Garlic price movements are influenced by the weather and harvest volume, but also by the clarity of view buyers have of the field, the market, and the ship transporting the product. Software is used increasingly by importers, wholesalers, food processors, and distributors to monitor supply chain activity, transportation costs, inventory levels, and purchasing risks. This clarity of vision enhances the decision-making process for those involved in procurement.
Four types of technology are critical for agriculture: AI, predictive analysis, satellite-based crop monitoring, and IoT-based sensors. No matter which of these technologies you use, none will take the risk out of farming. Instead, each of these technologies pulls together data from various sources into a single location, allowing buyers to identify possible issues with their supplies earlier than they would have been able to before using these types of technology. Additionally, each of these technologies allows buyers to determine the actual cost of international sourcing.
AI-Powered Predictive Analytics
Machine learning models can analyze multiple data sets such as historical prices, weather conditions, estimated harvests, transportation costs, and customer demands simultaneously. This analysis is valuable as it will allow the machine learning model to identify potential correlations among these variables that a human analyst may have overlooked during their spreadsheet-based review process.
An importer could use this process as a way to verify their decision making. They wouldn't have to rely solely upon previous average cost figures or one supplier's price quote. Rather than making decisions based on limited information, the procurement team would be able to test out different options and determine how changes in supply would impact their costs. For example, if there were a platform which combined historical harvest data, current freight rate trends, and seasonal demand patterns, it would be possible for the platform to identify potential "tight markets" (or shortages) prior to them occurring. This would allow the procurement team to alter their purchasing schedule, identify alternative sources for materials, and revise their inventory management strategies.
A forecast can only be as accurate as the data used to create the forecast, the manner in which the model was developed, and how well the market remains stable. A forecast should be considered as another factor in making decisions along with supplier checks and conducting market research; however, a forecast should never take the place of your own decision-making process.
Real-Time Data Analytics and Price Intelligence
Generally speaking, quotes, purchase histories, inventory control systems, shipping tracking data, and industry reports generally reside in multiple locations. With today's analytical platforms, these components can be viewed as one component, thus providing better visibility into price fluctuations and costs disparities.
By tracking garlic prices, businesses can compare their historical purchasing data with external market trends to better assess the fairness of each potential supplier's quote. With a business intelligence (BI) dashboard, inconsistencies in pricing are easy to identify, you can compare multiple suppliers at once, and your team can establish clear purchasing guidelines. Additionally, automated alerts assist by informing your team if a quote exceeds a specified budget, inventory falls short of a goal, or shipping expenses increase significantly.
One problem is that price comparisons only make sense when you have data that is comparable. For example, if you want to compare prices of products from different suppliers, you must make sure that the products you are comparing are the same in terms of their grade, origin, shipping volume, delivery conditions, and even the time that you received the quote. Otherwise, it would be possible for one supplier to appear less expensive than another simply because he/she is not selling what you are looking for.
Satellite Imaging and Digital Crop Monitoring
Using satellites, analysts are able to obtain a broad view of the primary agricultural areas. These areas can be monitored for early indications of crop stress using satellite based vegetation index, rainfall estimate, temperature reading and land condition data.
By incorporating additional information, such as weather forecasts, past production records, and reports from the field, the accuracy of estimating a crop's current status will increase. Importers can utilize this information to forecast potential supply limitations and plan for alternate sources. For instance, when a large production area experiences prolonged periods of adverse weather conditions, analysts can determine if the projected yield is threatened. After determining that the projection is in jeopardy, buyers can review their options regarding supplier availability, inventory coverage, and logistics before making final decisions about placing new orders.
Remote sensing does not provide measurements for every factor affecting garlic yields, and its effectiveness as an analysis tool is dependent upon the quality of images available (resolution), the method of analysis used, and supporting information. However, remote sensing can make visible production risk factors which would otherwise be difficult to identify.
IoT Sensors and Intelligent Storage Systems
IoT sensors connect the happenings inside a warehouse to a monitoring platform, allowing for real-time tracking of conditions. In regard to garlic, there are several key parameters that should be monitored including; temperature, relative humidity, ventilation and any environmental changes occurring around the area.
Garlic goes bad faster when it is stored poorly; therefore, the amount of garlic available to sell decreases. Sensors continuously measure and report back to users if the measurement falls out of range. When the measurement goes out of range, the warehouse staff will either fix the ventilation issue, adjust settings, or find a quality issue prior to being too big to handle. Tracking the history of the storage areas/batches that have been tracked by the sensors helps to identify recurring issues with these areas/batches.
The value added by using the sensors is that you are able to view the status, quantity and estimated delivery date of your products on a single screen by integrating the sensors into your inventory management system. Although the sensors cannot eliminate spoilage entirely, they will allow for more consistent product monitoring than if you were to manually inspect your products periodically.
Digital Supply-Chain Visibility and Shipment Tracking
When importing garlic you have to go through several processes: locate and deal with suppliers; pack the product; arrange transportation (freight); fill out the paperwork required by customs; handle the cargo after it arrives; and deliver the cargo to its final destination. Any unexpected delay or additional cost incurred at any point along the way would increase the total cost of the shipment.
The use of digital supply chain platforms allows for the consolidation of all relevant documentation, including purchase orders, shipment records, delivery statuses, and other logistics-related documentation. In addition to being able to provide real-time location data for cargo as well as projected arrival times based upon the specific platform being used and its integration with various carriers, digital supply chain platforms enable logistics personnel to anticipate delays. Additionally, several digital supply chain platforms allow for the association of freight quotes with procurement and inventory records so that the cost of transportation may be evaluated in relation to the purchasing price of goods rather than solely evaluating quotes received from suppliers.
This is important because what appears to be a "cheaper" shipment may not necessarily turn out to be so. A lower cost shipment with extra handling required, storage costs, or longer delivery times may actually result in higher costs for the shipment. As a result, when procurement professionals have full visibility of all the variables involved in a shipment, they can use this information to determine which shipment option is most cost-effective.
Procurement Automation and Supplier Evaluation
Procurement software enables you to access and compare quotations from various vendors, along with product specifications, minimum order quantities (MOQ), delivery schedules, shipping rates, insurance coverage, and available payment methods in one place. By having access to all of these details in one location, you will be able to easily assess the benefits of using each supplier.
The use of automated workflows can assist in identifying potential issues with your quotes, discrepancies within your specifications, as well as providing an estimate of the shipping cost for your products. As such, all offers being evaluated by your teams will be viewed using the same set of criteria, thus reducing the time spent by those teams in performing administrative duties. Today, many of the more advanced systems currently on the market are able to evaluate a supplier's historical performance based on factors such as delivery performance, quality performance records, response time to request for quote (RFQ) or other communications, and buying behavior. In doing so, these systems provide a much more complete picture of how reliable a supplier has historically been, as well as indicating areas that could present some form of risk.
Automation will never take the place of humans. Prior to being able to approve an order, a person must assess the quality of a product (grade), verify the condition of the products when they arrive at your location (delivery), review the details of the contract (contract) and determine if the supplier has provided accurate information.
Digital Cost Modeling and Landed-Cost Optimization
Importing garlic can be expensive. To calculate the total cost of importing garlic, you need to use a variety of computer-based tools such as spreadsheets, accounting software, and procurement software. The total cost of importing garlic includes the purchase price of the garlic, packaging costs for the garlic, handling charges for transporting the garlic from the grower to the port, shipping costs for transporting the garlic from the port to your location, insurance coverage for loss or damage during transit, documentation costs related to importing the garlic, and customs fees imposed by the government on imported goods.
Here's a hypothetical shipment of 10,000 kilograms:
These figures are illustrative and do not represent current market quotations. The landed cost is calculated by dividing the total applicable shipment expenses by the quantity imported, resulting in $1.55 per kilogram in this example.
Digital cost models make it easier to update individual expenses, compare alternative freight arrangements, and assess how exchange-rate changes or additional charges could affect purchasing budgets. Scenario analysis can also help procurement teams understand the financial implications of different shipment sizes and delivery options.
A digital model allows you to easily adjust one expense item, compare shipping options, or evaluate the financial impact of changes in currency exchange rates and additional costs on your budget. Additionally, scenario analysis illustrates the economic implications of varying shipment sizes and delivery options.
Integrating Digital Technologies for Smarter Procurement
The greatest benefits typically result from the integration of these different types of tools. For example, predictive analytics identifies risks associated with a particular market; satellite observation provides data regarding the condition of crops; Internet of Things (IoT) sensors monitor stored inventories; and supply-chain platforms track the location of goods being transported.
A company can respond with coordination once they are connected to procurement and inventory systems. For example, if there is a possible shortfall in production, a rapid assessment of supplier quotes, required inventory levels and delivery times can occur.
To achieve success, you will need to utilize accurate data, appropriate software, staff who have been properly trained and periodic evaluations of the system's performance. For organizations with limited technology budgets, consider beginning simply by utilizing digital procurement records, automated calculation of costs and tracking shipments. At a future date, you may want to look into utilizing more sophisticated forms of analysis and connecting storage devices.
Conclusion
Businesses are now using new technologies such as AI (Artificial Intelligence), predictive analysis, satellite imagery, IoT monitoring, and digital supply chains to analyze agricultural market trends and make decisions about their garlic imports. These technologies allow businesses to assess market conditions; monitor inventory levels; evaluate potential suppliers; and calculate the total cost of sourcing.
The use of price indexes will not solve the issue of price volatility nor will it provide a guarantee that business forecasts will be accurate. However, what these tools can do for businesses is allow them to make more informed decisions based on more complete information, and identify potential issues that may arise from their operations earlier than if they were relying solely on historical data. By combining the use of reliable market data with digital monitoring, verifying suppliers, and providing clear analyses of costs, importers are able to develop a more robust procurement strategy in today's increasingly data-driven business environment.