New Product Launch: ClimateLens Monitor Yield Outlook - see regional and location-specific yields on key commodity crops, updated weekly.Learn More
Jasmine Spiess • April 8th, 2024.
Our warming climate is having a costly impact on the availability of key commodity crops. Have you seen the price of cocoa lately?
Fortunately, there are ways to forecast food and beverage supply chain challenges. With the right climate insights, companies can find opportunities and mitigate risk in the face of climate volatility.
Brian Golden, Head of Global Supply Solutions at Suntory Holding Limited, sat down with our VP of Sales, Adam Rice, for a virtual fireside chat. They discussed the importance of climate adaptation and what success in tech solutions looks like. This includes Suntory’s innovative approach to applying ClimateAi technology to ensure a resilient, sustainable, and profitable supply chain.
Three main factors are top of mind:
When it comes to tackling short-term supply chain volatility, very few tools can look accurately beyond two weeks.
For procurement teams looking to build their short and long-term strategies, there is an impressive amount of raw climate data out there. Unfortunately, the data is often infrequent and not translated to business actionability in finding opportunities and mitigating risk.
“We know our ingredients come from nature. The climate is a key driver of nature. If we don’t have visibility into nature (or climate), we’re not going to know if our products will have a future or not.” – Brian Golden.
Suntory is an enterprise sustained by nature and water. The team at Suntory prioritizes its vision of what is happening today with the climate, and what will happen in the future.
Suntory’s sustainability goals are simple: ‘To inspire the brilliance of life, by creating rich experiences for people, in harmony with nature.’ Its Global Supply Solutions team is focused on Gemba-based solutions to the challenges of climate change and decarbonization across all aspects of the supply chain. The Gemba is a Japanese term literally meaning “actual place”. This can also be translated to mean any place where the most value-creating work occurs. This approach helps to ensure the company is respecting its commitment to the environment. It also ensures the supply and quality of ingredients Suntory needs to continue making the products consumers love.
Brian shared, “If we’re not thinking about climate short and long-term, we’d be very challenged to have a long-term business.”
Suntory believes that problems and solutions can only be understood and solved at the Gemba. This means working with farmers on the field to understand situations and problems at the ground level before taking action. For Suntory, ClimateAi technology is one integral piece of that puzzle.
Part of Suntory’s philosophy for addressing big challenges is having a long-term vision. ClimateAi’s proprietary model can forecast on any time scale from zero days to 60 years.
Brian shared how using long-term climate insights can inform strategy, “We can have long-term vision… thinking about the risk and turning that into cost because of climate change. We see some commodities that may have a 30%–40% decline in yields in some locations. We can back that up with solid data and that helps us influence our long-term strategy.”
A new capability for Brian’s team is its ability to look at insights in short and long-term time frames. With insights into what the climate will look like 20, 30, and 40 years into the future, the team can make informed decisions. These decisions include whether current growing locations for key commodity crops will continue to be viable and discovering future opportunities for growing locations.
Brian provided a tangible example of how our climate insights helped his team in-season. “In the short-term, we have some examples where we’ve seen temperature extremes coming, timed with droughts. We saw this with coffee – where we saw an alert come through, but the market wasn’t talking about it yet. And I think we saw the insight something like 5–7 days before the market was talking about it.”
Picking up just one or two insights can have huge dividends in this space. With forewarning of supply chain disruptions caused by climate change, leading companies like Suntory can make better operational decisions with targeted insights.
Suntory builds climate insights into its strategy to understand what changes it needs to make to achieve its ideal future state.
Using ClimateAi’s climate intelligence, Brian’s team identified that their plant breeding initiative needed a new angle. Based on better insights into future climate conditions, they realized they needed to focus not just on drought resistance, but also on temperature resistance.
Brian made the point that accuracy is sacrificed when your team is relying on old research. “You have different research papers and different mechanics of how they come to their conclusions. When you’re looking at a basket of commodities and comparing them against each other — Where is your biggest risk? It’s impossible to put them on the same playing field…[ClimateAi’s] data is up to date. We’ve aligned it with third-party reviews. And it gives us an apples-to-apples comparison across commodities that, without a universal tool like this, would be impossible to do.”
Climate intelligence translated into actionable information gives companies like Suntory insight into pathways toward a climate resilient supply chain.
Brian stressed the importance of having a plan for supply chains in the face of climate volatility. “The cost of not taking action is extremely large numbers. If you look out 5 years, 10 years, 20 years, and you don’t know if you can get a commodity, or what the quality is going to be, or where you can get it from — and you’re not building plans to get ahead of that — the cost of being late or not getting it right is extremely large. If you translate things to cost, you’ll get more innovative very quickly.”
As climate change accelerates, supply chain disruptions will increase. Gaining a better understanding of how extreme weather might affect future procurement processes can help businesses stay ahead of these disruptions and drive value in long-term strategies.
Thanks again to Brian Golden for taking the time to chat with us. We’re grateful for Suntory’s partnership and its role in driving end-to-end climate resilience in food and beverage supply chains.
As Brian shared, we can’t do this alone. “We want other companies to be on this journey to understand climate risk. One of our reasons for being on this fireside today is to encourage other companies to think like we are — to help raise the bar for everybody.”
If you’d like to go deeper, access the full fireside chat here or book a meeting with the ClimateAi team.
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Near the end of our chat with Brian, he spoke about the impact ClimateAi’s new Monitor Yield Outlook tool is having on his team’s workflow. The tool takes yield impact, brings it in-season, and applies it to a wide variety of key commodity crops, giving sourcing and procurement managers an edge in the market with weekly yield outlooks.