A bit of an unusual topic for me, but this was too good not to share.  Fortune Magazine recently did a wonderful article on the rise of the soy industry in Brazil.  What I found so fascinating about this article is how many trends can converge in a large agricultural area with “bad roads”:

• International competition:  US agriculture (soy is a major crop) versus Brazil’s growing dominance in soy (largest exporter since 2006)
• Eco-friendly business:  from the dark days of deforestation, the entire soy industry is striving to be environmentally friendly and energy-independent.  But there remain struggles to balance supply chain efficiency and the environment (see below)
• Innovation and sustainability:  while I think of soy as tofu, the products that now include soybeans as a critical component include:  cotton blends, spandex, shampoo, conditioner, soap, flashing tape, caulk, outdoor paint, glue for plywood cabinets, foam (including for a forth-coming Ford Mustang) and more!

Of particular interest in this article however is the critical role of the supply chain (physical, the article did not explain how information was moved).

Following on the trend from my last post, one “self-contained” supply chain uses soy products to produce fuel and feed for the largest chicken operation in South America.  The farm, processing plant and chicken buildings are literally built in one continuous line, with the trucks carrying the product to market fueled by bio-diesel — talk about a localized supplier network.

The second set of supply chain issues are more complex however, as actual soy consumption within Brazil is very limited.  The challenge is to export the bounty in a cost efficient manner through some of the most environmentally sensitive forests and rivers in the world.  The extensive discussion of the struggle to get the product to market without arousing the ire of the major markets (Europe, US) because of environmental damage is a fascinating twist on the influence globalization has.

We do a lot of business in Brazil, and I hope we have the opportunity to continue to grow in one of the world’s most exciting economies.

The folks over at Supply Chain Digest have put together a collection of thoughts from industry and academia about what is going on in 2008.  Often collections like this are nothing but aphorisms, but this one is different.  Among the gems:

• Jeff Karrenbauer of Insight, Inc — “the obvious outsourcing choice of , for example, the Pacific Basin, is often simply wrong”
• Jon Kirkegard of DCRA, Inc — “Postponed manufacturing state-side of imported key components will increasingly be seen as a major solution to supply chain and business challenges….”
• Larry Lapide of MIT — “Many companies will ’slow down’ their supply chains by using less expensive and slower transit modes”

While there are some areas of agreement, there are far more areas of disagreement about outcomes and effects — which is why I like this article.

For my part, what I find most interesting is the looming impact of fuel and energy costs (combined with changes in currency valuation).  If companies respond — as I hope they will — with much more aggressive leveraging of logistics information and a “postponed manufacturing strategy”, our payback for this more challenging period could be improved productivity, and progress in the quest for a demand-driven supply chain.

GXS spends a lot of time working on the concepts of “the hybrid model”, where software and services are integrated to work together to optimize B2B, but this hardware and services combination is pretty interesting as well!  The idea of hardware service combinations is old hat for cell phone users already, but this is a new approach.  I wonder if this could lead to the sale of USB hard drives that feature online backup services as well?  Could this catch on in the commercial space as well as for consumers?

The attraction of services in this kind of application is the universal availability characteristic.  I have often found myself using Google web applications — like Documents — not as application substitutes (I know it is not cool to speak well of new Microsoft versions, but I am really fond of Office 2007 — best yet!), but to have data available across systems and locations.  This is also a major advantage for companies that utilize supply chain applications running on the grid, as they can access — through a web UI — their information from anywhere they can connect, and know that they are looking at the same data as their partners.  To date the enterprise software market has approached software and SaaS as rivals (note the models of SAP), but I wonder if — like the USB disk — the future is more likely innovative combinations that combine the strength of both.