From Seed to Cup: Navigating the Coffee Supply Chain and Its Challenges

From agriculture to waste management, the coffee supply chain undergoes many stages to deliver your morning coffee fix. The economics of the coffee supply chain depend on many dynamic factors such as weather conditions, insect-induced spoilage, and the political and socio-economic influences within coffee-producing countries. 

In this coffee supply chain guide, we dig into the latest challenges of the coffee supply chain process and innovations to help you face them.

The agricultural phase includes the cultivation of green coffee, with different treatments such as soil management, fertilisation, pest treatment, and harvesting, depending on whether the coffee is conventionally or organically farmed.

Picking the ripe coffee beans is still a repetitive, manual task for most farmers. But there's new technology in coffee farming to help with this. These include drones to monitor crop health, artificial intelligence to optimise fertiliser and irrigation use, and climate-resistant coffee varieties that resist diseases such as coffee rust and cope with erratic weather.

Coffee beans are farmed in humid climates, often in developing countries. Farmers and labourers harvest the beans when they’re ripe and ready to be picked. Distributors and wholesalers need to get the beans from the farms and pass them to roasters. 

The roasters then deliver a more final bean product to coffee shops and grocery stores. In a coffee shop, the beans fall into the hands of the barista who brews the coffee that consumers buy. 

Here's a look at what a common flow looks like through a coffee supply chain diagram:

Coffee prices have been increasing recently, yet green coffee prices on the commodity market are fluctuating. Some coffee producers in the world are stuck in a commodity trap. This trap means they have little say or leverage on the price of coffee. In recent years, people and brands have shifted towards supporting small farmers who grow coffee ethically. 

However, despite farmers’ attempts to support a sustainable coffee supply chain, most of the profit from this effort lands in the pockets of cafes and stores, not the farmers.

Introducing blockchain and IOT in coffee logistics solutions helps achieve end-to-end traceability of beans right from the farm to the cup. This gives buyers the ability to check on if/how ethically beans have been sourced and benefits farmers by supporting transparent transactions. 

Prompted by growing consumer interest in ethical products, direct trade platforms like Typica bring small-scale producers into contact with speciality coffee buyers. This means larger portions of the profits they make go directly to the farmers who grow the beans.

Transportation and logistics operations represent a sizeable and significant network within the global coffee supply chain. From farm to factory, manufacturer to retailer, coffee beans will make several stops before reaching their destination at a local café or consumers’ kitchen cupboard. 

Factors affecting inventory management exist throughout the supply chain and greater stability is required the greater the number of supply chain intermediaries. A stable and cost-efficient supply chain relies on good relationships and trust between all parties.

Initiatives to make the supply chain greener range from the use of electric vehicles and alternative fuels to get beans where they need to go, to smart inventory management systems that use artificial intelligence to better forecast demand, and reduce spoilage at each stop along the distribution network.

Roasting, grinding, and packaging were once the domain of large manufacturers and commercial operations. Today, smaller establishments are purchasing the green coffee bean to roast and grind, creating new and unique blends for the coffee connoisseur.

Coffee roasters get into the coffee business because they’re passionate about flavourful, fresh coffee. Roasters hunt innovative blends and unique single-origin coffees, visiting coffee growers in search of new flavours. This is necessary work that can take time away from other business areas.

Unleashed's coffee roaster inventory software tracks recipes, production history, and forecasting demand. More and more coffee roasters and producers use it to reduce wasted inventory and grow their businesses with fewer mistakes.

Coffee producers accept a lot of risk and uncertainty in their supply chain, namely the threat of disease, significant rain, or changing temperatures. All this means coffee yields may vary substantially from year to year. 

Although coffee producers bear a large part of this risk, roasters are invariably affected when coffee producers are dealing with an unproductive season. If disease or weather impacts are widespread, the price of green coffee will usually rise even as availability and quality decrease. 

Although you may have placed advance orders with growers, growers and wholesalers are likely to need to balance multiple competing orders in the face of any inventory shortage.

Many businesses are responding to the risk posed by unstable growing conditions by building redundancy into their supply chains. Smaller roasters who might have favoured coffee from one particular region are now distributing their orders across multiple regions to reduce the risk and severity of disease and weather impacts. 
Equally, some roasters are adopting a leaner model for both single origin and blend coffees; rather than pre-committing to a particular range of coffees, roasters are making quick procurement decisions and buying what’s well priced and available.

Green coffee will hold its flavour for much longer than coffee that's been roasted, so it’s essential that roasted coffee is sold and dispatched as quickly as possible. A speciality coffee producer simply can't afford to sell stale coffee. 

Online inventory management software makes it clear how much roasted coffee you have in stock at all times. This lets you exactly know how many orders you can fulfil on existing stock. 

Since you now know whether you have roasted enough or not, the risk of running out of stock is much lower. This further justifies holding much smaller reserves of safety stock, sparing more coffee from going stale and being wasted.

Outside of composting, businesses adopting coffee supply chain innovation methods are turning coffee waste into renewable biofuels, upcycled building materials, and even flowers for human consumption. 

In some areas, a closed-loop supply chain takes used coffee grounds from cafés, recycling them into materials or energy in order to avoid waste being disposed of or having a negative environmental impact on landfills.

Coffee waste is also an excellent substrate for mushroom cultivation. The grounds can also be converted into pellets, turning them into a source of renewable fuel that can be used in wood-burning stoves.

 Progressive new industries and enterprises are converting coffee waste into flour products and turning bio-waste into fuels. This could mean that even our future car will rely on a caffeine fix to get going in the morning.

Coffee prices are and will continue to be volatile throughout the supply chain. 

The inconsistencies of the ordering cost mean that the people at the start of the supply chain, the farmers and labourers, have the least control. Ironically, without these farmers and labourers, the coffee industry wouldn’t exist. 

If a cafe can increase its ordering cost for the products farmers produce, it would make sense that some of the profit would pass down to the farmers as well. Unfortunately, that’s only one of the obstacles currently facing the supply chain of the coffee industry. 

Another problem is the severe impact of climate change. It has the power to alter the industry. Climate change has seen increases in temperatures and humidity in South America. 

With these weather changes, there have been outbreaks of coffee rust. This is a type of fungus that has the power to wipe out up to 70% of coffee bean production across South America. 

Issues like coffee rust not only plague the coffee industry, but have a direct impact on the farmers and labourers first hand. Their livelihoods depend on the coffee bean and if climate change threatens the growth, then it threatens their family, prompting them to increase prices.

Unleashed's coffee roaster inventory platform is changing the way that coffee roasters optimise their supply chain, with recipe and production history tracking to demand forecasting features. 

With this approach, you can decrease waste factors, avoid stockouts, and optimise operations. That all leaves you with more time to focus on crafting great coffee rather than playing around with guesswork and supply chain variability.

Try it now to get total inventory visibility in real-time, improve blockchain transparency, and create more sustainable logistics processes.