Intelligent Supply Chain Technologies for Agri-Food Supply Chain Resilience in the Chinese Fruit Sector ^†

Abstract

This research focuses on the resilience of China’s agri-food supply chain and explores how to improve its resilience under the current challenges of multiple supply chain disruptions. As a leading global producer of agricultural products, China faces a serious problem of supply chain vulnerability, with an annual loss of more than 12 million tons of fruits and vegetables due to supply chain disruptions. To address this problem, this study proposes an Industry 4.0-based intelligent supply chain as a potential solution to improve the resilience of agri-food supply chains. Based on semi-structured interviews, the different disruption risks faced by Chinese fruit supply chains, including weather and climate, quality control, and information asymmetry, were identified as well as the main enablers for resilience enhancement. Intelligent supply chains based on Industry 4.0 technologies such as IoT, big data and automation were found to increase Chinese agri-food supply chain systems to improve visibility, situation awareness and robustness, and thus can have a positive impact on supply chain resilience.

1. Introduction

Resilience in the agri-food supply chain nowadays plays a significant role under the increasing pressure on the stable supply of agri-food. According to statistics, the global population is now expected to increase to 8 billion by 2050, and it is even expected to reach over 10 billion in 2060 [1]. Such a drastic population growth trend undoubtedly implies a continued surge in the demand for agri-food products in contemporary society. However, the agri-food products are highly perishable and seasonal, which makes it difficult to control their quantity and quality [2]. Agri-food supply chains in all forms are exposed to a range of risks, including social, political and natural risks, in their operating environments at all stages from production to the final customer [3]. The aim of this research is to explore the potential relationship between intelligent supply chain technologies and agri-food supply chain resilience. In order to fulfil the aim, the enablers for enhancing the resilience of China’s agri-food supply chains, as well as the related technological applications of intelligent supply chains, are to be identified. This research demonstrates the potential benefits of intelligent supply chain technologies for agricultural supply chain resilience by examining the relevant enablers of increased resilience of agricultural supply chains, the current disruption risks faced by agricultural supply chains, Industry 4.0-based intelligent supply chain technologies, and the relationship between the implementation of intelligent supply chain technologies and the resilience of agricultural supply chains. This allows intelligent supply chain technology to be used as a brand-new solution to provide relevant enterprises with a new perspective on stabilizing supply chain operations and enhancing enterprise competitiveness.

2. Literature Review

2.1. Risks in the Agri-Food Supply Chain

The vulnerability of agri-food supply chains is greater than that of supply chains in other sectors, given the inherent inflexibility of demand for agricultural products and the long and highly seasonal production cycles. Furthermore, agri-food supply chains are unique and complex compared to supply chains in other industries due to the highly perishable nature of their products and the extremely stringent time constraints [4]. In addition to the general sources of risk that supply chains generally face, there are sources of risk that are specific to agri-food supply chains [4], such as external disturbances that are difficult to predict and manage, and weather shocks. These external disruptions often have a significant impact on activities within the internal operations of the agri-food supply chain. In the current study, the following risks are considered: climate and weather, pests and diseases, labour shortage, quality control, warehousing conditions, transportation conditions and other transportation issues, and information asymmetry.

2.2. Resilience-Enhancing Enablers of the Agri-Food Supply Chain

The enablers for supply chain resilience are the management tools, strategies, and initiatives that can improve supply chain resilience and, therefore, help supply chains cope with addressing supply chain disruptions. The enhancements of supply chain resilience are considered to be the result of different enablers working together in synergy [5]. After reviewing and summarising the relevant literature, the authors identified the core enablers of resilience enhancement, which for this study are: situation awareness, visibility, flexibility, coordination, agility, and knowledge management.

2.3. Definition of an Intelligent Supply Chain System and Industry 4.0 Technologies

An intelligent supply chain system is also defined by [6] as a connected business system across the entire supply chain that makes the AFSC ecosystem intelligent enough to cope with the disruptions due to various risks in different parts of supply chains by integrating the key technologies of Industry 4.0 (I4.0). For the application of intelligent supply chain systems in the agri-food supply chain sector, Mei [7] advocates the necessity to consider all the subjects from the production end to the marketing segment, to achieve intelligence in the entire agri-food supply chain, from production, processing, storage, and transportation of agricultural products.

I4.0 technologies are the main drivers of intelligence in the Agri-food Supply Chain (AFSC); Cricelli, Mauriello and Strazzullo [8] argue that the advantages they provide to AFSC are mainly related to the specific activities or tasks in each stage of the supply chain process, where different technologies are combined to provide the required advantages or achieve the set goals in each part. For example, in the production phase, IoT combined with smart sensors and other technologies supports the realisation of the management concept of ‘precision agriculture’ [9]. In the ASC, there are various I4.0 technologies that are used, such as the Internet of Things (IoT), Big Data, AI, and process automation.

2.4. China’s Agricultural Supply Chain

The traditional supply chain in China’s agricultural industry has long suffered from low efficiency and high vulnerability [10]. Statistics indicate that approximately 15% of China’s agri-food products are lost or damaged due to disruptions in the agri-food supply chain, a rate that is reported to be double or even triple that of other developed countries [11]. In today’s increasingly volatile environment, exacerbated by unforeseen events such as the COVID-19 pandemic, there are even greater challenges to supply chain resilience, including labour shortages, transportation failures, and supply imbalances [12]. Therefore, it is critical to improve as much as possible the resilience of agri-food supply chains in China.

3. Materials and Methods

To gain an in-depth understanding of the research topic, this study conducted semi-structured interviews with industry practitioners from China’s agri-food supply chain until saturation was achieved. Ten interviews were conducted in total with presidents and general managers in different companies in the field of fruit supply chains, which have introduced I4.0 technologies or have a leading position in the industry. Therefore, these research participants have a wealth of expertise about particular issues in the intelligent agri-food supply chains practice in China. The interviews were conducted in person and were audio-recorded. The duration was 20 min each. By interviewing these participants, the researchers of this study aimed to understand the enablers of resilience, the I4.0 technologies that they use and whether these technologies help improve resilience. As part of developing the interview questions, different themes were developed and these are: agricultural supply chain resilience enhancing measures, sources of risk of agricultural supply chain disruptions, intelligent supply chain technologies implementation, and demographics of the respondents.

4. Results

In order to understand the key enablers of the resilience of the AFSC in China and its relationship to the implementation of the intelligent supply chain technologies, 10 experts were interviewed. The interview analysis indicated that most Chinese fruits and vegetables are vulnerable to disruptive risks such as weather, quality control, and information asymmetry in the process of supply chains. This led to a widespread preference amongst fruit supply chain practitioners to take steps to avoid risks before they occur, i.e., in a resilience readiness phase.

The I4.0-based intelligent supply chain technologies, such as IoT, big data, and automation, can help China’s ASFSC system to improve its visibility, situational awareness, and robustness by strengthening supply chain productivity, adapting to market demand, enhancing information exchange, and improving the ability to monitor unknown risks, etc. Six of the interviewees recognised the seasonality of their fruit and vegetable production and the vulnerability of farmers in terms of the market uncertainty, which resulted in the inability in most cases in the fruit and vegetable supply chain to cope and adjust to sudden disruption risks immediately, with a long-term recovery period. Therefore, they agreed on enablers identified through the literature review by placing a great emphasis on the important roles of situation awareness and coordination in the operation of their fruit supply chains, which can help to avoid or mitigate the possibility of disruption risk. Similarly, a certain number of interviewees emphasised the positive effect of visibility on the resilient performance of the supply chain, arguing that supply chain visibility is the underlying pillar of supply chain resilience. Other than the enablers mentioned above, some of the participants also valued the ‘robustness’ to support the resilient performance. They mentioned strategies such as continuously optimizing the selection of the crop varieties, improving the conditions at the production sites, and/or investing in equipment, etc. These measures can directly enhance the resilience of the fruit production process and the final output products by reducing sensitivity to natural disasters. Therefore, they have become an excellent solution for supply chain resilience nowadays. Through the analysis of the interviews, it can be observed that all participants adopted some of the measures related to these resilience phases, which partly proves the widespread use of the concept of resilience enhancement in the Chinese fruit sectors. Of these, the readiness phase-related measures were the most considered by all participants, reflecting the common practice among practitioners when dealing with supply chain disruption risks.

Nowadays, various applications of I4.0 have been introduced into the Chinese AFSC. It was evident from the interviews that eight of the respondents have introduced IoT based technologies into their operations. These interviewees agreed that IoT technology has improved their ability to control their processes, especially to monitor the various risks in their processes. Most of them indicated that through real-time monitoring related to the fruit or the operational environment, they can better understand the status of their operations, which helps them to identify potential problems more quickly and reduce risks. In terms of the technology concept of process automation, five participants indicated that they were using technologies related to process automation. The application of automation was mainly used in the warehouses to assist in automating picking and grading systems. Respondents agreed that the application of automation can improve overall process efficiency and reduce the risk of human error. Further to the interview transcripts, a few interviewees indicated that they were using big data techniques. They emphasized the key role of big data in demand forecasting. By analyzing large-scale data, they are able to predict market demand and supply chain needs more accurately, and thus better plan and optimise their supply activities.

Five out of the ten participants agreed that the introduction of process automation technologies across the chain has increased the robustness of supply activities. In other words, in their operations, their fruit supply chain can be made more stable as well as less vulnerable to external fluctuations through process automation. Intelligent supply chain technologies can enhance information sharing among the stakeholders in the supply chains, which can improve the visibility for information accessibility. In which some of the participants have mentioned the role of IoT-based technologies in the operational activities and related product status information recording and traceability. The introduction of IoT-based technologies can also make the supply chain systems more capable in terms of situation awareness. This would, in turn, increase the performance of risk management as companies will be aware of potential problems faster and thus will be able to react quickly to solve them. In summary, most of the interviewed experts in the AFSC of China have already actively adopted intelligent supply chain technologies.

To conclude, from the perspective of these real-world participants, I4.0-based intelligent supply chain technologies have great potential to improve supply chain resilience. These intelligent supply chain technologies were mainly said to improve productivity, forecasting accuracy, and process efficiency across the fruit supply chain, with enablers such as robustness, situation awareness, and visibility as the specific effects performance for the resilience enhancement being the most frequently mentioned by these participants.

5. Discussion and Conclusions

The interview analysis revealed that most Chinese AFSCs are vulnerable to disruptive risks such as weather, quality control, and information asymmetry in the process of supply chains. This has led to a widespread preference amongst AFSC practitioners to take steps to avoid risks before the risk occurs, i.e., in a resilience readiness phase. Situational awareness, visibility, and coordination were found to be the most important enablers of resilience for most participants. However, there is one unanticipated result from the interviews, that is, that the participants also value the robustness of the supply chain system itself, i.e., its ability to resist risky disruptions. The I4.0-based intelligent supply chain technologies, such as IoT, big data, and automation, can help China’s AFSC to improve its visibility, situational awareness, and robustness by strengthening supply chain productivity, adapting to market demand, enhancing information exchange, and improving the ability to monitor unknown risks. Thus, it can be concluded that, based on the interviewed experts, an intelligent AFSC through I4.0 technologies can indeed improve its resilience for AFSC in China. However, further data should be collected through interviews with more experts or a large-scale questionnaire to have more generalizable results.