Reviewer

Dr. Trey Malone, Associate Professor and Boehlje Chair for Managerial Economics in Agribusiness, Purdue University

Article

Software Solutions in Agri-Food Supply Chains: A current view for sustainability reporting by Dunigan O’Keeffe, Karen Harris, and Austin Kimson

Source

Loy, R., Britton, L. L., & Malone, T. (2024). Software solutions in agri-food supply chains: a current view for sustainability reporting. International Food and Agribusiness Management Review, 27(4), 729-744. https://doi.org/10.22434/ifam.1085

Summary

A recent academic article I co-authored with colleagues from Kansas State University and the University of Arkansas explores how supply chain management software (SCM) can help agribusinesses achieve sustainability goals. We argue that mastering these innovative tools is a strategic imperative for dealing with the heightening global sustainability regulations, especially those targeting Scope 3 emissions.

As sustainability and regulatory demands increase, integrating SCM software into modern agribusiness supply chains has become essential. Our study highlights that the future of agribusiness sustainability hinges on technological adoption that reduces transaction costs, improves data management, and drives operational efficiency.


Consider the figure from the article below, which illustrates a key takeaway from the study: cutting-edge software solutions can minimize transaction costs, enhance resiliency, and ultimately complement the sustainable transformation of food systems. We emphasize that agribusinesses would benefit from adopting software systems like Enterprise Resource Planning (ERP), which are critical to procurement, logistics, and inventory management. These systems support environmental impact reporting and enhance supply chain agility, allowing firms to respond swiftly to disruptions, such as those seen during the COVID-19 pandemic. The research also highlights the significant transaction costs associated with sustainability reporting and how software can streamline these processes through automation and greater data transparency.

What does this mean for food and agribusiness?

Software as a Strategic Differentiator for Sustainability and Profitability

Agribusinesses must view software adoption as a strategic priority to stay competitive in a market increasingly focused on sustainability and transparency. Firms that fail to adapt will face higher costs, inefficiencies, and non-compliance with evolving environmental standards.

Embracing SCM software better positions agribusinesses to meet regulatory demands and gain a significant competitive edge by streamlining operations, reducing transaction costs, and optimizing resource allocation. Though the investment in these digital systems might be difficult while margins are tight, the long-term benefits of improved sustainability reporting and regulatory compliance can become a key differentiator.

For example, agribusinesses that implement ERP systems can better track their operations’ environmental impact, from fertilizers and machinery to the carbon footprint of logistics. These tools allow companies to provide accurate data to consumers, investors, and regulators, building a reputation for corporate responsibility. In this way, sustainability software becomes a strategic asset that drives compliance and competitiveness.

Workforce Empowerment and Data Transparency as Keys to Success

Even the most advanced software cannot deliver its full potential without the technical expertise to use it. A second takeaway from the article is the importance of equipping the workforce with the skills needed to use SCM software effectively. Agribusiness executives should prioritize internal training programs that help employees to enhance sustainability reporting and improve supply chain management.

Additionally, data transparency is now a key factor in building consumer trust. Today’s consumers want transparency and are willing to pay a premium for sustainably sourced products. SCM software provides real-time data on sustainability efforts, helping agribusinesses communicate their environmental impact.

Proactive Adoption of Software to Navigate Future Regulatory Challenges

With global sustainability standards becoming more rigorous, agribusinesses must proactively adopt SCM software to navigate complex regulatory requirements. Environmental reporting, particularly for Scope 3 emissions, is rapidly becoming mandatory in many regions. Firms that lack the necessary software risk facing compliance issues, financial penalties, and reputational damage.

For instance, the International Sustainability Standards Board (ISSB) has introduced new sustainability reporting guidelines, with more regulations expected. Companies that invest in software to automate data collection and reporting will be well-positioned to comply with these evolving requirements. Moreover, proactive software adoption reduces regulatory risk and improves overall supply chain visibility, allowing companies to identify inefficiencies and opportunities for improvement.

While technology cannot replace the importance of trust between suppliers and buyers, strategic adoption of SCM software offers agribusinesses a powerful tool for achieving sustainability goals.  By investing in technology, empowering the workforce, and embracing data transparency, agribusinesses can build consumer trust, streamline operations, and gain a competitive edge. As global regulations tighten, early software adoption will ensure compliance and position agribusinesses for long-term success.