Submission - Supply Chain Resilience Review - HYPHA

HYPHA Supply Chain // Food security // Scrutiny Panel// August 17th

Deputy Moz Scott , Chair Economic and InternationalAffairs Scrutiny Panel, Scrutiny Office, States Greffe Morier House, St Helier, Jersey, JE11DD

Dear Deputy Scott ,

This letter is from HYPHAConsulting Ltd, providing a comprehensive review of the processes employed by SCOOP The Sustainable Cooperative, to assist the Jersey Government in understanding the intricacies of food supply and security dynamics. SCOOP has acquired valuable insights over the past five years, as its mission revolves around the experimentation with enhancing food security in Jersey. HYPHA, a consulting firm based in Jersey, is spearheaded by India Hamilton and Taylor Smythe, both of whom possess expertise in food systems, enterprise design, and regenerative economics.

SCOOP is a community-owned food cooperative with a dedicated focus on zero waste and agro-ecological products. It maintains an internationalsupply chain while also sourcing from over 105 localproducers. The shop has a weekly footfallof 450 visitors. SCOOP achieves financialstability through its membership scheme, allowing it to allocate between 75p and 82p for every £ to farmers and suppliers. You can find SCOOP's three-year report here, which intricately details its business model, emergent benefits, and business opportunities. SCOOP has experienced an almost 100%consistency in supply on the shop floor, and its prices remain relatively stable. Notably, it offers some of the most budget-friendly food options in the island.

This review willanswer the three parts that have been defined by this Scrutiny Panel. Competition and diversification in the supply chain:

The food system operates as an intricate network of numerous interconnected businesses, each contributing to its complexity. While competition is integralfor ensuring operationalefficiency, grasping the overarching dynamics of this system holds paramount importance. Examining the wider repercussions of heightened competition through the introduction of a new supermarket chain reveals potentialbenefits such as temporary cost-effective products. However, it also raises concerns about the loss of numerous jobs and independent businesses. While competition remains a beneficialfactor, its strategic application is crucialfor the resilience of small, independent socialbusinesses like the one in question.

In this context, SCOOP undertook the task of reimagining the role of competition within the food system. They sought ways to establish a competitive advantage despite budget constraints for marketing and inherent inefficiencies within a diverse supply chain. SCOOP's approach involved a comprehensive evaluation of all stakeholders within the food system, investigating the roles of competition, collaboration, and cooperation. Embracing a fresh approach to enterprise design enabled SCOOP to shape market conditions, ensuring a consistent, affordable, health-conscious, and ecologically sustainable supply chain for the localcommunity.

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Competition in the community:In Jersey, the engagement of the "community owned"or "socialimpact business models" in market competition is neither straightforward nor a common practice. The existing legislative framework and understanding in the business ecosystem offers limited support for community / social-led commercialenterprises. Consequently, Jersey lacks a certain levelof competitive environment in both business and philanthropic realms. Contrasting this, the United Kingdom has witnessed the ascendancy of community-owned food systems, which have played a pivotalrole in enhancing supply chains and fostering economic as wellas socialadvantages.

Localdynamics affecting competition:Mainstream businesses in Jersey encounter reduced competition owing to the distinctive localenvironment, where intricate factors such as the extensive road network and dispersed customer base complicate alternative supply channels such as home delivery and farmers markets. In the United Kingdom, supermarkets cater to nearly 100%of packaged processed foods yet only around 60%of fresh produce, yet this is often

simplified to 85%of allfood. This average can sometimes lead to a misleading perception of the UKmarket. Aproper assessment of the market potentialfor alternative supply chains is needed to form a true understanding of how they can participate in food security in Jersey.

Embedding diversity into yourbusiness model:Diversification isn't just about multiple businesses, it is understanding how to embed it into your enterprise design. To SCOOP diversity is about seed variety, farming practice and supplier networks. SCOOP holds many different varieties of flour, grains, pastas etc. This seed variety brings in a levelof consistency as it sits outside the commodity market. Although the turnover is relatively small, we push to receive hundreds of invoices per month. This creates as many connections to suppliers as possible and plays a part in our resilience. Enterprise design is a commonly overlooked option for change in this sort of debate, but it is critical.

Recommendations:Invest in socialimpact policy, do an analysis on any policy that prevents the growth and resilience of localindependent food businesses. Encourage education round enterprise design. Encourage new food businesses and education round understanding embedded and diverse supply networks.

Warehousing and stockpiling:

Over the last three years, SCOOP has not experienced empty shelves and the cost of the food is pretty stable, often selling some of the cheapest food on the island. Although it is a relative surprise to the business, on reflection it is clear that the built in infrastructure and design has been criticalto its' consistency. We like to add the concepts of flow and processing as means of improving stocks on Island.

Each product line is unique:Allfood products function differently as they flow across the supply network, SCOOP creates a dynamic supply time line with each product line, to balance both price and consistency. Each supply line requires a specific sort of storage and a specific processing skill. Holding un portioned products is cheaper and has a longer life expectancy than purchasing portions, for example.

Processing is stockpiling:SCOOP wouldn't function as wellif it didn't have a production kitchen, this production kitchen is key to processing surplus from the farm as wellas food that has passed the merchandisable standard. This production kitchen allows for added value and a zero waste business. Extending the life of the product once it had arrived fresh on the island is a form

of stockpiling. This process has many co benefits, from improving income of business but especially if the end product has considered health and socialoutcomes.

Understanding VUCA:SCOOP is aware that the boat isn't consistent, so working within those limitations has created a more dynamic ordering strategy. It is important to SCOOP that the business modelis adaptable to the risks associated with today's market, environmentaland social conditions.

Recommendations:Create robust circular economy policy round environmentalhealth, the circular economy is meant to design out waste from the system, here is a link to the SCOOPLOOP circular economy policy for a deeper explanation. Support shared kitchens, and processing facilities. Allow for processing facilities on farms, small-holdings.

Onshoring of the Island's supply chain:

When considering the process of bringing supply networks back to our shores, it's important to approach this from an economic perspective. We need to decide whether we aim for a system that resembles a globalised economy, incorporating competition and economies of scale within our community, or if our goalis to enhance the socialcapacities of our localisland. Our research indicates that introducing global market forces into a community while isolating it on our island tends to drive an economic race to the bottom. This results in challenges for farmers who struggle to meet the required prices. As time progresses, the community faces negative consequences such as economic decline, closure of farms and localshops, concentration of businesses, uneven development, and in some instances, breakdown

of the community itself. Additionally, decisions about the food system's stability are controlled by externaldecision-makers, adding to its volatility.

The ongoing problem is that the market fails to generate affordable food, and these issues become progressively intricate. SCOOP's favoured strategy concerning the economics of food systems revolves around "localization."This concept involves establishing both globaland localrelationships within the supply chain, focusing on fostering socialand environmentalcapacities through transactions. It recognizes that our existence is tied to specific geographicalregions with unique circumstances that demand location-specific comprehension. Embracing localization is essentialfor ensuring the long-term resilience of the food system. It's crucialto recognise that every nation worldwide is merely one crisis away from experiencing disruptions in their supply chains.

CounterIntuitive strategies:SCOOPS supply network is designed round the smallest most biodiverse supply as a means to reimagine the economics of the localfood system. .

Understand the system:SCOOP understands that localsupply chains are incredibly

complicated, as every localcommunity has their own set of lock-ins that take time to overcome.

SCOOP has built a strategy on understanding the systemic and structuralrealities of Jersey. Recommendations:Building your supplier chain around the smallest supplier because it offers a levelof security and resilience. Look across the bioregion which extends allthe way up to North Poland but excludes the UK. Explore sailtrade and empty trade resources.

SCOOP has encountered various policy challenges that are impeding its growth and development. This suggests that the prevailing policies and business framework prioritise elevated productivity and profitability over comprehensive food security measures. Although this has been a very successful strategy, food system resilience is an increasingly complex question, and we must look at it using system perspectives and be prepared to reimagine how business models are designed.

For further information please contact admin@hypha.je With much respect

India Hamilton and Taylor Smythe Hypha Consultancy Ltd.