of the final product. It means that data needs to be collected,
analyzed, and deliver correct information about the food, feed, food
manufacturing process at all stages of the food supply chain. This allows the
product to be certified, for example, as an organic or checked for quality and
safety control, also traced through all the food supply chain.
The amount of data that systems can gather and manage is unforeseen. A
logistics manager can access the dashboard at any time to get real-time updates
on the exact location of an asset, its distance, and its expected time of
arrival based on actual travel conditions. These real-time warnings help
players in the food supply chain to stay flexible and adapt quickly through a
dynamic transportation network. Delays in the supply chain can often cause
significant losses, but logistic managers acquire the knowledge they need to
mobilize quickly. Due to IoT technology, usually, an expensive disturbance
transforms into a temporary issue.
If any food and beverage product require special handling or temperature
control, geolocation capabilities can be coupled with transportation conditions
monitoring for added value. The manager is also alerted if an asset falls
outside a predetermined temperature range or receives unexpected vibrations or
shocks.
As interconnectivity is becoming the logistics sector's practice, the
industry must recognize the value of digital security. Connected systems help
monitor all objects, asset
tracking logistics applications help monitor deliveries, warn the management team if anything is missing, increase the
transparency of who visits the warehouses at any given time, and more.
Since anything from rising temperatures in containers to security
breaches can be tracked remotely, IoT technology reduces the need for physical
supply chain supervision. The Internet of Things is changing security by
allowing for more open supply chain solutions. On the other hand, technology is
widening the digital space and increasing the need for data protection.
4.3.
Creating a Greener Supply Chain
With the ambitious goals being set up in Green Deal, IoT technology comes
as one tool to help achieve them.
As presented by the use cases, there is no doubt that the demand for
environmentally sustainable logistics in the food value chain is expanding and
will grow in the coming years. That
means environmental concerns should be at the core of every food supply chain
stakeholder plan. Although there is no one solution to the climate problem, the
Internet of Things helps reduce the agri-food industry's environmental
footprint by making the logistics processes smarter.
Food chain logistics stakeholders can use data collection, analysis, and
machine learning to forecast traffic flow and reduce the number of unused
trailers, boxes, etc., on the road at any given time. This strategy not only
reduces the cost it also lowers total carbon emissions.
The transparency
provided by IoT technologies significantly aids in the reduction of food waste
and goods loss and damage. This is particularly valid for perishable products
such as fruits, vegetables, etc. The systems help for better cargo control and
establish leaner, more effective food supply chain logistics processes as a
whole.
Making the processes
automated, controlled, and visible, a new path is created to a leaner and
greener food supply chain. The transformational potential for the IoT in the
logistics food supply chain, making it sustainable, is undeniable.
5.
CONCLUSIONS AND RECOMMENDATIONS
IoT-connected sensors and systems in
food and beverage supply chain logistics offer real-time visibility and
data-driven analytics, allowing stakeholders to improve performance, cut
operating costs, conduct predictive maintenance to avoid downtime, and even
decrease energy usage or reduce negative environmental impacts.
With the responsibility on the
logistics in the agri-food sector to fulfill two-day, overnight, or even
same-day service obligations and at the same time to trace the origin and keep
the quality of the products unaltered, the Internet of Things is a crucial
component in assisting players in meeting the demands of today's fast-paced,
global economy.
The pilot use cases in the agri-food
sector have demonstrated many ways the IoT technologies can transform food
supply chain logistics from the ground.
Management of the supply chain
processes is better regulated, and as a result, production risks are reduced.
The ability to predict performance levels accounts for improved product
delivery planning.
A vast number of the data is being
collected by smart sensors using IoT technologies. This information can be used
to monitor all stakeholders' overall efficiency in agri-food supply chains and
their employee results, equipment quality, and more.
Agri-food industry logistics cost
management and significant food waste reduction are possible due to increased
control over the supply chains. Being able to see any disruptions in traffic
flow or quality or risks of the contamination in the goods, stakeholders can
take measures to lower or avoid losses.
IoT through automation and machine
learning helps increase efficiency down the supply chain. Using smart devices comes
the opportunity to automate multiple processes and significantly lower the
physical supervision.
Keeping the product quality and at
the same time not lowering the volumes of production becomes a usual process.
Better control over the logistics process helps maintain higher standards for
food and beverage quality and the production growth capacity through the whole
food and beverage supply chain.
A result of applying the Internet of
Things technologies to the food and beverage supply chain logistics processes
leads to higher revenue for all the stakeholders.
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INCREASING THE EFFECTIVENESS OF FOOD SUPPLY
CHAIN LOGISTICS THROUGH DIGITAL TRANSFORMATION