How Good IS Your Traceability?

 

According to the CDC, the E. coli-affected lettuce has been linked to the Yuma, Arizona, growing region, but so far no individual grower, supplier, distributor, or brand has been identified. The CDC advises everybody to avoid buying or eating romaine lettuce from a grocery store or restaurant unless the romaine is known to not be from the Yuma, Arizona, growing region. Orlando Sentinel April 24, 2018

Same Old Thing

Years ago one of my colleagues and I at John Deere FoodOrigins attended several fresh produce and food processor trade shows in an effort to poll companies in that business sector concerning their capabilities to trace and track their products in the supply chain. The answer from each of these agri-food entities was the same – WE HAVE IT!

Of course they have it but then the follow up question was just how good their traceability was? It is not a binary thing, it is a level of sophistication, rigor and procedural issue. How does one measure their ability to trace backward or track forward in the chain? Since there are no standards once one delivers the answer to the first question then there is no need for any follow up.

Not So Great

So how does an entire variety of lettuce from THE primary growing region for leafy greens this time of year have a Schwarzenegger-like “Total Recall”? I would venture to say that while there are only a handful of companies growing, buying, packing and packaging Romain Lettuce not one of them could tell the market – it’s not mine and I can prove it.

Food products that are comingled at a plant or in a bin or elevator, like grain, can be difficult to identify the exact origin of those finished goods. That being said one should have the wherewithal to isolate a contaminate if it can be isolated at the last link in the chain prior to being ingested by some unfortunate consumer.

It Ain't Easy

Traceability is hard. It requires a set of protocols that are both tedious and onerous. Yet the importance of such practices are evident when the entire country is throwing out their salad makings just in case it is tainted with E. Coli. The cost to the industry must be enormous not just in this single event but for some time to come as consumers may shy away from all lettuce products for some period of time.

Contrary to popular beliefs this is not about bar codes and RFID technologies. Putting a sticker on the box, bag or bin does not solve the problem. It may help streamline the process but it does not replace it.

Measure to Manage Requires Standards

My guess is that there are a number of CEOs of food processing companies that might be asking the question that we asked many years ago – “How good is our traceability?” Without a set of standards for measuring it the answer might be that most people just don’t know, oh, and there are no standards.

World Agri-Tech Innovation Summit Musings

Who's Who Agri  Food Tech

Last week I attended this event in San Francisco highlighting the latest advancements in agri-food technology hosted by Rethink. Over 900 people representing some 450 companies and institutions participated in this global gathering of scientists, engineers, financiers, marketing/sales people, entrepreneurs, public service/government representatives, academicians as well as consultants like myself.

I have participated in this event in the past and certainly this year exceeded my expectations as to what may have changed in this “fast-paced” market sector. Note the quotes here as while the rate of adoption of new technologies may not have increased significantly the technologists are rapidly developing many solutions that are certain game changers as the industry seeks to optimize or, in some cases, replace the agri-food value chain entirely in the future.

Game Changers

How to sum up the take aways from this two day meeting? Let me just say that within the various categories of ag and food tech (Robotics, Gene Editing – no longer GMO, Biological Microbial Molecular Enhancers, IoT Sensors Controllers, Information Technology Imagery Analytics) there are some exciting new advancements that can clearly change the way that we produce food and deliver it to consumers sustainably.

The highlights for me were in the rapid development of disease or drought resistant varieties using what are referred to as “crispers” (CRISPR, CASP) that have the potential to insure that the next Irish potato blight famine never happens again. More importantly, scientists are developing what I would refer to as bio/microbial enhancers that drastically reduce the need for NPK simply by optimizing the plant itself. Improving the overall vigor of the plant also minimizes the need for pesticides, too.

We were introduced to new harvesting equipment that can literally handle the most difficult and delicate of all crops, strawberries, and also be adapted for a number of other fruit and vegetable labor intensive crops. There were people who are looking at the issue of creating new food products that are nutritionally healthy AND better tasting. It is not just about improving yields anymore.

Rethinking the Value Chain

One company is developing local fully automated greenhouses that can deliver food to local grocers in half the time and one tenth the distances traveled by the majority of our produce today. Think the Central and Salinas Valleys next door to Trader Joes in Chicago and New York.

It's the Integration

Everyone is still trying to figure out the key to unlocking the mystery of getting to the middle of that bell curve for adoption. Growers and trusted advisors are being deluged with a lot of point solutions but very little in the way of fully integrated and open systems. Without these solutions growers will not move from data to information to knowledge to AI that quickly make accurate decisions for those producers.

Gorillas in Our Midst

The agribusiness landscape is changing as we were introduced to Corteva Agriscience, formally Dow DuPont Pioneer. The company will be opening up some opportunities in promoting new farm management information systems in a recent startup acquisition. How this unfolds we shall see.

Lest I forget. There is a new player coming to the dining room table via the farm. Amazon. More on that later.

Tech Driven vs Market Driven Companies

What is the best approach towards engaging the agri-food market with new products and services? Are you a developer of a new technology that seeks opportunities, aka problems that your latest creation solves? Or do you recognize this great void in the market that begs a solution you can surely fill by hiring a lot of geniuses?

Techies Rule

The “geeks” of the world, and I use this term endearingly, will tell you that the first method of market engagement is far superior to the MBA way. There are many companies that have had great success creating software, hardware, services, systems and devices and then finding the nail that fits their hammer. On the other hand the road to riches is littered with innovative technology that could not gain acceptance by potential customers with a very clear and well-defined need.

PowerPoints and Business Plans

Taking the business route might seem to be a more prudent way to succeed in the market. Unfortunately, the development of a detailed business plan does not insure that those “hockey stick” sales forecasts will be achieved. This is not to say that one shouldn’t have a plan but sometimes all of that market research, positioning, pricing, messaging, profiling and needs analysis may not be enough to get that startup across the finish line.

Examples of The Tech First Approach

Two companies, Iteris and Descartes Labs, have some very similar beginnings when it comes to launching their businesses. One introduced and subsequently proved the value of their technologies in other non ag market sectors with a bona fide solution to a well-defined problem. The other leveraged their public sector knowledge and technology for use in the forecasting of commodity yields. Each had their beginnings as a collection of some very smart people who had done the heavy lifting technically and found customers who, for the most part, recognized the ROI of those offerings very quickly.

Iteris

Iteris launched their business by solving the problems of logistics and traffic flow optimization for municipalities as well as for private industry. Understanding the science of big data analysis provided them with the wherewithal to leverage that knowledge into ag and food. The term they use is “informatics” or informed decision-making.

Descartes Labs

Descartes Labs was founded by a group of astrophysicists, cosmologists and big data analysts out of the prestigious Los Alamos National Laboratory who had a sense that their skills and knowledge would deliver value to a myriad of business inefficiencies that could be solved geospatially.

Innovative Technology + Business Plan + Capital + Leadership = Success

Let’s just say that with any one or two or even three of the above companies will not get to the equals goal.  It seems that by putting tech first and building a business around that might be the best path towards success. The smart money is on "the geeks".

Sales & Marketing and Vice Versa

How We View Ourselves is Who We Are

A friend and I have had a long running discussion about the way that many companies have departmentalized the functions of “sales and marketing”.

First of all it seems that many agri-food technology startups put them in the same box on the org chart. While it might seem logical due to a perceived inherent close relationship between the two, upon further inspection these distinct disciplines are as different as software development and accounting. Which begs the question why any organization would have IT coupled with accounting – which some do. But that is a different discussion entirely.

Looking at the functions of each one sees that while they are tasked with the ultimate goal of moving product or services to the intended market their methods for doing so are not in the least way related.

There is a Difference

Marketing, and I am going to simplify here, is all about product definition, perception, branding, pricing, positioning, messaging, promoting and all of that other stuff that goes into laying the foundation for the sales staff as a means to assist in the adoption process.

Sales is the act of converting a prospect into a customer by having those people or organizations exchange money for those products and services. OK. I have really oversimplified that one!

It is very difficult to have one without the other. Salespeople are not good marketers and we all know that marketers can be lousy salespeople. We need the unique expertise and talents of each in order to be successful in the agri-food technology market segment.

Carts and Horses

Secondly, a common error in establishing the department name is when companies assign the name as “Sales and Marketing”. Combining them is the first mistake but when we don’t lead with marketing in order to support sales and not the other way around we have missed a key step towards success. It may seem trivial but by transposing these activities we fail to recognize the true nature of the challenge in engaging the market.

In any business planning process one cannot possibly establish sales projections without conducting the necessary market research first. Market size, demographics, customer profiling, value propositions, pricing, SWAT analysis and all the other things that marketing provides the sales group are what position them for success.

This is not to say that there might be some overlap of sorts in a few of the functions of the two but for the most part there is a definitive line of demarcation that necessitates separate boxes on that organizational chart.

 

The Case for Case Studies

Why? Why not?

I get it. Documenting the value of one’s offerings is a lot of work. The challenges are many and most agri-food technologists are ill prepared to tackle the job of quantifying a return-on-investment for their products and services. It is not impossible, though, and those who go through the exercise will find that the results can help differentiate their offerings from those of their competitors.

 

The Hurdles

Customers are quick to provide those quick quotable quotes as to what they think about a product. Most marketing and sales folks may jot those words of endorsement down but when those innovative market leaders are pressed as to how it actually makes or saves them money the usual response is a little less specific. When questioned as to “how much” a product adds to the bottom line the answer is typically “not sure about that”.

One excuse might be that they are not open to sharing information about ROI because they don’t really want their vendor to know that they may have not priced their products in line with the value. Another reason is that they probably have not taken the time to calculate the actual return.

Denominate, Denominate, Denominate

Clients are usually open in disclosing their positive, and even negative, experiences when it comes to how well a tool of their trade might have performed. All too often in the excitement of hearing something positive the company representative just leaves it at that.

The key is to do what one old college professor used to say – “denominate, denominate, denominate”. That is ask the question that leads to the question that leads to the question as to “how does that REALLY help you?” Or when given a response from a customer it is important to ask the follow up question “why is THAT important?” and finally “can we go through the numbers on that topic?”.

Quantification

Some products are easier in assessing real value. Take robotics, for example. Replacing a crew of workers with a mechanized weeding and thinning machine can be denominated fairly simply. However, one still has the issue of quality of the work completed with humans vs the consistency of the equipment.

Biotech savings, yield and quality are pretty straight forwards, too. Roundup Ready corn and soybeans demonstrated fairly easily the elimination of costs of production, yield increases and decreases in defects.

Information systems present the biggest challenge in determining ROI. Saving an hour here or there may mean that more time can be spent engaging customers and prospects to determine their needs for more products and services. How do you assess that? Or worse still what is the value of better information overall? Better informed decisions? Try measuring that.

Roll Up the Sleeves

It takes effort to get to the dollars associated with efficiency gains or the increase in yield and/or quality. That being said – it can be done and it can be well worth the effort. Without this information companies might be left with "take my word for it".

Business Inertia and Technology

Overcoming the Lack of Momentum

 

Drive Me Crazy

We see it in our everyday lives each and every single day. How many of you drive a different way to work occasionally just to experience something new or order that caramel macchiato frappuccino instead of your usual regular drip with room at your favorite coffee establishment? Never?

Yet when it comes to business and change those of us who promote new technology to prospective customers just become frustrated over the obvious need to do something different and improve – if nothing else simply because it is the right thing to do.

People are Businesses – Businesses are People

It seems that in the corporate world more decisions should be driven by economics rather than intuition and gut instinct. If this were the case then they would operate at an efficiency level that would be accelerating at an alarming rate.

The reality is that this is not reality so we collectively plod along in our safe and familiar worlds rarely venturing into anything that remotely resembles the unknown. This is never truer than in the adoption of new technologies.

Continuous Improvement without Change?

 

LEAN, Six Sigma and Kaizen (kai “change” zen “good”) are all part of our corporate cultures. Imbedded and ingrained in our companies’ DNA is this drive to always look for better ways to do our jobs. Or is it?

It appears that this Yen and Yang, push and pull exercise that we encounter in business with these improvement programs is what, ultimately, gives us heartburn and results in inertia. It somewhat reminds me of the old Chinese finger trap. Insert your two index fingers into the tube and now try pulling them apart. Result? Inertia.

The Shameless Plug for Consultants

Outsiders see what is not so blatantly evident to those people who have held the same or a similar job for several decades. If you can remember when you were first hired you probably thought to yourself (you wouldn’t want to rock the boat on your first days) “why do they do it like that?” Over time you become accustomed to the way things work and become part of the problem.

I have heard it all before; “Consultants are people who look at YOUR watch and tell you what time it is.” “Consultants are people to tell you where you need to go but can’t really describe how you should go about getting there.”

Here is the thing. Many of them will tell you the truth. The good ones are trying to work themselves out of a job rather than work their way into the next one. Bringing someone in to tell you what is broken can be a path towards continuous improvement. Hey, I tried one of those sweet dessert drinks once. It was terrible. But at least I tried it.

 

Decline in Ag and Food Tech Investment



AgFunderNews just released their annual report
on ag and food technology funding for 2016. Not surprisingly many in the industry are finding that capital investments have declined significantly from the previous year. The numbers tell us that there are 30% fewer dollars being directed to this market sector overall. On a high note the number of startups was up 10% last year. More companies entered the fray in the hopes of grabbing that big brass ring.

 

Hit the Reset Button

When asked as to the “why” for this sharp decline in investments AgFunder CEO Rob Leclerc stated, "Investors are becoming more aware of the challenges in distribution and adoption rates. New investors in this space didn't realize how hard distribution might be.  It's raising risk, it's seeing companies not growing as fast as they'd like them to grow, and that's a real challenge," he said. https://agfunder.com/

 

The Influencers Hold the Cards

So two things here require some further discussion. Adoption rates and distribution. At first glance one might be inclined to say that without one you cannot have the other. He is right in separating these two challenges in that distribution is driven by the gate keepers of technology for growers, or as we commonly refer to them, “trusted advisors”.

 

 The adoption rate in agriculture is heavily influenced by those ag retailers and crop consultants who understand the value to their customers in utilizing technology. So they have to invest and take a risk in the hope that their growers will pay for those additional services. Farm supply companies know that in order to compete for a growers “share of wallet” they will need to add more value to their relationships with those farmers.

 

No Such Thing as a Free Lunch

While these companies understand the need to offer technology services, or any services for that matter, they are also well aware of the risk involved in not being able to charge the customer a fair price for them. It may be that in order to prove the value in using these new tools they may just have to offer them at a discounted rate or even worse - give them away for free.

 

Back to the Drawing Board

Investor are finding that growers have not been convinced of the value, the retailers - not wanting to lose money on their service offerings - are hesitant to buy and the tech companies can’t give it away because they told their investors that they would provide a significant return on their capital contributions in a relatively short period of time. Thank heavens for the early adopter retailers who are trying to establish an advantage over their competitors!

 

There are ways to crack this nut. It might just require some new strategies in order to do so.