Smart Pasta: Barilla’s Digitization of the Food Supply Chain
Barilla Group is employing digitization in its food supply chain to increase consumer transparency and enhance food safety.
GMO-free. Organic. Grass-fed. While consumers are bombarded with health buzzwords on labels at the grocery store, they still don’t truly understand where their food comes from. This largely stems from the fact that food supply chains are incredibly complex, spanning multiple geographies and processes. Because of this, the digitization of the food supply chain is crucial in providing transparency to consumers. By having better documentation of each of the steps involved to get food from the farm to the table, food producers can better respond to increasing consumer scrutiny on food origin, food quality, nutritional value, and processed ingredients. [1]
Barilla Group, a worldwide producer of pasta and sauces, is one of the leaders in using digital technology to transform its food supply chain. In partnership with Cisco, Penelope S.p.A., an Italian consulting firm, and NTT data, an IT service provider, Barilla recently implemented a pilot of its Safety4Food platform, which allows consumers to trace every step of the supply chain for the production of its food. The platform combines a network of sensors, wireless networks, and the cloud with analytics to enable this transparency. After scanning a QR code on the package, consumers are directed to Barilla’s website where they will see a detailed “digital passport” of that specific batch of product – from the farm to factory to point of sale. The website also features information on local farm suppliers and how these farms use digital technology to improve the efficiency of their operations. [3]
In addition, Barilla and Cisco are partnering with the scientific community, NGOs, technology companies, and other food producers to create the Safety for Food Initiative. This is an online network which provides access to a global database from the entire agricultural food chain. [4] The initiative seeks to break through information silos on the supply chain to adhere to and enhance international standards on food safety.
Barilla’s supply chain digitization represents a major advancement in the Internet of Things (IoT) technology in the food industry and provides a multitude of benefits to Barilla. Consumers are more drawn to the brand as they create a more meaningful cultural connection with the food they are eating. Additionally, this increased transparency helps reduce food fraud and counterfeiting, which is a $50 billion annual industry. [5] Furthermore, this transparency allows Barilla to monitor its food quality on a granular basis in order to prevent food safety crises.
Going forward, Barilla should move beyond the pilot and identify more commercial uses for IoT and digitization in its food supply chain. In addition to providing consumer transparency and enhancing food safety, I recommend that Barilla use the real-time data provided by this technology to decrease food waste, increase the efficiency of its production operations, and better understand the environmental impact of its operations.
Approximately one third of all food is lost or wasted before it is consumed per year. [6] Food waste that occurs during the transportation and distribution portion of the supply chain is a major contributor to this, amounting to 1.3 billion tons per year. Barilla can decrease the food loss in its supply chain by employing sensors that track in real time temperatures and points of transfer. This data can be integrated into a centralized database that would help it act faster to prevent food from being spoiled.
Additionally, these sensors can be used to streamline Barilla’s production processes by better managing and restocking of inventory, monitoring factory productivity, and understanding labor inputs. Eventually, digitization can even be used to automate shipping and delivery processes. In other industries, it is already used to track product locations by GPS and to optimize delivery routes by tracking weather patterns and traffic conditions. [7] Barilla can leverage the data provided by digitization for almost endless opportunities for analysis in order to make smarter business decisions.
In going beyond the initial pilot, an open question I have is whether Barilla’s suppliers will be open to adapting more digitization in the supply chain. I can imagine a scenario in which suppliers are reluctant to provide information on their operations since they may dislike the concept of others collecting and analyzing their data. Additionally, I would be concerned about how much money would be required to scale this operation and if it makes financial sense to do so.
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- Moore, John, “Internet of Things: Food safety apps set to emerge,” Tech Target, January 2016, [http://internetofthingsagenda.techtarget.com/feature/Internet-of-Things-Food-safety-apps-set-to-emerge], accessed November 2017.
- “FDA Investigates Multistate Outbreak of E. coli O26 Infections Linked to Chipotle Mexican Grill Restaurants,” FDA, February 2016, [https://www.fda.gov/Food/RecallsOutbreaksEmergencies/Outbreaks/ucm470410.htm], accessed November 2017.
- “From the Ground to the Grocer, Barilla Makes Use of Cisco’s Internet of Everything to Give Consumers Insight into the Journey of Their Food,” Cisco press release (San Jose, CA, September 2015).
- Safety4Food, http://www.safety4food.org/, accessed November 2017.
- Taylor, Kate, “Expert reveals 5 expensive restaurant foods that are often fake,” Business Insider, July 2016, [http://www.businessinsider.com/fake-food-expert-on-how-to-spot-scams-2016-7], accessed November 2017.
- Food and Agriculture Organization of the United Nations, “Food Loss and Waste,” http://www.fao.org/food-loss-and-food-waste/en/, accessed November 2017.
- Shankar, Udaya, “How the Internet of Things Impacts Supply Chains,” Inbound Logistics, August 2014, [http://www.inboundlogistics.com/cms/article/how-the-internet-of-things-impacts-supply-chains/], accessed November 2017.
Thanks for writing about food waste reduction! I agree it’s a big problem and especially relevant for large-scale suppliers such as Barilla. Aside from the many wonderful things that Barilla is already doing to reduce waste and make its supply chain more efficient, I also recommend that Barilla and other food manufacturers work with large-scale retailers to implement these complex technologies. For example, Walmart has taken the lead in investing with IBM and implementing blockchain to track the food supply chain from farm to market. In order for this work, Walmart needs to have buy-in from suppliers such as Barilla because Barilla manages the upstream process while Walmart has less control in this space. I would love to see a distinct pilot between Barilla and Walmart on how all these digitization techniques have decreased food waste from pre- to post-consumer and that could serve as a key case study to convince other suppliers to buy into incorporating digitization in the food supply chain.
I look forward to seeing the long-term impact and cost / benefit analysis to this with regards to food waste as Barilla / Cisco run through their pilot. A slight majority of food waste in the developed world occurs prior to reaching consumers, while the vast majority of food waste in developing countries happens before reaching the consumer. Where in the supply chain would Barilla and Cisco’s efforts impact, and how much would it cost? The dream of using IOT, primarily through radio / RFID tags, has been around for decades, yet has never been deemed feasible for foodstuffs due to cost / benefit ratios. As the technology becomes cheaper, it will no doubt one day be feasible, and hopefully Barilla and Cisco’s efforts will contribute to making it a reality sooner than later. However, how far up the chain can this be done? How far up the supply chain does it need to go? Does it need to happen at the grower level? If so, how can this provide value to the grower? Can it be abstracted up a level and still derive the majority of the benefits?
Nice work on this post! I am intrigued by both the supply chain efficiency and the food safety implications of Barilla’s efforts. I am wondering if there are opportunities for other products with consumer safety risks (medicines, baby products, supplements, etc) or products that tie a great deal of their value to their supply chain (fair trade, organic, etc) to leverage the QR code and the system described here to better tell their story, increase efficiency, and increase safety. Very cool. Thanks for sharing.
Interesting subject on the benefits of supporting an age-old industry with the latest technologies and data processing capabilities. In regards to the use of RFID, it is a technology that has been around for at least a decade and is still being “piloted” in many areas to prove it economically feasible; even in higher ticket price items such as concert tickets (via RFID wristbands – http://www.hypebot.com/hypebot/2017/01/how-radio-concert-wristbands-can-scale-for-smaller-shows.html), or industrial goods, it hasn’t become mainstream due to cost concerns. It will be interesting to see companies explore other ways to either build-in data around food items, or translate this type of tech into higher value provided to the customer in order to make it economical. Given this, the question you pose for the future is quite relevant on not only the concerns with the surrendering of data by the supply chain actors, but also on the economical aspect of it; if a large enough company struggles with realizing the value of this initiative, the struggles up the supply chain, particularly for the agricultural sector, are magnified.
This is really interesting and useful technology! While I applaud Barilla for being the pilot on this, it seems like this kind of technology could be best used outside the non-perishable food items (Pasta and Sauce have super long shelf lives, so are naturally resistant to things like the E.Coli problem that chipotle faced). I would love to see this same application in things that are perishable (where waste during transportation is an even bigger problem).
That said though, I wonder whether the added investment to deploy this for perishables is worth it. Packaging for perishables tends to be less robust, and with razor thing margins already, is the added benefit worth it to cover the entire supply chain and distribution channel? Especially since the majority of perishables go to food services companies / restaurants, which by definition have to break bulk before selling, I wonder if there is sufficient benefit to cover the entire process vs. just individualized bar-codes through a certain point in the channel?
I really enjoyed this essay, particularly given my affinity for pasta. It would be difficult to argue against the notion that this digitization of Barilla’s supply chain will reduce food waste and improve safety. I would, however, challenge the notion that consumers will factor this into their purchasing decisions, or that they are “more drawn to the brand”. First of all, as you said, consumers are bombarded with buzzwords and claims about sustainability, fair trade, etc. on their food labels. I don’t think another QR code will influence them to purchase this. Additionally, even if we believe that consumers will appreciate this transparency and base purchasing decisions off of it, it will only be a short-term advantage for Barilla, as other companies will follow suit, particularly if we believe that this type of digitization will occur industry-wide.
Great post AYZ – while I don’t think enough consumers really care about where their food comes from to make investments in this technology necessary and financially viable, I do agree that Barilla has a great opportunity to leverage their supply chain and tech infrastructure to reduce food waste, which is a huge problem. What I like most about this is that both key stakeholder’s incentives are aligned – Barilla generates cost savings and consumers value that the company is socially conscious.
Great essay about digitization applications at Barilla! In my view, suppliers will ultimately also benefit from an increased integration of the supply chain, resulting in a more streamlined production process, less variability and lower inventory costs. Following an initial “transition” phase during which suppliers need to be educated about how the application of a digitized supply chain at Barilla would create mutual performance benefits, I would expect only little resistance to provide increased process & data visibility.
Even though the comprehensive transition to a digitized value chain will require significant investments in the beginning, Barilla will benefit from material cost savings in the long run, ranging from the decrease of food waste and increased production efficiencies to the envisaged automation of shipping and delivery processes. As competitors are starting to enhance their supply chains, the “real cost” of not embracing the further digitization of the value chain is ultimately the loss of competitive edge vis-à-vis other, innovative pasta producers.
Thank you for an interesting read! It’s great to see that Barilla has taken the plunge (and heavy financial investments) needed to track its ingredients through the upstream value chain and into its pasta. The food industry has historically been one of the least transparent industries to its consumers, and this makes great headway in being able to show where our food comes from. Hopefully other food producers will follow and consumers will demand this information. I think Barilla, other brands, and retailers should help create broader demand for this new information. My hunch is that some consumers who appear not to care haven’t been given the opportunity to efficiently learn they when they are stretched both on time and money.
Of of the key constituents in food waste is the network of hunger-based non-profits that redirect some food waste (when edible and food-safe) to food-insecure people who cannot afford current prices. Some amount of food waste will always exist (unless digitization allows retailers to perfectly predict consumer demand AND remove the bullwhip effect). It would be incredible to see food producers, retailers, and non-profits partner to use digitization to more efficiently redirect food waste to hungry people.
I agree completely that IoT is going to be an essential part of the supply chain for Barilla, but I think they need to do more to push suppliers on the urgency of getting IoT into their production. Barilla can, in good faith, discuss why the data will be helpful to all sides, and also offer to share data on Barilla end-customer demand in return as an added incentive for supplier adoption.
Given the value at stake to Barilla, they may want to take a page out of Toyota’s book and actually offer to work with suppliers on how to implement best practices as it relates to IoT installation and digitization. These sorts of gestures can build the trust required amongst suppliers to begin more robust data sharing practices. In the medium-to-long term, Barilla could begin to integrate these data feeds downstream as well to help better align all parts of the value chain (incl. grocery stores / retailers) to fulfill customer demand. Strengthening the lines of communication via digitization and rapid information flows would position Barilla very well to combat some of the food quality and health scare challenges mentioned in the essay.
Definitely a big issue for a company with such scope! I think that the direction they are now taking on the consumer front is focused on information sharing only. While this is good and much needed, I believe they can do so much more! The information sharing portal with the consumers can be better done by sharing real-time information rather than in retrospect after receiving the goods, allowing for even more transparency. On the production front, I think that digitalization is key to solve their efficiency and distribution issues. I strongly advocate to make a move for vertical integration on the distribution side through buying stakes in their major distributors and through scaling their own distribution network.
Barilla should definitely continue to digitalize its supply chain, and I agree decreasing food waste will both save them time and money, but I also wonder how much they feel online “grocers” are a threat to them. I imagine that digitalizing their supply chain would allow them better tracking and therefore make an online customer platform for both brick and mortar customers, the everyday consumer and online grocers. I think digitalization could keep them investing in technology so that they can compete in the every-digitalizing food industry.