See through the fog: early visibility for resilient CPG procurement

Team Cropin
June 6, 2024
9 min read

Early visibility into your crop supply chain

In the agricultural industry, commodity availability and quality throughout the season are critical tasks. In the fast-paced world of CPG, uncertainties around commodity availability and quality add a layer of complexity to agricultural supply chain planning for those in procurement.

Imagine navigating this journey blindfolded! Isn’t that really what happens when key stakeholders lack early visibility into crop availability and quality?

This lack of foresight isn’t just a minor inconvenience; it’s a recipe for disruption, impacting everyone from the Crop Desk Head to the Business and Procurement Heads.

Let’s delve deeper and explore the multitude of challenges this creates and why early visibility empowers you to win the procurement battle.

The great ingredient hunt: A CPG challenge

Picture this: You’re a Procurement Head juggling contracts, negotiating deals, and ensuring a steady flow of ingredients for your CPG company. Suddenly, whispers of a potential crop shortage reach your ears. Panic sets in. Are these rumors true? Will you have the high-quality yields required to meet production demands?

This stressful scenario is all too real for many CPG companies. The problem? A lack of early visibility into crop availability and quality. It’s a recipe for disaster impacting everyone from the Procurement Head and Crop Desk Head to the Business Head.

Feeling the heat across departments

Procurement heads: Negotiating contracts becomes a guessing game. Price fluctuations leave you vulnerable, potentially overpaying or missing out on favorable deals.
Crop desk heads : Inaccurate forecasts bring chaos into planning. You’re left reacting to disruptions instead of securing the best deals.
Business heads: Unforeseen supply chain disruptions can cripple production, leading to missed revenue, unhappy customers (read impacting brand name), and ultimately, a hit to your top and bottom line.

The power of foresight: early visibility to the rescue

Early visibility enables you to see the future of your crop supply chain and gives you the power to:

A Glimpse into the future: why early visibility can prevent your own “cocoa crisis”

The recent surge in cocoa prices serves as a stark warning for the CPG industry. According to JP Morgan, this crisis stems from a global cocoa shortage caused by a confluence of factors:

Climate change: Droughts ravaged crops in West Africa, a region responsible for roughly 80% of the world’s cocoa output.
Chronic under-investment: Most cocoa cultivation is by smallholder farmers who struggle to make ends meet and reinvest in their land, leading to declining yields.
Crucially, these challenges are not unique to cocoa: Climate change and smallholder farmers’ dominance are prevalent across numerous commodities.

If major chocolatiers had early visibility into cocoa availability, could it have helped navigate this crisis?

Possibly. With a clearer view of the situation, they might have been able to take proactive measures like:

The cocoa crisis is a cautionary tale. Don’t wait for a similar situation to unfold with your commodity of interest. Early visibility empowers you to take proactive steps and safeguard your supply chain.

The information gap today

Limited past, uncertain future – historical data falls short: While historical data has traditionally been a cornerstone of procurement planning, it’s rapidly becoming less significant in today’s dynamic agricultural landscape. Climate change makes historical trends unreliable for predicting future yields and quality.
Limited scope of field visits: Field visits offer a valuable snapshot, but they can’t capture the complete picture of a region’s crop health. They use unscientific random sampling that falls short of capturing the inherent heterogeneity both at plot and regional levels..
Delayed and error-prone government data: Government CCE reports are released well after contracting cycles are underway. Additionally, these reports come with error margins of over 20%. This makes CCEs a recipe for procurement headaches rather than a tool for proactive decision-making.
These limitations force you to make crucial procurement decisions with incomplete information and limited real-time updates.
But Cropin brings you the power of Early Visibility – the knowledge of the availability and quality of your key commodities months in advance. This is the transformative potential of Cropin’s data-driven solution for early visibility.

Cropin: unveiling the future of your crop supply chain

Cropin empowers you to see beyond the horizon with a comprehensive suite of tools:

Established proprietary crop knowledge graphs : This vast repository, built on the knowledge of over 10,000 crop varieties across 103 nations, provides a foundation for accurate crop identification – first step in enabling accurate predictions using remote sensing.
Unveiling crop potential with satellite insights:Cropin leverages the power of satellite imagery to offer intelligence into crop health and growth patterns. We utilize various vegetation indices derived from satellite imagery. Each index provides a specific piece of the puzzle. By feeding vegetation indices data into our contextual trained deep-learning AI/ML models, Cropin Cloud can reveal details on:
Crop health: Assess the overall health and vigor of crops.
Crop stage : Track the development of crops throughout the growing season.
Nutrient requirements : Identify areas in the field that may benefit from additional nutrients.
Irrigation needs: Optimize irrigation practices based on real-time data.
Our models compile all these datasets to provide accurate estimations of the sown area and production. This gives you a clear understanding of crop coverage and potential output within a region, information that empowers you to make informed sourcing decisions with a broader perspective.
Predictive analytics: The Power of Foresight: Cropin’s platform doesn’t just provide snapshots. The platform provides intelligence on estimates of potential yield and quality variations within a region by combining historical data, remote sensing information, and advanced weather forecasts.
Scalability: Forget one-size-fits-all solutions! Cropin’s cloud platform is built to adapt seamlessly to your specific needs. Our staggering experience managing 10,000+ diverse crop varieties across 103 countries is a testament to its unmatched scalability. Plus, Cropin leverages noninvasive satellite imagery, giving you valuable insights without disrupting your farm operations. It’s a win-win for efficiency and sustainability – you get the data you need without depending on large scale in-field interventions.

Beyond the basics: plot-Level accuracy and early warning systems

Cropin’s solution goes a step further by providing:

Accurate weather forecasts at plot level : Weather forecasts offer a regional view. Cropin delivers hyper-local forecasts, giving you insights into specific plots within your area of interest.
Safeguard your supply chain with the power of DEWS: For CPG companies, a disruption in crop health due to disease outbreaks can wreak havoc on your procurement process. Cropin’s Disease Early Warning System (DEWS) offers a proactive solution.
This data-driven model predicts the likelihood of disease occurrence. It factors in weather forecasts, real-time weather covering details of rainy days, relative humidity, total rainfall, maximum, minimum and average temperatures; wind speed, pollution; historical disease occurrences; and the specific growth stage of the crop. The predictions are provided monthly or fortnightly, along with actionable insights.

DEWS equips CPG procurement teams with the knowledge to take preventive action, minimize disruption and maximize yield potential.

The benefits of early visibility

Early visibility into your crop supply chain offers a powerful advantage, empowering you to make informed decisions and achieve greater control over your procurement process. You can transform procurement from a reactive process to a strategic advantage by gaining a clearer picture of your crop supply chain. Here’s how:

Informed procurement decisions : Knowing anticipated availability and quality across various regions allows you to make strategic purchases. You can secure the required commodities at the right time, potentially at the best price, ensuring a steady flow of ingredients for your production.
Reduced risk of supply shortages:Early warnings of potential disruptions, such as weather events or disease outbreaks, allow you to identify alternative sourcing options. This proactive approach mitigates the risk of shortages and ensures you have the food stock required to meet production demands.
Enhanced risk mitigation : Early visibility goes beyond just shortages. It lets you anticipate potential price fluctuations and adjust your procurement strategies accordingly. This proactive approach minimizes losses and protects your bottom line.
Supply chain optimization : Accurate predictions and insights into potential disruptions empower you to optimize your supply chain. You can reduce the need for expensive buffer stocks and ensure a continuous flow of ingredients, leading to greater efficiency and cost savings.
Improved profitability :Informed decisions, risk mitigation, and a more efficient supply chain ultimately lead to improved profitability and a more stable bottom line. Early visibility empowers you to navigate the ever-changing agricultural landscape with confidence.

Conclusion

Data-driven solution for early visibility into the supply chain is a game-changer for food processors. Early visibility empowers CPG procurement to make informed decisions, mitigate risks, and optimize their supply chain, ultimately improving profitability and a competitive advantage.