Seven technologies shaping the food supply chain (which are not blockchain)
The food supply chain is undergoing a silent revolution. If you do not work in close contact with this sector, you might be unaware of what is happening in the wholesaler industry but new technologies are completely reshaping this vital business which accounts for nearly £30Bn in the UK.
Here is an overview of what these technologies are and how they will soon disrupt the way our food reaches our plates in the UK.
- Driverless lorries
The profession of lorry driver, tedious for many and requiring hours of constant concentration, is near to extinction. At the same time, volume of deliveries is growing steadily at 8% per year*, pushing up driver overhead cost to be near to 45% of the total road freight costs.
Driverless lorries could offer an obvious solution to this manpower shortage, in particular on motorways where vehicles follow a regular trajectory for periods of time.
Things get more complicated when driverless lorries enter urban environments: the presence of pedestrians and the task of handling deliveries create a layer of complexity which requires the presence of a human. We might then see a hybrid system made up of a driverless mode outside cities and a human mode once the vehicle enters the city.
This is not too far away in the future: just earlier this year a 25-tonne autonomous truck was put to test on the A14 as part of a trial by Highways England for automation in road construction works. Meanwhile, Volvo has announced a partnership with DFDS to trial its first autonomous, fully electric truck from a logistics centre to Gothenburg’s port in Sweden.
Governments such as the UK are already starting to release codes of practice for driverless vehicle tests on public roads, thus recognising the eagerness of the private sector to bring these technologies into use.
2. Electric traction lorries
Trucks running on dual sources of power are already in use on the streets: DPD and UPS have integrated them in their fleets and most vehicle manufacturers such as Volvo and Renault are churning out brilliant technology solutions. Scania’s new generation of trucks can be driven silently and emission-free for up to 10km: imagine the advantage such a fleet can have in a city like London where ultra-low emission measures are increasingly important.
It’s not a stretch of the imagination to see lorries adopting similar technology, though enhanced to suit the heavier haul. In the future, lorries could run on combustion outside the city and switch to electric once they enter residential areas.
As expected when mentioning electric vehicles, Tesla is leading the way: in 2017 Elon Musk unveiled the Semi and Roadster series which promise 20% savings on fuel and maintenance. Production has been pushed back to 2020 but the healthy order list is an indication that the supply chain sector is keen to adopt this technology to secure savings in the long run.
3. Automated warehouses
UK has lagged behind other European countries such as Austria and Switzerland when it comes to warehouse automation for a number of reasons but things are starting to change.
Flexible and cheap labour laws meant that Britain could easily rely on foreign workforce as and when needed. In the post Brexit era though, the cost to employ in this labour market has outstripped inflation and as such the cost benefit is rapidly disappearing. If we consider that 60% to 70% of temporary workers were from Europe, it is not just a cost factor but also a supply reliability factor that means automation solutions are increasingly attractive.
The second reason why automation hasn’t taken on yet is the supplier market maturity. In this highly commodified sector, 3PLs used to receive short term contracts which limited capital investment opportunities. This seems to be changing now that customers are asking for stability against uncertain geo-economic conditions and recognise innovation will only come with longer term commitments. Longer term contracts will encourage 3PLs to invest in more capital intensive solutions that will bear fruit in the foreseeable future.
The third and last factor is technology. We are seeing a shift from the sortation model we’ve relied on since the 80’s to modular storage systems, in easier terms from conveyor belts and limited lines of sorting to 3-dimensional storing systems. Other countries in Europe have already adopted this new model successfully and demonstrated its scalability, reliability and cost effectiveness. Now that workforce is becoming scarcer, it won’t be long until the UK picks up learnings from abroad to match its domestic needs.
4. Digital Procurement Platforms
Leveraging technology for food procurement is not a new concept, and several tech companies out there are sinking their teeth into this. Companies such as Rekki, Foodchain or GoKart are creating virtual communities of professional kitchens and suppliers and offer digital platforms for order management.
These companies are mainly looking at migrating orders onto the digital space to address the access and payment restrictions associated with wholesale operators, but what they do not do is improving how the physical food supply chain works. This is because the actual handling of goods in the supply chain is a complex affair with a high entry barrier. Companies such as Collectiv Food, on the other hand, have invested in digital as well as the logistical capabilities to improve how goods move from one point to the other in the real supply journey.
As leaner, more efficient ways of procuring and delivering food takes hold of the market, wholesalers will soon become obsolete and direct sourcing will become the norm.
5. Order fulfilment
As the drive to create traceability and transparency across the supply chain influences the way we move goods, we’ll see the adoption of electronic check points along the food journey. The technology is already there, with DHL spearheading the way. An added benefit would be the ability to follow our food order with the same level of accuracy and tracking that apps such as Uber have made us familiar with. Electronic data collection will also allow trusted receipt and enabling unattended access, making inventory management and operations leaner and smarter.
6. Electronic site access
In the future we can get rid of keys. Unattended access is great for driving more efficient delivery network but changing the route regularly is very difficult with physical keys.
To allow more flexibility, the drivers of the future will have apps on their phone which will give them access codes which change daily and are triggered by geo location and time parameters. This technology needs a certain level of adoption at multiple outlets before it can become really viable. The fact that DHL and Amazon have already invested in this access system for their delivery points tells us that a future where delivery drivers will not carry keys to make deliveries is not too far away.
7. Variable road user charging
Consider that the Royal Opera House in Covent Garden receives an average of 51 deliveries a day. Multiply that for all the locations in London which need F&B deliveries every day. The UK government might soon want to counteract that by putting in place new measures to encourage deliveries at less congested times, or consolidation, or even using other means of delivery rather than vehicles. Electric bikes perhaps? UK government might encourage this by offering tax breaks or incentives, and it has an opportunity to do so if and when Britain leaves the EU. Currently European law restricts what local governments can charge for road usage and the UK could soon be in a position to change that for its most trafficked city roads.
Ultimately the supply chain that delivers food to restaurants is a very complex system being shaped by political, social and economic demands. E-commerce is driving much of the agenda for the whole delivery sector and is pioneering the technologies of the future but it is a short leap to adopt these into the food supply chain.
Food trends for restaurant professionals
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