Forget last-mile, it’s supply chains’ first mile that poses the biggest challenge for companies

Improving end-to-end supply chain transparency is a top priority for companies of all sizes across industries, but very few actually have complete visibility. And while the last mile is top of mind as companies struggle to match Amazon’s delivery times, it’s the first half of the supply chain that poses the biggest challenge.

Specifically, it’s the first mile—farm level activity, before goods reach a manufacturer or shipping container—that continues to be a black box for brands and suppliers, despite increasing pressure to ensure issues like deforestation and child labor aren’t part of their supply chains.

That’s in part because of the fragmented nature of global agriculture, Christopher Mejía, director and founder of MIT’s Food and Retail Operations Lab, told Retail Brew. The first mile tends to lack the technology and accessibility that would facilitate visibility, he explained.

“It’s a problem related to economics, it’s a problem related to training, and it’s a problem related to logistics, and that’s why it’s so challenging,” Mejía said.

A problem for scale: Canadian beauty brand Three Ships can identify the country of origin for each of the individual ingredients in its products (and does so on its website).

But that’s usually as specific as it can get, co-founder Laura Burget explained. “You never actually know what’s going on at the farm level because there’s so much complexity to those supply chains,” she told us.

Three Ships has just 18 SKUs, but they use hundreds of ingredients, sourced from all over the world, Burget said.

The brand doesn’t own farms, and works with contract manufacturers who source ingredients. That lack of direct control makes even getting information about a country of origin a struggle, she explained.

• Finding manufacturing partners who can provide sourcing and technical documents about each ingredient is challenging, Burget told us.
• Today, Three Ships knows the prickly pear oil in its night cream is sourced from Morocco, but not which farm a particular batch came from.

“If I could know down to the farm level that it was sourced from, that would be amazing,” Burget said. “But I can’t say with any degree of confidence that it would ever be possible.”

Ground level: Suppliers might be closer to the farms than anyone else in the supply chain, but first-mile visibility is still a heavy lift, Juliet Wiebe-King, vice president of sustainability and business development at fruit and nut supplier Red River Foods, explained.

As a supplier, Red River Foods has to think about both the farms themselves and the facilities where raw materials are processed, but that can be complicated.

• Cashews, for example, Red River’s biggest seller, are primarily grown in West Africa, but the majority are processed in Vietnam, Wiebe-King said.
• The company has employees in all its major sourcing regions, including in West Africa, but to have full visibility, it also needed to operate its own processing facilities in Vietnam, she explained.

Taking control of large swaths of the supply chain allows Red River to pinpoint where individual products come from down to the farm level, and ensures a reliable flow of information about local markets and crop quality. But that doesn’t come cheap.

“With commodities, we are constantly up against absolute minimum pricing from traders who aren’t doing what we’re doing within the supply chain,” Wiebe-King said.

Digitizing the first mile: There’s general consensus in the industry that deploying the right technology in the first mile is critical. Unilever, for example, is using satellite data, geolocation, and artificial intelligence to monitor deforestation in areas where it sources palm oil.

Red River Foods turned to Norwegian agritech company Farmforce to digitize field visits to its partner farms, which often have low connectivity.

• Farmforce’s software allows Red River to map and register each farm, and enables its on-the-ground team to conduct farmer surveys and audits entirely offline.

End of the line: Farmforce is far from the only tech company building solutions to the first-mile problem. But even with cutting-edge technology designed with farmers in mind, the only way for a company to truly understand what’s happening at the beginning of its products’ lifecycle is to be on the ground, Mejía told us.

And just like the technology itself, that physical presence comes with an added cost—one that consumers don’t feel responsible for, and that the farmers themselves can’t afford, he said.

“It is the responsibility of all the stakeholders involved in a specific supply chain,” he explained. “But nobody wants to put their hands on the fire.”—MA