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The Perishables Ecosystem –Food, Wine, Cannabis & More

Food/Beverage

Now is the Time for Food Manufacturers to Embrace Digitalization Technologies

Stephen Dombroski · October 2020 ·

The food and beverage marketplace is driven by the consumer and today’s consumers are more demanding in all aspects of the buying experience. The industry is getting pressure from consumers who want to know the origin of the products they consume as well as the path they took to get to their door. The reality for many manufacturers is that pressures from customers now carry more weight than pressures from regulators. There is a growing perception that the global food supply chain is not agile enough to respond to current marketplace demands. There is new technology that can help manufacturers and suppliers meet these demands, but in an industry that has low margins, the opportunity to invest in new technologies can be limited. Regardless, experts agree that food manufacturing will see a dramatic surge in technology adoption over the next five to 10 years as the market continues to change and pressures on supply chains and logistics continue to grow. Manufacturers will have to evolve to survive.

The COVID-19 pandemic, climate change, food safety and quality pressures, sustainability initiatives and changing consumer preferences are driving food and beverage manufacturers to utilize advanced tools in all areas of their businesses to remain competitive. Information from the growers and farmers has always been critical to the flow of the entire business and due to the unpredictability of nature, data is constantly changing. Years ago, companies that produced food products whose ingredients were dependent on fresh seasonally grown vegetables, fruits and nuts would employ several people sitting in a room with multiple phones receiving daily reports from the farms. This process was necessary so that planners could anticipate what ingredients were coming and when so that they could create production and distribution plans. 

Manufacturing facilities have to stay in constant communication with the farms so they can get as close to real-time information as possible. They relied on phone calls to know the latest information regarding what was being harvested, what was on the trucks, what products were available and when they were available for delivery to the manufacturing facility. It became a scramble to see if the downstream activities could keep up with the input of materials and if what could then be produced would even come close to matching the sales forecast. Today, the phones still ring but they beep and ping too. Text alerts, email alerts and notifications from advanced systems are the wave of the future as new technologies emerge for quicker and much more reliant information.

Typically, food and beverage manufacturers have been reluctant to embrace new technologies. While they are the first to employ new machinery if it will improve yields and reduce manufacturing costs, profits are at a premium. In fact, all costs, not just operational costs are crucial to business success and this reality has inhibited investments in other areas of technology that could help their businesses grow, improve yields and increase profit margins. But reacting to customer pressures and the changing nature of their industry, smart manufacturers have begun using IoT and advanced technologies to improve their business operations.

Advanced Technologies

The digital revolution has had an ever-increasing impact on critical steps of the food and beverage supply chain; procurement/supply, manufacturing and distribution. A great deal of the focus has been placed on the upstream processes of the supply chain in the areas of farming and agriculture. Long gone are the days of a farmer grabbing a handful of dirt and throwing it in the air after reading his annual copy of The Farmer’s Almanac. Traditional agricultural methods are slowly being replaced with precision agricultural methods.

Precision agriculture is a process that uses a variety of IoT devices to allow farmers and growers to maximize land use by increasing and optimizing crop yields. Farmers use guidance systems, GPS systems, soil monitors, and other diagnostic tools in fields to improve growing conditions and provide crucial information. Drones monitor growth and soil quality, search for pests and communicate back to the farmers. Technology has become even more important to the downstream links of the supply chain with robots harvesting crops and tending to a variety of farm tasks. Automating and improving the farming process will lead to bigger product yields and just as important, valuable information that can assist in producing profitable, sustainable and safe-to-eat food.

Food and beverage manufacturers have always tried to use state-of the-art manufacturing equipment when it comes to the actual food production. Throughput and efficiency is the key to maximizing profits especially when they are at a premium. However, food manufacturers are now going beyond better mixers, ovens and packing lines. They are implementing sensors that detect quality flaws and robot machinery to fully automate a streamlined manufacturing floor. Sophisticated Manufacturing Execution Systems and production execution systems communicate with the tools used for the forecasting and distribution processes. 3D printing is being investigated as an option for replacing cumbersome extrusion machines. Beverage manufacturers are investing in continuous flow processing for beverages which results in a much more streamlined and high volume operation than the traditional make and pack operation.

Knowledge is Power 

Advanced technologies that give food producers the ability to learn about consumer buying habits are increasingly being deployed through the industry. The information now available to manufacturers is incredible. It gives insight to both the upstream and downstream processes of the supply chain and helps keep them connected. Thanks to the ability to compile buying trends, manufacturers can learn what products are being purchased and when they are being purchased. They input this information directly into the forecasting process which sets the wheels of the entire supply chain in motion.  Smart labels, basically QR codes printed on products that consumers can use to get product information, now have the capability to relay information back to the manufacturer. New forecast-enhancing technologies such as Blockchain are being used to gather information about consumers purchasing habits via data collected through the credit system. This information significantly impacts the upstream processes as a more accurate finished product forecast results in a more accurate forecast for supplies and ingredients. With this new information, farmers and growers can have far more accurate data for better crop planning which can maximize field and soil usage and assist in the tracking and tracing of products from field to fork. 

Advanced technologies are already impacting and changing the way food and beverage manufacturers operate their businesses. But, we have only reached the tip of the iceberg. These new technologies will help food manufacturers be intelligent, innovative and agile. Real-time insights about operations, market environments and customers will enable smart decision-making.  Manufacturers are now able to impact the market with new processes, service and products and rapidly respond to internal and external business changes. It’s a win both for the manufacturer and the customers.

Stephen Dombroski, Director Consumer Markets, QAD

Filed Under: Food/Beverage

Convenience Stores Pivot to Meet New Consumer Demands

Lara L. Sowinski · August 2020 ·

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The U.S. convenience store sector is comprised of large chains like Circle K and 7-Eleven along with many independently owned retail outlets. Although business from consumers going to-and-from work and school has dropped off considerably, the coronavirus pandemic has spurred more visits from consumers who are trying to avoid large, busy supermarkets that contribute to longer visits, more touch points, and more handling of food. 

Not only does the c-store (convenience store) satisfy the need for a quick stop to pick up food, drink and household items like laundry soap and toilet paper, consumers often take advantage of fueling up their vehicles, too. 

At the same time, in rural areas the c-store serves as an important alternative to driving long distances to a larger retail outlet. 

According to Dafna Gabel, vice president of insight and strategy at PDI, a global provider of ERP, fuel pricing, supply chain logistics, and marketing cloud solutions for the convenience retail and petroleum wholesale industries, c-stores are emphasizing the “convenience” proposition of c-stores to meet new demands in the marketplace.

For starters, c-stores are enhancing their offerings in several ways, including a broader choice of foods; offering foods for specific meals (breakfast, lunch, dinner); and adding more frozen foods, which is a growing segment in c-stores. 

In addition, c-store operators are also responding to the contactless trend, Gabel says.

A recent survey from convenience store industry association NACS finds that of 77 member companies (representing 2,796 stores) polled:

  • 40 percent say they have introduced or increased contactless payment options inside stores, and 62 percent say fewer customers are paying by cash; and 
  • 33 percent of stores have introduced or expanded curbside pickup, 29 percent have increased a drive-thru element to their operations, and 21 percent increased delivery

Despite the challenges associated with the coronavirus pandemic, C-stores have an opportunity to meet consumers’ needs while simultaneously boosting their attractiveness to a growing number of leisure travelers who are hitting the road instead of flying, and are looking for a quick, easy and contactless transaction in a store stocked with an enticing selection of food, beverages and other products.

Filed Under: Food/Beverage Tagged With: conveniencestore, foodsupplychain

The Food & Beverage Supply Chain is Stressed to the Breaking Point by COVID-19

SCSparrow Staff · July 2020 ·

What positive changes might we see post-pandemic?

By Henry Canitz

Director of Product Marketing
Logility Inc.

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There is no shortage of doom and gloom these days when it comes to the food and beverage industry. Since early spring, Covid-19 has rapidly spread across the world causing consumers to engage in an unparalleled wave of panic buying and stockpiling leading to empty retail shelves. Stay-at-home and shutdown orders have led to restaurant bankruptcies, pouring milk down the drain and fields full of rotting produce that was slated for the food service sector. Plant shutdowns due to outbreaks of Covid-19 and widespread shortages of imported products have further aggravated an already fragile food supply situation. Just open any newsfeed and you are likely to find many more examples of supply chain issues in the F&B industry caused by the Coronavirus pandemic.

However, the situation for the F&B Industry could be worse. According to Euromonitor International, food & non-alcoholic beverages will be the only spending category expected to show positive growth in 2020 (Figure 1).1 Today, the food and beverage industry is one of the largest marketplaces, estimated to generate US$ 224,815M in revenue in 2020. 

Euromonitor International, “Coronavirus Will Transform Consumer Behavior” by An Hodgson 05/25/2020

Figure 1: Global Consumer Expenditure Growth by Category: 2019/2020. (Data for 2020 are forecasts)

The F&B industry has undergone significant change in the last 10 years due to evolving customer demands, ongoing product innovations, globalization, and stringent regulatory oversight. Consumers want more nutritious products and are more concerned about the environmental impact of the products they buy. The Covid-19 pandemic has sped up customer demand for plant-based meats, product traceability and fresh-made meals. Widespread fear of contracting the coronavirus has led to significantly more direct-to-consumer food and beverage delivery with shopping services experiencing growing pains. Industry experts seem to believe that many shoppers will continue to rely on online grocery services even after the pandemic is over.Post-pandemic food and beverage companies will need to invest in advanced supply chain technologies to move the industry toward supply chain maturity.

Higher adoption of advanced supply chain data management capabilities will improve the availability of actionable data and power positive changes in the F&B industry. Clean, complete, consistent, current, controlled and convenient data is required to enable end-to-end supply chain visibility and to lay the foundation for advanced supply chain capabilities like digital twins, machine learning, and cognitive analytics. The global data sphere will grow from 33 Zettabytes in 2018 to 175 Zettabytes by 2025. In 2020, 460+ Exabytes are expected to be created every day. For us more experienced supply chain practitioners, that is roughly 200 Million DVDs of data per day. Robust data on customers, products, locations, lanes, partners and orders is needed to develop insights and make timely decisions. More mature supply chain processes thrive on digital data, a fact that has been mostly overlooked and underfunded in the F&B industry.

Figure 2: Standard units of measurement used for data storage

Traditional product forecasting is based on statistical time series techniques that create forecasts using sales history. Unfortunately, when drastic changes in demand occur over short periods of time, as with the coronavirus, the past is rarely a great predictor of the future, especially when trying to forecast down to the SKU/location level. As Yogi Berra once said, “The future ain’t what is used to be.” When demand variability is high you need to leverage additional forward-looking data to sense, react and adapt to what is actually happening. What is needed are demand sensing capabilities. 

Demand sensing is the translation of demand information with minimal latency to detect who is buying what products, what attributes are driving sales, and what impact demand-shaping programs are having. Demand sensing uses forward-looking inputs to augment a historical forecast to improve forecast accuracy and synchronize and align purchasing, manufacturing, and deployment operations to what is really happening in the supply chain. Typical demand sensing inputs that can be used to improve product forecasts include daily sales order history, daily point of sale (POS), syndicated data, market intel, social media and weather. Demand sensing will help F&B companies respond to micro-market changes, helping to improve fill rates and reduce distressed product.

Figure 3: Demand sensing and typical inputs

It’s no secret that most food and beverage companies have fragmented planning capabilities. Longer-term planning (strategic and financial), mid-term planning (tactical and S&OP) and shorter-term operational planning (demand, inventory, purchasing, replenishment, and manufacturing) are not aligned or synchronized. These planning efforts are run by different groups, use different assumptions, are based on different data and run on different systems. Financial plans are tough to incorporate into S&OP and operational plans, and Financial and S&OP plans often don’t reflect the latest supply chain operational data. These disconnects and misalignments lead to missed opportunities, higher costs and increase operational risks. What’s the answer? Advanced sales and operations planning, or what some in the industry refer to as Integrated Business Planning (IBP). IBP unites volumetric and financial information into one flexible planning and decision support process over operational, tactical, and strategic planning horizons. IBP drives better practices and closer teamwork among planning teams by creating smoother transitions between supply chain stakeholders. Everyone gets reliable answers faster. Forecast and capacity plans become more accurate and synchronized. Alerts highlight plan deviations, collaboration compresses process times and trust in the integrated plan improves. 

Figure 4: Integrated Business Planning Diagram

Food and beverage company CEOs expect their supply chain leaders to prepare their operations for digital business and want to know how they intend to develop capabilities that take advantage of artificial intelligence to create a resilient, agile and responsive supply chain. Embracing advanced analytics to not only determine what happened and why but also, to predict what will happen and decide what should be done to minimize the risks from disruptions and fully embrace opportunities will add significant value to the F&B industry. Automation of routine supply chain tasks and speeding up decision making through the application of purpose-built artificial intelligence and machine learning is essential if the industry is to evolve to accommodate much higher transaction volumes from direct-to-consumer business. It is estimated that 40% of essential items are now bought online. For most F&B companies, this amount of e-commerce business was not normal pre-Covid, but it certainly is during the pandemic and may well be post-Covid.

Additional technology investments that will lead to positive post-pandemic changes in the food and beverage industry include:

  • Higher adoption of supply chain optimization technologies like Multi-Echelon Inventory Optimization, Supply Planning Optimization, and Finite Scheduling at manufacturing plants leading to fresher product, less inventory and better product availability.
  • Widespread adoption of supplier on-boarding and management capabilities to facilitate more resilient and agile procurement.
  • Wider adoption of continuous planning to sense, analyze and respond faster to demand and supply variations.

Food and beverage industry veterans have a saying, “When times are good people eat and drink in abundance, when times are bad people eat and drink even more.” The food and beverage industry in general tends to be fairly stable. The Covid-19 pandemic has shone a spotlight on major supply chain issues across all sectors of the food and beverage industry. The supply chain has never before had as much attention paid to it by everyone from the President to the average consumer.  Food and beverage supply chain leaders should take advantage of the renewed interest in the supply chain to push for improvements to fix weak links in their supply chains. Are you ready to embrace the digital supply chain of the future?

Figure 5: The digital supply chain of the future

Henry (Hank) Canitz

Director of Product Marketing at Logility Inc., a leading provider of AI-powered supply chain and retail planning solutions.

    Filed Under: Food/Beverage Tagged With: coronavirus, demandsensing, foodsupplychain

    There’s Still a Need For More Refrigerated Rail Service

    Lara L. Sowinski · June 2020 ·

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    The shuttering of Union Pacific’s Cold Connect coast-to-coast rail service, the former Railex operation that UP acquired 2017, was a surprise to many. For one, the service catered to demand for the transportation of fresh produce and other temperature-sensitive food and beverages between Washington, California and New York. It was also competitive with truck transportation in regards to transit time and cost. 

    According to a recent conversation with rail industry executives, there were extenuating factors that contributed to Cold Connect’s demise. Drayage costs have risen steadily in recent years. In addition, the Rotterdam, New York rail terminal was too far from New York City, Boston and other high-density consumer markets on the East Coast that factored largely in Cold Connect’s business model. This contributed to overall slower service, which is not acceptable for perishable freight. 

    The final coup de grâce was delivered by the COVID-19 outbreak, which disrupted domestic and international food chains and transportation rates. 

    There’s no disputing that North American rail providers, in general, need to improve service in order to attract more time- and temperature-sensitive freight, especially fresh food. 

    Meanwhile, there are services that make a strong case for the viability and investment attractiveness for refrigerated rail. 

    CN’s CargoCool service handles a variety of fresh, chilled and frozen food throughout a North American network comprised of 23 intermodal terminals, five logistics parts in Canada and the U.S., and rail connections to three coasts and six major ports. Its fleet of refrigerated rail cars is complemented with real-time visibility software that provides shippers with temperature reports in minutes and alerts on reefer status, door openings and more.

    Class II provider Florida East Coast Railway is pursuing an initiative with Blackline Partners to develop a rail-served refrigerated cross-dock and cold storage warehouse at Port Everglades with direct rail service for boxcars as well as intermodal trailers and containers.

    The facility’s temperature capabilities would include ambient, temperature-controlled, chilled, super-chilled, frozen and ultra-frozen. In addition, the facility would feature electronic cold pasteurization capabilities. 

    Industrial real estate development CenterPoint Properties is also building an International Logistics Center at Port Everglades, which is scheduled for completion by September. The project will contain warehouse, refrigerated warehouse, office space, and cross-docking facilities. A portion of the International Logistics Center will be activated as a Foreign Trade Zone.

    Port Everglades is the leading Florida port for temperature-controlled cargo, with reefer cargo comprising 17 percent of its cargo mix. 

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    Filed Under: Food/Beverage

    Food Supply Chain Transparency is Misleading

    Lara L. Sowinski · April 2020 ·

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    The people who comprise the food supply chain, including farmers, truckers, grocery clerks and food delivery drivers, are among those essential workers who are on the front lines, doing their part to get food to consumers in the midst of the C19 pandemic. 

    They deserve our utmost appreciation. They also deserve safe working conditions.

    As do another segment of food supply chain workers: the people who work in the fields and in processing plants. 

    In April, various media outlets from the L.A. Times to The Guardian and BBC News reported on the extreme risks these workers are exposed to daily. Agricultural workers in California work side-by-side in the fields and pack houses; are crammed together in buses that transport them, and live together in close quarters. 

    Meanwhile, the meat processing plants are shutting down operations around the U.S. and Canada as hundreds of workers are testing positive and deaths are rising. 

    Tyson Foods suspended operations at its Iowa City, Iowa plant on April 22 after more than 180 of its 2,800 workers tested positive. Four people already died from C19 at one of Tyson Foods’ poultry processing plants in Georgia.

    JBS USA shut its Worthington, Minn. plant on April 20 after seven workers tested positive. The company’s Greeley, Colo. meatpacking plant reported four deaths earlier this month. 

    Cargill’s Fort Morgan, Colo. plant has at least 18 confirmed cases and one death. Meanwhile, on April 20, the High River, Alberta (Canada) plant was shut down after 484 cases of C19, linked to 360 plant workers, were reported, along with one death.

    Smithfield Foods closed its Sioux Falls, South Dakota plant on April 15, after 644 cases were reported among workers and people who contracted it from the workers. The huge number of cases qualified the plant as the number one hotspot for C19 in the U.S. 

    The common thread among agricultural workers and those who work in meat processing plants goes beyond their employers’ disregard for safety, training and information during the current health crisis. These workers share other attributes: they are mostly Latino, African-American or refugees who are paid minimum wage or less, and are subjected to some of the worst working conditions of any job. It’s dirty, dangerous, and repetitious, and it takes a toll on the body. 

    For years, I have written about the global food supply chain, including tracking and tracing, visibility, and transparency. Technology enables us to pinpoint where a carton of strawberries were picked, who grew our coffee beans, or what temperature, humidity and shock our bottle of wine encountered on its journey. 

    Why is it that the essential workers, especially those in the fields and processing plants, are so often left out and discounted? What can employers and consumers do to change this? Or perhaps, what will it take for this to change?

    If we are serious about transparency in the global food supply chain, then we need to look at all aspects, and all the essential workers. 

    photo credit: davispigeon-0

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    Filed Under: Food/Beverage

    The Global Food Chain Needs Diversity, and Small Farmers

    Lara L. Sowinski · April 2020 ·

    Supply chain diversification is a good thing, particularly when it comes to food. It can reduce overreliance on a single supplier, grower or global region, and can reduce exposure to pest and disease infestations, trade wars, weather events and climate change. 

    China’s small farmers are feeling the brunt of the COVID-19 pandemic. Some cannot harvest their crops due to quarantine measures, transportation options have dried up, while sales to restaurants and cafes are on hold.

    Farmers without access to cold storage are among the hardest hit, and it’s forcing some to dump their produce, and others to abandon their farms and livelihood altogether. 

    However, “A transition to off-grid, solar-powered cold storage systems can reduce food waste and make more food available for subsistence and sales, ensuring food security and economic development while minimizing the adverse effects of conventional, fossil fuel-based agricultural value chains,” states the Brookings Institution.

    Three companies are among those with solutions that can help support small farmers: Solar Freeze, Ecozen, and InspiraFarms. 

    Empowering small farmers with cold chain solutions addresses multiple issues. 

    Food waste is one issue. In the developing world, including many parts of Asia and Africa, food waste occurs before the food even reaches the market, such as during post-harvest. This contributes to food insecurity and malnutrition, as well as greenhouse gas emissions and ocean acidification.

    Maintaining supplier diversity is another issue. In China and other developing nations, the farming sector is made up primarily of small farmers. What happens when small farmers cannot remain viable, whether in the developing world or industrialized nations? What would fewer small farmers mean to the global food supply chain?

    Lack of diversification in the global food chain due to industry consolidation is problematic. While the advent of industrialized farming in the twentieth century brought efficiencies to food production, the benefits today are overshadowed by serious concerns, including the environmental impacts related to chemical fertilizers and animal waste, and the overuse of antibiotics in animals. 

    Meanwhile, Big Ag keeps on getting bigger, controlling more land, more resources, and more of the global food supply chain—what and how food is produced, and ultimately what ends up on our grocery shelves. Moreover, consider that only four companies now control two-thirds of the global seed market. 

    Filed Under: Food/Beverage

    Farmers’ Markets Are Happening—Support Them!

    SCSparrow Staff · April 2020 ·

    In recent years, the Buy Local movement has gained considerable popularity in the U.S. with most major grocery chains offering shoppers a selection of locally sourced fresh produce.

    Farmers’ markets are a part of that movement, and their role in the food supply chain is taking on added importance right now as consumers find bare shelves at their local chains.

    In Southern California, certain farmers’ markets are continuing to operate uninterrupted, and in some cases the vendors are going out of their way to meet demand.

    The Coachella Valley Certified Farmers’ Markets (CVCFM), which operates three markets throughout the week in and around Palm Springs, Calif., is an “essential service” that is permitted to remain open to the public.

    According to the latest news from CVCFM, “We have created a list of modifications to our normal operations that incorporate health and safety recommendations from the California Department of Food and Agriculture and the California Department of Public Health.”

    Some of the modifications include more spacing between vendors’ booths and tables to facilitate social distancing; hand-washing or hand sanitizing stations at booths; and a temporary ban on entertainment in order to discourage people from lingering.

    Some vendors are even arranging for direct-to-customer delivery or customer pick-up, if possible.

    The modifications by the CVCFM “look out for the health and safety of our customers and participants” and also provide “a critical source of income for our farmers and artisan food makers.”

    In Los Angeles, however, Mayor Eric Garcetti announced a suspension of farmers’ markets on March 30. Markets that want to continue operating are now required to submit a plan to ensure social distancing measures.

    SCSparrow will update information as it changes.

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    Filed Under: Food/Beverage

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    I VOTED (for cannabis)

    No matter their political stripe, many Americans are in agreement with efforts to legalize recreational and medical cannabis.

    On November 3, voters legalized marijuana for adult use in Arizona, Montana, New Jersey and South Dakota. Initiatives to legalize medical cannabis passed in Mississippi and South Dakota. The rapid expansion of legalized cannabis throughout the U.S. has a direct impact on the supply chain.

    Let’s start by considering the food supply chain–a valuable case study with COVID-19 as the backdrop. Early on, Americans experienced food shortages at the retail level. Manufacturers and distributors scrambled to realign networks to supply grocery stores where demand was spiking, while shifting away from restaurants and the hospitality sector where demand was tanking. In a matter of months, online shopping and food delivery to consumers’ homes grew dramatically. As a result, the food supply chain is in the midst of reinventing itself.

    The cannabis supply chain faces some similar challenges. Most importantly, there’s an opportunity now to learn and adopt best practices from the food and pharmaceutical supply chains with which it shares key commonalities.

    What are the risks to the cannabis supply chain? California’s unprecedented fires this year threatened growers throughout the state. How quickly can infrastructure scale-up to meet demand, and at what cost? Commercial and industrial real estate is currently at a premium with the proliferation of e-commerce. What about transportation, distribution and logistics capabilities, including reverse logistics in the case of product recalls? Facilities, equipment, and skilled workers are in high demand, and as competition for these various assets tightens, what does that mean for the entire perishables sector (food, cannabis, wine, beverages, pharma, etc.) that need them? Collaboration and creativity can provide critical solutions across the board.

    On a related note, a small handful of American and European companies are in talks with Rwanda now about exporting cannabis to the country to meet rising pharmaceutical demand. Supply Chain Sparrow has previously identified cannabis exports as a massive opportunity for the U.S., which of course, would require legislative changes at the federal level.

    Vote. And keep on voting.

    Be Brave. Fly Right. And keep in touch at info@scsparrow.com.

    Lara L. Sowinski, Executive Editor

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