Due to the increasing global awareness of poor agricultural practices in supply chains, many large commodity traders are increasingly making efforts to make their supply chains more sustainable. Transparency and traceability are quickly becoming cornerstones in the development of effective supply chain management strategies.
Geodata, and especially satellite data-driven solutions help in making supply chains more transparent and traceable. Satellite based insights provide near real-time information on performance and risk. Perhaps even more importantly: the information is reliable and unbiased. Something that, for instance, Blockchain does not provide that benefit.
An Example: The Palm Oil Supply Chain
In order to reach the 2020 target of deforestation-free supply chains, a good understanding of the complexity of effective oil palm monitoring is needed. Imagine palm oil being sourced from millions of hectares and thousands of mills around the globe; deforestation is happening daily while satellites record millions of images each day.
Nestlé uses that satellite data and Artificial Intelligence to cover their entire global palm oil supply chain, identifying all farms and plantations, starting next year; more companies are on the way. Nestlé says that it is a game changer and it is, but we are not there yet. Nonetheless, there is hope when one looks at the following trends:
1. Global Coverage Monitoring
Satellites have the ability monitor assets daily and globally. They are great on paper, but they mean a potential overload of information. Using millions of satellite images that detect every tree being cut or falling does not mean making decisions is easier but more challenging. Moreover, observing at the highest possible resolution is not needed as it is equivalent to observing an elephant with a microscope. It is key to understand that it is not about increasing the amount of data but reducing complexity: from an overload of deforestation events to filtered, prioritised actionable alerts.
2. Companies Are Ready to Use Satellites to Track Global Supply Chains.
To reduce complexity, we need to determine when observed deforestation is relevant deforestation. This is when Artificial Intelligence comes into the picture. Currently, many commodity traders choose to disclose their mills publicly. By combining that with satellite-based deforestation information, unsustainable mills can be identified, and interventions can be planned. Furthermore, one can filter for relevance through focussing on deforestation in primary forest, conservation areas, on peatland, etc.
3. Cooperation at Landscape Level
Companies see the benefit of not only looking after their own supply chain: What is the use of tracing mills and sourcing area for deforestation if a neighbouring mill is not being traced? There are many collaborations opportunities on the landscape level to tackle deforestation and other environmental risks within supply chains. Shared responsibility brings truly sustainable supply chains a step closer.
4. Financial Inclusion for Smallholders
Satellite data can also be used for monitoring smallholder performance and risk. This can be used to identify well performing smallholders and those that would need more training. This information is also useful for Financial Service Providers as they want to know where the low risk smallholders are that are eligible for loans.
Head of Client Relations