01 Oct 2024

From Farm to Cup: The Coffee Supply Chain Journey

The coffee supply chain is volatile and requires careful planning to enhance efficiency. In this blog, you’ll discover the challenges and the solutions to solve the intricacy.

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Coffee is a culture, a universal connector that brings people together. As dawn breaks, millions of people stir a cup of coffee to begin the day; in the office, co-workers bond over it. Meanwhile, friends and loved ones gather at cozy cafes to share laughter and talk over their favorite brew. It is a globally appreciated beverage, and its popularity is backed by impressive statistics. According to FAO, coffee production has surged from approximately 8.5 million tonnes in 2008 to 10.7 million tonnes by 2020, cultivated across about 11 million hectares.

Table of Contents


Global Coffee Industry: Facts & Figures

According to the Food and Agriculture Organization of the United Nations, coffee is the world’s most traded commodity and consumed beverage. In 2022, the coffee sector reached a remarkable retail market value of approx. US$ 102 billion and is projected to expand at a compound annual growth rate (CAGR) of 4.28% from 2021-2026. Brazil, Vietnam, and Columbia have consistently been the top producing and exporting countries, while the EU, US, and Japan emerged as the largest importers in 2021/22. The coffee value chain plays a vital role in the global economy, providing direct employment to roughly 125 million people worldwide, according to the Fairtrade Foundation, 2022.

The Journey of A Coffee Bean

Coffee begins its journey on 12.5 million farms worldwide, primarily run by smallholder farmers who grow and harvest the beans. After harvesting, the cherries undergo a meticulous processing routine. They are then sorted, dried, and packed into sturdy jute or sisal bags, ready for the next stage of their journey. At this point, third-party intermediaries step in; they handle everything from buying and transporting to selling. The beans are then roasted and distributed to retailers who brands them. These retailers distribute the beans to many outlets, coffee shops, grocery stores, and restaurants, ultimately bringing rich aromatic beverages to consumers.

Journey Disruptions

  • Environmental Sustainability Concerns: Coffee cultivation presents several environmental and social sustainability challenges. The use of fertilizers and pesticides can lead to water pollution and degrade soil quality. Unpredictable weather and emergence of diseases can lead to shortage of beans. Since most coffee is grown in rural areas, the journey of the coffee beans from remote regions to urban stores and cafes causes high carbon emissions.
  • Transportation Issue: Almost 90% of the coffee is grown in economically developing countries, where road conditions are poor and heavy rainfall can cause landslides, causing delays in transportation and driving up the prices of the beans.  In 2019, a landslide triggered by incessant rainfall in Indonesia severed access to the Trans Sulawesi Line, Coffee Plantation. In 2021, Brazil suffered drought followed by excessive rainfall, which caused flooding and damaged the coffee crops. This year, Colombia was hit by heavy rainfall, causing landslides in coffee-producing towns.
  • Global Pandemic & Political Instability: The COVID-19 pandemic has served as a cautionary tale on the global supply chain. In the coffee supply chain, lockdown and restrictions hindered harvest and transportation, it caused labor shortage, there was an increase in shipping cost, and the demand shifted to online. While it changed the consumer pattern, the demand remained consistent. The disruptions caused due to political instability in the region or globally can cause shortage and drive up the cost, just like COVID-19 did.

Innovative Solutions for Coffee Supply Chain Challenges

  • Demand Forecasting to Navigate Fluctuations: The coffee market is notoriously volatile, influenced by factors like seasonal change, global events, holidays, and changing consumer preferences. Additionally, weather conditions can dramatically impact both supply and prices. To combat the complexity, implement AI and advanced ML, to analyse historical data for precise forecasts on price fluctuation, demand, and consumer flavour preference. With accurate demand forecasting, manufacturers and retailers can control the unpredictable market, allocate finance optimally, and optimize inventory.
  • Scenario Planning for Resilience: The global pandemic has been challenging for the supply chain, and we saw the requirement for scenario planning. To address future potential disruptions, whether from political unrest, crop disease, or climate change, scenario planning can weigh multiple possibilities and provide the best solution. By simulating different scenarios, companies can develop robust strategies that enhance their resilience and agility in the face of unexpected events.
  • Integrate Blockchain for End-to-End Visibility: Streamline the supply chain process with blockchain and track the origin and transportation of products in real time. Blockchain enhances traceability and data recording, providing visibility and a detailed audit trail of carbon emission data. Using the data available, you can focus on developing effective carbon emission reduction strategies.
  • Optimize Transportation: To combat transportation issues and delays due to weather and political concerns, use AI/ML to map out a transportation route to move the beans around effectively. Use AI to study real-time weather conditions and traffic to determine the most suitable route, especially during the rainy season when landslides are common in remote areas.

Untangle the Coffee Supply Chain Intricacy with 3SC

Whether you’re a producer, exporter, roaster, or retailer, streamline your coffee supply chain with 3SC’S AI-ML powered end-to-end Supply Chain platform, SCAI, to improve efficiency while reducing cost. With accurate demand forecasting and valuable insights at your fingertips, you can optimize inventory levels, elevate operations, and drive profitability.

Request a demo today!


Disclaimer: We acknowledge the contributions of various sources referenced in this article, whose published content has greatly informed and enriched its content.

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