The rise and fall of the "middleman": intentional intermediation within the supply chain. Part 2

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This is the second part of the article "The rise and fall of the "middleman" - intentional intermediation within the supply chain". The first part is available here.

In the second part of her article for the NX-FOOD blog, food innovator and entrepreneur Júlia Dalmadi explains the concept of collaborative transparency and lists examples of innovative services and initiatives in the areas of supply chain, transportation and food delivery.

Collaborative transparency

With the globalization of the food supply chain, the risk of contamination has risen. E. coli outbreaks, horse meat scandals, and other food controversies made consumers concerned about poor food handling, bacteria contamination. They want to know more about farming practices and the freshness of their food. Technology and connectivity have advanced customers’ expectations for tracking their food from farm to fork.

Food companies cannot solely rely on brand recognition and marketing, they need to develop long-term relationships with current customers and acquire new ones by offering complete product transparency. The study conducted by Label Insight shows that 94% of the consumers expect brands and manufacturers to provide transparent information about the ingredients and the preparation of their food.

Traceability, transparency, and control in the current system, where ingredients can bounce along a chain from farmer to manufacturer to distributor to retailer, sometimes with additional steps in between, is often a nearly impossible task. Working directly with farmers provides greater clarity on when an item is being harvested, from what kind of soil, by whom, how it’s cleaned and packaged and delivered. It also provides an opportunity for collaboration.

Supply chain collaboration of small and medium enterprises can ensure faster, reliable and more cost-efficient distribution of products and increase value for the consumer. Instead of classic commercial relationship, the collaborators have relational exchange and benefit in all supply chain activities (faster procurement, knowledge sharing, more flexible distribution, more accurate forecast, and improved product availability).

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On-the-ground innovations

Business models that leave more value at origin by improving growing techniques, strengthening the local suppliers’ cluster and paying for true cost can truly shift the balance in value chains.

Distribution platforms can create immediate connections between farmers and end consumers by removing the unnecessary “middleman” from the equation.

100km Foods (Canada) has been acting as a “translator” between farmers of Ontario and chefs of Toronto for the last 10 years. While chefs didn't know what happens with the ingredients before they arrived at the kitchen, farmers did not understand that the processing of different sized potatoes, for example, can result in longer preparation times and higher labour costs.

The company developed a break-even analysis tool for food hubs that calculates the price of products that need to be picked up from the farm and sold by the hub in order to break even. It helps to decide which farms should be on the truck driver’s route during the specific times of the year indicating the minimum total route order.

Chef orders are placed based on a weekly availability list prepared by the farmers. Items are already sold by the time they are picked up from the farms. Thanks to the 24h delivery system they work with very little inventory. Besides some non-perishables and staples, everything else is literally in the ground on Monday and delivered on Tuesday.

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Farmidable (Spain) created a human-centred platform which directly connects local producers with end consumers. Their online surface allows farmers to showcase their products to a wider range of customers than what they could reach on their own. On the other hand, they literally bring fresh seasonal ingredients to the consumers by allowing them to pick up their order at so-called FarmiHubs which are located in places like schools that one might visit on a daily basis. The model has a high emphasis on environmental sustainability. They use eco-vehicles for transportation and work with the least possible food miles by locating the FarmiHubs close to the food origin and implementing in the end consumers’ daily routine.

Ninjacart (India) started as a hyperlocal B2B grocery delivery service in 2015. They track the consumption patterns of each partner and plug the information back to the farms. Based on the data collected throughout the years Ninjacart helped farmers to understand what to grow and when. The data is also used for planning the logistics and ensure that no truck is running empty. Their plug-and-play setup enables farmers to sign on and start selling within a few days. The startup recently started to launch company-owned and franchised B2C outlets to diversify they offer. Their big data will help the stores in forecasting and managing their inventory, cash flow, and customer demand.

Loop from Digital Green (India) is an aggregation and transportation initiative helping smallholder farmers to access local markets. Their extension agents have been helping farmers with logistics to reach unexploited markets where they managed to negotiate commision discounts thanks to the delivered volume. The producers are paid faster through their e-receipt system and the collected transaction data allows them to predict price trends and choose the most profitable destinations. The overall results are costs and time saved what the farmers can invest in other duties than transportation.

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Big distributors can also play an important role in empowering small producers.

Nurtured with care (Bulgaria) Since 2017 METRO Bulgaria provides 200 smallholder farmers with packaging and logistic support, consultancy to recover the production of indigenous seeds and to develop financial models for EU fund program access. They buy directly from the farmers who deliver to 11 METRO Cash & Carry stores from their fields. Thanks to the program local farmers have greater sales opportunities with fair conditions, METRO has regional fresh fruit & vegetable offer and restaurants have easy access to local produce for a competitive price.

Traceability and transparency finally became buzzwords in the food industry as well.

Multiple projects have been trying to overcome the inefficiency of the paper-based recording in our food system. Crowdbutching is an online platform for sustainable, fair and traceable meat sourcing. Animals are only being slaughtered when all of the meat is sold and the customers can follow the whole process from the farm till delivery. aims to create a fully transparent shared record system for all participants of the food supply chain. Their first pilot was the ‘Internet of Tomatoes’. In partnership with Sweetgreen, a farm-to-counter salad franchise, they proved that blockchain can help farmers to improve their growing practices, speed up the distribution and provide consumers with a lot more information “beyond the labels”.     

The above examples show that supply chain operations in the food sector are currently under a transformation process, namely, they are switching from large-scale commodity handling activities to transparent value-added operations that fulfil the consumers’ preferences. In this transformation, we, “demanders”, were handed the power and responsibility of driving the modern food system.

About the author

About Júlia Dalmadi (photo-julia-dalmadi_new.jpg)

Júlia Dalmadi

Júlia Dalmadi is a food entrepreneur, soon-to-be food innovator and food tech expert. Having completed her education in International Hospitality, Júlia has worked in aviation and hotel revenue management. Later she became a product manager at SnapShot the company introducing game-changing tech solutions in the hotel industry. Since 2015 she has been also managing her artisan food business, Pelmeni Slam in Berlin.

Currently, Júlia is pursuing her Master degree in Food Innovation in Italy and looking for the best way to combine her expertise in tech and food.

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