I interviewed Remco van den Berg who discussed Dealing with Supply Chain Uncertainty in Agribusiness Supply Chain.
Can you provide a brief background of yourself?
Yeah. Thank you, Dustin. Thank you for having me as well. I graduated from Cranfield University with a masters in supply chain last September 2105. From there, I applied to a graduate program within a big agribusiness company called Syngenta. And they hired me. I've been there since the first of October. The program that I'm doing is a three-year program. I'm going to do three different roles within their supply chain.
Can you discuss the types of uncertainty in the supply within your industry?
There's multiple things of uncertainty. On a more strategic level, if we look at the business on a global level, there's a lot of uncertainty in terms of businesses merging and buying each other. And it all started with the Dow - Dupont merger. And then we also have the commodity prices with that, which are dropping, not just in the agribusiness, but all of the commodity prices at this point, which drives a lot of prices down and creates a lot of uncertainty for farmers to get the right price. Also, if they will be able to buy the right products, basically, for the right prices, if their income goes down.
And then on a more operational level, we look at uncertainty on a longer term for us in terms of forecast for products, we have to make decisions for crops to grow for 2018-2019 to have the seeds ready, which now creates a lot of uncertainty in terms of what are we going to plant now to have the seeds ready in 2018 if we don't know what farmers want to grow in 2018 or 2019.
If some products that are hyping at this point, will they still be hyped in 2018 and '19? And how many acres do we need? And how much seed do we need of that? That's something I'm currently involved in with my first role to look at that. It's difficult, difficult to narrow down how much are you going to actually grow and plant on a global scale.
Then there's also the uncertainty where you can't grow every crop everywhere.
Can you talk about why is there uncertainty?
Yeah. There's uncertainty on a more global scale. It's because commodity prices are falling and because the industry is going through some rough times where mergers are happening and where shareholders are looking for more interesting ways to make money and to get the company at a right level. So, that's why there is uncertainty, I guess, on a global scale.
When we look more on operational scale, there's uncertainty because no one knows what's going to happen in 2018 and 2019. But we to make decisions to go there, to make sure we have to right products ready for that. That drives up a lot of inventory for us.
My last question is how can this be effectively addressed?
That's a good question, and that’s something that we're looking at at the moment and from a more theoretical perspective, and things I did in my master degree and everything. We learned a lot about how on a supply chain side and how you collaborate with partners and how you share the risk, etc. And the things we see now is that you can't do that alone as a company. And also, what are our competitors doing? If they don't make the same supply chain decisions, and they're all facing the same issues...you sort of end up in an endless cycle. If competitors are not doing, are you really able to do it? Or are customers then going to choose from your competitors?
So, that's something we're looking at in terms of how are you going to make it more of a robust thing. And how can we address the uncertainty of making sure that farmers know what we would have available for them and why they should get our product and why they should collaborate with us to manage the risk and to share the risk as well.
Thanks, Remco. Are there any final recommendations you have for people in your industry dealing with uncertainty?
Some of the same issues that we have as a company. To look at the collective model, looking at how we can collaborate more to address the uncertainty and to reduce... There will always be uncertainty, but if you can work together to get as much information as possible, at least you make decisions with more certainty.
Thanks for sharing today.
Yeah. Thank you for having me.
About Remco van den Berg
Remco van den Berg
S&OP Analyst at Syngenta