Innovation in the Coffee Supply Chain

A Conversation with Raphaelle Hemmerlin, Chief Innovation Officer for Sucafina. 

Good morning, Raphaelle, and welcome to Commodity Conversations. First, could you tell me a little about your career so far? 

I’m French and have been in the commodity business for twenty years.

When I was young, I always wanted to do something where I would speak different languages.  I found a course on transport and logistics in an international school based in Paris and began my career with Bolloré, one of the largest French forwarding companies. I enjoyed it, but they did not pay me much, and I was keen to progress.

In 2006, when I was 22, I visited Geneva and said, “Oh, this is a great place to live, and the salaries are much higher than in France!”

I interviewed with Sucafina and joined the company as a logistics officer, overseeing East African export logistics. Five years later, the company appointed me to a position as senior logistic coordinator.

I felt the company at that time lacked vision, and there was little opportunity for me to grow in my career. I decided to widen my horizons and joined BNP Paribas in their commodity trade finance department. I spent three years with them in their front office, discovering the world of soft commodity finance. It was a tremendous experience, and I built a great network, but I didn’t like the bank’s environment. It excluded all aspects of entrepreneurship.

I had kept in touch with Sucafina, who, during this time, had developed a vision, a culture, and a growth strategy. I came back to them. I have gone from senior logistics coordination to heading group logistics and operational efficiency in the ten years since then. I have been responsible for technology and innovation for the past six months.

What does your current role entail?

It mainly entails project coordination. Sucafina fosters entrepreneurship as one of the company’s core values. We don’t have a single person leading innovation. Every employee comes up with ideas, and my job is to implement those ideas.

I love it, as we have an immense capacity for brainstorming, trying, failing, and learning. We have an escalation guide and an organization that can bet on the ideas with the most potential at the group level. My role is to bring project management together, align the strategy in the innovation pilots, meet with partners, decide whether to invest in start-ups and lead the teams that can scale from piloting to implementation.

You mentioned that you invest in start-ups. Would these be external to Sucafina?

Both external and internal. I don’t do the financial analysis and due diligence, but we invest in start-ups external to Sucafina. We have also taken an internally generated idea, scaled it, and spun it off as a start-up.

Could you describe Sucafina to people that don’t know the company? 

Sucafina is a family-owned coffee merchant which aims to be the world’s leading sustainable farm-to-roaster coffee company.

How does your experience in logistics and finance help you in your current role? 

My experience has given me a 360° view of coffee and soft commodities. It helps me listen to people in the supply chain and understand their needs, dependencies, and pain points. My network allows me to discuss ideas, leverage and scale them.

Working with the bank expanded my network. It helps to have counterparties with whom you can brainstorm – to say, “Hey, I have this idea; what do you think on your side? Is it a pain point for you? Shall we try it together?”

Logistics present an immense opportunity for innovation. Many people are still doing things the way they always did them. The number of actors in the chain is crazy – from the people loading the trucks, stuffing the containers, processing the customs forms, signing the bill of lading etc. There are so many steps.  Having this experience helps me to speak the language and understand a project.

Is it usual for companies to have a designated head of innovation? 

The head of a research department could potentially have the same role, but I haven’t seen that specific title in any commodities trading company. It’s new even for Sucafina; the company created the position just six months ago.

But I stress that I don’t aim to be the person who is doing the innovation. My objective is to be the enabler for the company’s innovation strategy. My role is to create value for our clients, our suppliers, and our ecosystem in general.

It is slightly different in logistics because of my background in them. I have a pool of opportunities for innovation that I pilot and develop with the team. I’m deeply involved in all the innovations, ideas, proposals, and pilots that touch the logistics aspect of the company. But in other areas of innovation, I am more involved with finding the winners and scaling them up.

Do you find resistance within the company from people who say, “We’ve always done it this way; why should we change?”

We can find resistance to change, sometimes because of a fear of the unknown, sometimes because people are too busy.

But even when people were busy with Covid, we still managed to implement and scale innovation in document handling. Even though there was freight squeeze, COVID, and many other issues, the team managed to pilot, validate, and implement a tool that enabled us, together with custom brokers and trucking companies, to create digital documents in ten different origins of the group.

I recently interviewed the CEO of Covantis. Are you involved in Covantis? 

No. Covantis tackles soft commodities from a grain perspective. Grains move mainly in breakbulk, whereas coffee moves in containers. You might imagine these are the same, but the processes and actors differ. We use Cargoo, a different platform. It is better suited to our needs.

Cargoo was my first experience of leading innovation at Sucafina, starting in 2017 when the platform was at its beginning. We wanted to innovate in the sector and supported Cargoo as a partner. It was an amazing experience.

But document handling is not the only area for innovation in logistics.  There are many more.

Such as smart containers?  

Smart containers help when you need help. They can make a difference in specific cases, for example, in the case of theft. You don’t need smart containers when everything goes well. Their use case is rather limited, but they don’t cost much. You gain a lot of data, but we have not yet learned how to compute and leverage that data. We are working on it.

Are you duplicating Farmer Connect with your smart containers? 

For the sea voyage, potentially, yes.

But the Farmer Connect story is different. Farmer Connect is the spin-off of an idea from Dave Behrends, Sucafina’s head of trading. I participated in it from the very beginning.

The use case is to provide farm-to-roaster traceability. Farmer Connect puts the miles before and after the container into a tangible form. You can attach information about the farmers, soil analysis, deforestation, and carbon emissions. Smart containers just tell you if your goods are inside the container and what happens to them while they are in it.

I read you moved Vietnamese coffee to Europe in breakbulk at one stage. It was innovation going in reverse. How did it work out?

It worked out well, but, as you say, it was going back to how merchants transported coffee 50-70 years ago.

There was a freight squeeze at the time, and instead of paying $1,000 to ship a container from Asia to Europe, we were suddenly paying $13,000 per container. It didn’t make sense for a low-margin business like coffee. We decided to try breakbulk whilst ensuring we maintained food safety and traceability. We had to relearn everything. It was stressful, but we learned a lot. We could do it again if the situation arises.

Innovation covers so many different things. Could you give some examples of where you’re currently innovating along the supply chain?

We are working on waste and water management in coffee washing stations to reduce carbon emissions and create value for farmers.  We operate two pilot plants that take the water, clean it, and reuse it in a closed cycle. Up until today, it was not something you could do in coffee. Usually, you use the water, clean it, and then dump it.  Having a closed cycle reduces water consumption. We are currently trying to perfect the technology and, once we do, will introduce it across all our origins.

We are also working on the way we dry coffee beans. You’ve perhaps seen coffee being dried in the sun on tables. It’s what they do in Africa, but most other origins dry the coffee in machines that use a lot of energy. We are currently testing using electricity from solar panels to power the devices and then recycling the generated heat.

Otherwise, we are currently talking with companies about bean-free coffee. It’s an interesting debate. Bean-free coffee could have potential. It could reduce coffee’s carbon footprint. It could bring new flavours. But at Sucafina, we are very attached to the farm and the farmer. So, this is the kind of innovation where we want to learn and be informed, to know what is happening, what the consumer appetite is for it, and how it could benefit the environment.

Some companies buy carbon offsets to meet consumer demand for carbon-free coffee. Carbon offsets have fallen out of favour recently. Is carbon-free coffee possible without carbon offsets? 

End to end, I don’t think so. However, you can reduce emissions and create carbon insets.

We start by choosing the right variety of seeds to grow trees that need less water and give farmers better yields. We then look to see if we have good regenerative agriculture practices. If you combine both with soil analysis, multi-crops around the coffee, and reduced water consumption during processing, then, potentially, we can think of having a carbon footprint close to zero. I don’t dare say it would be zero, but it can be close to zero. I think it’s possible.

For the rest of the chain, you’re dependent on the partners. You depend on your trucking company, shipping line company, and logistic distributor. Can Sucafina be the driver of change? No, standalone, we cannot. Can we use offsets to reduce those parts of the chain where we cannot go to zero? Yes, if it’s beneficial, let’s do it.

What about green financing – is it still a thing?

It’s still there, but it doesn’t mean lower interest rates. It doesn’t work like that. What happens is you link borrowing conditions to certain environmental and social goals. We get reduced interest rates and return them directly through investment in sustainability projects.

It’s a positive cycle. It’s a way to incentive the industry to change and to achieve goals, but at some point, it becomes the standard.  Today, you’re super happy when you meet specified objectives, but once you reach them, they become the baseline.

In other words, the banks won’t finance you unless you meet certain sustainability criteria. 

Exactly. The trend is in this direction.

Of the different things Sucafina does regarding innovation, which is the one you’re most proud of? 

I’m most proud of Farmer Connect. I love that it’s a data-driven innovation where you give the benefits back to the farmers. It is a start-up whose purpose is to improve farmer incomes by allowing them to monetize their data and be at the centre of traceability.

I’m super proud of how we have transformed logistics at Sucafina. My son was in the office last week, and I kept him busy archiving documents. I laughed because all the documents were dated from 2006 to 2017, but none after 2017. It was a huge change in how people worked, sending 2,000 emails daily, printing every contract, putting them on the file, scanning documents, and presenting them to the bank.

We went from so much paper to no paper. And that, for me, is a carbon opportunity. But it’s more about how people have managed to change their way of working. It makes me super proud.

I am proud of a project we are working on connecting Sucafina with the warehouse keeper. Warehousing is a huge deal in coffee. We store coffee all along the supply chain. We exchange information with warehouses all over the world.

Sucafina is willing to invest and assign people to an idea where we know we will repeatedly fail, but we will keep trying until it works. There are not many companies that allow you to do that. It’s not a huge budget, but it is a significant investment. I wouldn’t be free to do that in another company.

Sucafina drives innovation, but how do you spread it through the industry?

Innovation cannot just be company- or person-driven. A company or a person can play a leadership role – that’s what we want to do at Sucafina – but innovation must be embraced and shared at a wider level. We need to think about how to support people who are not equipped – or do not have the time – to innovate.

How can we help people who are working hard to feed their families but don’t have the time to think about changing how they work? And how can we help companies to be more willing to try and fail? The fear of failure is sometimes bigger than the opportunity to win.

How might artificial intelligence change the business? 

We already use AI at Sucafina with machine learning for our trading model. AI is a powerful assistant enabling us to make better trading decisions. AI helps in other fields like invoicing, market research, PowerPoint presentations or blog updates. It helps us go faster in the cycle of trying and failing or trying and delivering. I have a chatbot I use to compose technical specifications. I have used it with some developers to see how AI can create user code to develop a tool.

AI has a variety of use cases. We must learn and adapt while keeping our people and our strategy relevant. As with every disruption, be aware, learn, and don’t be scared to embrace it.

Innovation is not just limited to companies; it’s also personal. You recently studied at the THNK School of Creative Leadership. What motivated you to do that, and what did you get out of it? 

I joined the experience from May to October last year, partly on-site and partly remote. It was amazing.

Why did I do it? I wanted to do an executive course to help me participate in decision-making and strategy. After twenty years in my career, I wanted to learn new skills and recognize where I had a shortfall.

What did I gain? I gained confidence that I could be different in how I engaged in leadership. It brought me a frame of thinking around change management.

It’s an executive creative school. It’s about incorporating art, feeling, emotion, and your dreams into your business functions. It spoke to me. I’m a romantic person. I cry at the cinema. But I am not like that at work. I’m not emotionally driven at work. It’s funny. I realized that if I linked the two, I would get the best of me and the best from the people I work with. So, embedding stories, reframing, and peer coaching supports me and the innovation culture within the company. It also helps the way people engage with their ideas.

I’d like to move on to women in commodities. I think you recently won an award for your role in the commodity sector. Is that correct? 

WISTA, the Women’s International Shipping and Trading Association, nominated me. I joined WISTA’s Swiss chapter in 2016 as a member and became Treasurer and Vice President. I’m no longer on the board but remain a member. The nomination came from a commodity networking company WISTA partnered with to promote women in commodities.

Why are there so few women in commodities? 

There are many women in shipping and trading, but they are more in procurement, operations, accounting, and human resources. Few are traders.

I think it’s about creating the pipeline. Trading has a reputation for being male-dominated. It’s a bias we have, but that bias is breaking down on both sides. Women are gaining more confidence. I see it at Sucafina, where we are getting close to 50/50 in our Geneva office. We have a pipeline to take female employees into management positions.

Awareness is important, confidence is important, and the world has changed. Work from anywhere. Work with parental leave, work with whatever you want to do in your life. It’s more normal now. It’s going to take time. It will get there.

So, you are optimistic? 

I’m an optimistic person. I’m confident about this because I can see it coming.

Thank you, Raphaelle, for your time and input. 

© Commodity Conversations ® 2023

This is part of the Commodity Professionals – The People Behind the Trade series.

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