A key lesson for businesses today: an organization’s risk management strategy may be only as good as its commitment to sustainable sourcing. Resilience is valuable throughout the supply chain, especially for food and agriculture products. The addition of a handful of key metrics to understand the resilience of both farm communities and supply chains – with social and environmental impacts as top priorities – may be one of the best future-proofing strategies a business can adopt.

Few could have predicted the full extent of COVID impact in the agri-food sector. Border closures, a shrunken pool of farm laborers, processing and manufacturing delays, and supply shortages and gluts. Now is the time to re-focus or adapt sustainability programs to better prepare for the future and address the next crises of climate change, biodiversity loss, and inequalities. It is likely that going forward, companies will be under even greater pressure to demonstrate sustainability, proving their impacts and contributions to the SDGs. The rising performance of ESG investments is an undeniable indicator that businesses that take sustainability seriously lower their risks and may have in most cases improved performance.

A key feature of those who succeed during disruptions is having business-critical information that helps them take smarter decisions. The Coca-Cola Company partners proactively with leading institutions to apply science-based metrics to help them improve their sustainable sourcing efforts and ensure they are achieved. “Our ability to trace our supply back to the farmer allows us to understand some of the key factors such as areas of drought or deforestation,” says Praveen Kumar Kolimarla who heads up this effort for the company’s global brewed beverages procurement. “We can now see the growers that supply us! Their faces, their family, their levels of productivity, their resilience to climate change, and even the training and education they are getting.”

Managing performance with the right kind of data

Businesses can achieve this level of insight by monitoring sustainability performance with key resilience metrics, structured with the appropriate technology for gathering and managing their data as an effective intelligence system. Such sustainability intelligence systems provide global supply chains with forward-looking prescriptive analytics to improve decision-making and add transparency and accountability.

An effective sustainability program should deliver useful, actionable data to warrant investing business resources during challenging times. This system can be established in a matter of weeks.

Start with determining what is material and then select science-based KPIs that measure what matters. Consider the core social, economic, and environmental aspects of the supply chain. Use indicators that avoid simplistic yes-no answers or checklists as these limit understanding, are subject to misinterpretation and eliminate options for continuous improvement. And do regular monitoring of sustainability performance to gain a deeper understanding of the risks and opportunities in the supply chains and the communities where they operate.

“Crises such as the pandemic…remind us of the importance of asking the right questions,” writes Cassie Kosyrkov, chief decision scientist at Google.[1] Analysis can “reveal threats that you never even imagined should be on your radar. That sort of work can’t be managed with a stopwatch and a checklist”.

Resilience is a valuable asset in supply chains as well as in farming systems and yet it can be complicated.[2] To understand resilience means getting vital data on important supply chain factors as well as on the farming communities that are the core suppliers. To minimize the cost and complexity of gathering such data, we convened a publicly funded collaboration with knowledgeable institutions to craft a standard set of indicators that can be readily applied. The collaboration distilled the very best work globally in resilience measurement and included the FAO, Conservation International, the International Center for Tropical Agriculture, Sustainable Food Lab, Lutheran World Relief, Catholic Relief Services, and Root Capital.

Of course, supply chains cannot be very resilient without viable or resilient farmers. Analysis suggests that farmers’ ability to cope with the risk of unexpected events – whether climate change, drop in market prices, or health crises – is strongly correlated with specific short-term preparedness strategies[3].

Even beyond strengthening a company’s supply chain, resilient farmers can be valuable to revitalize Micro, Small and Medium Enterprises (MSME) sectors as an engine for rural development through a virtuous cycle of increased productive capacity, higher productivity and spillover in infrastructure investment. in a number of countries.

Software system or spreadsheets?

Managers sometimes debate the merits of software vs. spreadsheets to track sustainability in supply chains. It is indeed useful to initially design a system in analog form or spreadsheets to gain an understanding of needs and to make design adjustments in a simple format. However, these quickly become unmanageable, severely limit understanding, and certainly present security risks. Today, there are several types of systems and software to help. If you have mapped your needs then it is easier to select a system. For non-experts, the process of evaluation can be time-consuming because there are many promising products that do some things well but fail at others. IT departments can help a lot but are often not versed in the available technologies and it is difficult for non-experts to evaluate software effectively. COSA applies more than 164 test points based on experience evaluating and applying solutions and software for global firms.

Great systems give managers the ability to process and understand complex data in quick-to-digest dashboards and data visuals. By thus simplifying learning, managers who are under busy workloads can take less time and be better informed of what matters in a timely manner.

Reality check

Smart businesses cannot go back to things as they were before. Even in the midst of seismic market changes, sustainable sourcing is no longer a nice-to-have. The failure to track any metrics, let alone the right metrics that capture risk at origin, has caught many off guard. But every crisis brings an opportunity to learn and improve. Companies can gain critical insights through farmer-centric sustainability intelligence for everyday management that can also reveal emerging risks at origin.

Of course, even the best data or intentions cannot solve every crisis. Our research suggests that lasting resilience will also need system-level changes in the sphere of governance, services, and infrastructure.[4] But, that has always been the case. Meanwhile, successful businesses move ahead and engage the tools to have a more resilient and better-prepared future.

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[1] Koayrkov, Cassie. “To Recognize Risks Earlier, Invest in Analytics.” Harvard Business Review, Vol. 98 Issue 6, November-December 2020, pp. 53-55

[2] For agri-food businesses, we define resilience as the capacity of people, communities, or systems to prepare for and to react to stressors and shocks in ways that limit vulnerability and promote sustainability.

[3] Serfilippi E., De Los Rios C. & d’Errico M. 2020. Coffee in crisis offers a lesson in resilience: evidence from Guatemala. FAO Agricultural Development Economics Working Paper 20-02. Rome, FAO.

 [4] : COSA. 2017. Simpler Resilience Measurement: Tools to Diagnose and Improve How Households Fare in Difficult Circumstances from Conflict to Climate Change.