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What’s Keeping Food and Beverage Companies Up at Night in 2021?

food and beverage
Archives, Global Logistics, Global Trade Daily, Warehousing

What’s Keeping Food and Beverage Companies Up at Night in 2021?

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Here are the top issues that most food and beverage companies are trying to solve right now and some tips on how to work through these pressing problems. 

 

Climbing mountains is nothing new for food and beverage companies that, like most organizations, face a steady stream of new challenges in the course of business. Whether they’re complying with new regulations, adapting to changing consumer demands, or strengthening their supply chains against disruption, food and beverage companies have to stay on their toes or risk falling behind the curve.

 

Right now, some of the key issues that these organizations are facing include:

 

-Changes in consumer demand, both in terms of the volume and variety of manufactured goods consumed.

 

-A higher volume of direct-to-consumer (DTC) transactions. With more consumers shopping from home, setting up and fulfilling these distribution networks have become full-time jobs for food and foodservice organizations.

 

-Disruption of transportation networks needed to be able to deliver these DTC orders (e.g., truck driver shortages, ocean container shortages, transportation capacity constraints, etc.).

 

-Workforce presence, composition, and location. Despite the current economic situation, available labor is still difficult to find in certain areas.

 

-The uncertainties of virus transmission have led many countries to adopt food protectionist policies, DHL points out in a recent report, which has disrupted end-to-end supply chain continuity.

 

-This, in turn, has increased the global price of food and beverage products and has made the global food supply more inaccessible.

 

-Reductions in passenger air travel have impacted air freight considerably, the method by which most perishable products are transported. (According to DHL, air freight capacity declined over 80% on routes between Europe and Latin America in 2020.)

 

-Workforce health and safety—an issue that was exacerbated by the global pandemic. For example, companies have had to rethink their plant floor design in order to accommodate social distancing guidelines. Doug Mefford, our product manager has recently explained why using a WMS can result in an enhanced work environment for the warehouse employees all while reducing risks and potential errors in an interview with Food Logistics.

 

-Raw material and component inventory shortages affecting production. As supply chain shortages persist, everything from steel to resin to electrical components remain difficult to source in the current market.

 

-Inventory shortages that impact manufacturing and distribution companies’ sales.

 

The list of challenges doesn’t end there, but these points paint a picture of an industry that’s still shaking off the impacts of the global pandemic while also looking for ways to work smarter, better, and faster in 2021 (and beyond).

 

Long-Term Resiliency Wanted

 

As the coronavirus outbreak spread, unprecedented challenges have surfaced for food and beverage companies all over the world. Extraordinary measures have been taken to keep the food supply chain safe, efficient, and moving. Industry leaders with agile solutions in place have been able to mitigate some of the fallout from the pandemic, while others are still learning how to cope with the new realities of the crisis.

 

Regardless of where they land on the technology adoption curve, companies need to be able to quickly identify, configure/develop and adopt new capabilities that ensure long-term organizational resiliency.

 

“COVID-19 has impacted the entire food and beverage (F&B) supply chain, from farm field to consumer,” DHL writes in Food Logistics. “It has upended the sector’s operational capacity in its entirety, including production, processing, packaging, and distribution.” COVID also caused a shift toward a greater need for efficiency in production amid the long-term realities of staff capacity shortages and an unpredictable regulatory environment, the freight provider points out.

 

Three Steps to Take Now

 

The good news is that the global food supply chain nearly always shows resilience in the face of unanticipated challenges. Here are three steps that all food sector companies can take now to make their supply chains more resilient and responsible:

 

Focus on go-to-market versatility. Existing go-to-market channels like bars and restaurants could take months to fully recover from COVID-19. “Companies, therefore, need to invest in omnichannel capabilities, especially focusing on online/digital solutions,” Deloitte explains. “This should also include product [interchangeability] across channels.”

 

Step up end-to-end supply chain management. Work with a wider pool of suppliers, including regional ones, and keep larger strategic stocks. A broad product range is more expensive to maintain, but spreads risks, Deloitte acknowledges. “An alternative is to simplify recipes and/or remove problem products from the portfolio, resulting in a leaner, more manageable product range, less risk, and lower costs.”

 

Leverage technology ecosystems. Good supply chain visibility starts with a robust technology hub that includes a warehouse management system (WMS), transportation management system (TMS), yard management system (YMS), and order management system (OMS). It also includes Industry 4.0 technologies that provide advanced capabilities. “Digital supply networks are going to make businesses less vulnerable in the longer term,” Deloitte says. “Robots, for instance, reduce dependence on migrant labor, while track-and-trace solutions help businesses zoom in on supply chain bottlenecks.”

 

With the global pandemic still in full effect, companies across the food supply chain must plan for the continuing effects of the outbreak on different areas of supply, demand, and the overall economy. Using the strategies outlined above, companies can work to improve their supply chain resilience and visibility in a way that addresses the rigors of the current operating environment while also helping organizations prepare for the future. Generix Group North America has recently hosted a webinar Post Pandemic Impacts on the Food & Beverage Business featuring a guest speaker from Chapman’s Ice Cream, John Fleming. You can listen to the recording here and plan how to address supply chain resilience within your own organization.

 

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. From Warehouse Management Systems (WMS) and Transportation Management Systems (TMS) to Manufacturing Execution Systems (MES) and more, software platforms can deliver a wide range of benefits that ultimately flow to the warehouse operator’s bottom line. We invite you to contact us to learn more.

 

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This article originally appeared on GenerixGroup.com. Republished with permission.

perishable
Archives, Global Logistics, Global Trade Daily

Cutting Waste and Best Practices in Managing Perishable Inventory

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How food and beverage companies can use good inventory management and demand forecasting to reduce inventory carrying costs and sell their perishable goods before they expire..

 

The global pandemic exacerbated the need for good perishable inventory management. Afraid that they wouldn’t be able to fulfill orders during the crisis, companies stocked up on their fast-moving products and supplies. Many also switched over to making and/or selling pandemic-related necessities like hand sanitizer, face masks, and gloves.

 

With the world’s supply chains beginning to normalize, it’s time to take stock of the goods sitting in storerooms and warehouses—specifically those items whose shelf life may be coming down to the wire. Critical because these lose their value over time until rendered worthless, perishable inventory management should focus on selling those goods before they expire.

 

Typically associated with food and beverages, the word “perishable” applies to products that have to be consumed within a specific period of time before spoiling. The truth is, perishable inventory also includes flower bouquets that wither and are rendered unsaleable, event tickets that go unsold, or even the hotel room that sits empty overnight.

 

The bag of coffee that expires while sitting on the shelf in a small café, an obsolete piece of equipment that’s sitting on the shelf in a distributor’s warehouse…the list goes on. These and other perishable inventory items can be a significant expense for companies who literally get left holding the bag when the clock runs out.

 

Putting the Right Systems in Place

 

Made up of the tools, strategies, and techniques used to store, track, and replenish inventory, inventory management is critical for any product-oriented business that has money tied up in inventory. It’s especially important for companies that use and/or sell perishable goods that could wind up spoiling before they can be used.

 

To track perishable inventory, companies can use manual, automated, or hybrid inventory management systems focused on accurately matching supply with demand. And while such forecasts naturally become “hazy” in the midst of COVID-19, most times they do help provide a clear picture of what customers will need and what your company should have on the shelves (or, be able to source quickly) when the order comes in.

 

Using alerts that indicate when supply is low on certain products, for example, automated inventory software helps ensure that the goods are in stock when a customer asks for them. Unfortunately, it doesn’t always tell you when you’ve over-ordered something or when you’re in danger of losing product to spoilage.

 

“If the inventory is perishable,” Small Business Chronicle points out, “it has a defined date of usage and business owners need to pay closer attention to inventory demand cycles than non-perishable business owners.”

 

A better approach for perishable products is the single-period inventory, which focuses on ordering only enough goods for one period (e.g., a week, a month, a quarter, etc.). Only when that inventory is sold does the company reassess the potential demand and place another order. “This system will limit the amount of inventory that can spoil, go bad, or be otherwise obsolete,” the publication points out.

 

First-in-first-out or “FIFO” is another inventory management tool that can be used with perishable goods. The approach is straightforward: what arrives first gets sold first. For example, milk containers are stored according to their expiration dates in a refrigerator. The milk cartons with close expiration dates are stored in the front so that they get sold first.

 

“The main aim of this concept of inventory management ensures that the oldest stock is moved out first to guarantee cost-effectiveness and avoid waste,” Complete Controller explains. “The widespread use of this concept makes it ideal for many industries who use it along with other models of stock management.”

 

Minding the Details

 

Regardless of which approach a food and beverage company uses, its perishable inventory management should also incorporate product batch numbers, traceability, recalls, and obsolescence, all of which can be used to ensure the sale of inventory before its expiration date. When integrated with (or included as part of) a warehouse management system (WMS), inventory management systems provide high levels of visibility over stock that’s nearing the end of its useful life. This, in turn, helps food and beverage companies fine-tune their perishable inventory management processes.

 

Accurate demand forecasting is another must-have for food and beverage companies that want to reduce their inventory waste. “Demand forecasting (or sales projections) helps you understand how much of each product you need to have on hand at all times to meet customer demand,” Business News Daily points out. Established companies can base their forecasts on historical sales data, while startups can use assumptions and industry data to come up with these projections.

 

By using accurate sales numbers, putting someone in charge of the perishable inventory tracking processing, and doing regular inventory cycle counts, small businesses can save money on spoilage and unsold products. Warehouse managers who know that the 100 crates of navel oranges that arrived on Friday afternoon either have to be used or sold within the next week can either give the oranges a more prominent place on the retail floor (for a grocery) or offer a promotion for 25% off vanilla-orange smoothies (for a restaurant).

 

Stay Profitable and Keep Scaling

 

With inventory carrying costs comprising a good portion of many business budgets, effectively managing goods that could at some point expire helps keep those costs down while also avoiding excessive waste and spoilage.

 

Plus, inventory management is crucial to prevent loss of items, quickly fulfill customer orders, and know when you need to buy more of a given product. “It contributes directly to profitability,” Business News Daily points out, “and no business can successfully scale without an inventory management process in place.”

 

This article originally appeared on GenerixGroup.com. Republished with permission.

cold chain
Archives, Global Trade Daily, Stories

Benefits of Cold Chain Warehousing Solutions

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Not many people are familiar with cold chain warehouse solutions. However, if you are in any type of business dealing with perishable items, this is right up your alley. Cold chain warehousing is used to store items that need to be left in cool surroundings and that have a short shelf life. By using them you can prevent your items from spoiling, being attacked by insects and rotting. So, the goal is clear. Life of certain items needs to be prolonged and one of the most effective ways to accomplish this is by using cold-chain warehousing, also known as cold storage or refrigerated warehousing.

Types of products that are in need of cold chain warehousing 

First, you need to know which items are suitable to be stored in such a place. Not all items respond well to cool temperatures. The last thing you want is investing in something that you do not need, like cold storage. For example, after transporting fruits and vegetables it would be a great solution to store them in cold storage space. Hence, if your business involves some of these products you are on the right path of finding the best possible solution for your business load.

Supermarkets and other stores have a tendency to use cold storage for a lot of their goods that are not in store for sale. 

3 main groups of goods 

-Foods that are considered to be alive – fruits and vegetables

-Processed foods that are considered to be no longer alive – fish, meat and any other products that contain the fish and meat

-Items that do not necessarily need be stored in a cool or freezing atmosphere, but remain the freshest and of highest quality while in it (tobacco, beer, some oils, some types of flour, etc.)

There are two main options 

One of the great things about cold storage units is that there are many different variations. But, there are two main types of systems. First comes the vapor absorption system (VAS), followed by vapor compression system (VCS). These two systems are not cardinally different from one another. Yet, there are some important differences that need to be acknowledged. The main one being the technique in which energy input is fed to the system. To be sure you are making the right choice when making this large purchase, we strongly advise you to speak to an expert. Sooner or later you will have to learn the difference between the two systems.

Main benefits of cold chain warehouse solutions 

Still, you might not be persuaded and convinced that this type of storage will improve your business. Nonetheless, after reading these benefits, it is very likely that the next thing you do will be exploring your options in purchasing a cold storage unit. Cold chain warehousing solutions in combination with transport technologies for air cargo can be one of the best solutions for storing and moving perishable goods.

Fruits and vegetables are items that are very difficult to store because they are very sensitive to temperature and even humidity. 

The array of usage doesn’t limit you 

One great thing about cold storage is that the temperature within the unit can be easily adjusted. That isn’t all. In addition to temperature, humidity can also be controlled. Humidity, just like temperature, can be a huge factor in saving the freshness and quality of the items. These two benefits, with an airtight closing mechanism, make this a great storage option.

Customize to fit your needs 

More modern units can be customized so the temperature range and size of the unit specifically fit your storage needs. For instance, if you do not need freezing conditions, but dry and cool, your needs can be accommodated. This is a perfect option for those that import oils and fats. As a cherry on top, your unit can be fixed or portable. There is an abundance of options. All you have to do is choose the bests options for your business requirements.

Great backup and organizing option

This can be best described in an example. For argument’s sake, let’s say you are a restaurant owner. One day, out of the blue, the power shuts down and there is no electricity in your restaurant. If you are a fan of cold chain warehousing solutions, you might survive the electricity outage without any loses. If all goods are quickly moved and expedited to the cold storage space, it is very likely they will not lose their value and end up as garbage.

In the long run, you are saving money 

The initial investment is not small, but it will certainly save you money in the long run. Surely you know how much goods you’ve tossed in the past years. Imagine preserving and using or selling at least half of what you tossed. That can add up financially. Minimize waste and give yourself an option to purchase items in bigger bulks for a significantly lower price.

Investing in cold storage might initially turn out to be a financial hit, but it will pay off in the long run. Alt text: suitcase filled with dollar bills and with other bills around it.

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Danny Segno is a New York native, but currently, she lives in Boynton Beach Florida. For the past two years, she has been working for Authority Moving Group, a professional moving company. Danny enjoys her job because she likes working with people and helping them. Since she is a customer care specialist, she focuses on customer satisfaction. 

 

3pls, Archives, Global Trade Daily

WHAT IT TAKES TO BE OR WORK WITH A 3PL THAT HANDLES PERISHABLE FREIGHT

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In a world that is becoming more globalized by the second, the literal array of products being shipped in 2019 is extremely diverse. One diverse segment is the perishables industry, which distributes goods that naturally deteriorate due to time or environmental conditions. This is an understandably complex segment, requiring a logistical savviness and excellent partners to ensure products arrive in time and, most important, fresh and intact.

Meats and meat by-products, dairy, fish and seafood, chemicals, flowers and pharmaceutical products make up the perishable goods segment. According to Technavio, a leading market research firm, the sector is expected to grow at a compound annual rate of nearly 8 percent (2017-2021). A revealing report published by the U.S. Department of Agriculture in 2000 astutely signaled this growth, arguing that the advances in transportation technology would significantly ease perishable freight trade via the reduction of shipping costs and streamlined delivery times.

A Valuable Partner

Transporting perishable freight is a multiple, moving parts effort. As such, third party logistics (3PL) providers play a vital role. Outsourcing to 3PLs allows shippers to not only hang onto their capital for reinvestment in their own, core operations, but they can additionally take advantage of 3PL technology which is generally ahead of the curve.

A good 3PL will provide access to economies of scale, enable superior elasticity in areas such as route planning (to lessen unnecessary “hand-offs”), provide access to cutting-edge temperature tracking technology and enable the use of shared, cold storage warehouses with the shipper. The latter alone offers tremendous cost savings.

Choosing the Right 3PL

Food Logistics holds annual awards, prominently recognizing the top 3PL and cold-storage providers. Jumping into a 3PL partnership should not be taken lightly. While the agencies in the Food Logistics awards list are clearly leaders in the industry, fully vetting potential partners is highly suggested, with these five areas are an excellent place to start.    

1. Proven Success – To the detriment of the “start-up” 3PLs, entrusting your perishable freight in the hands of relative novices is not the best idea. Go with a winner that can provide excellent client feedback.

2. Robust Technology – This is an area where your 3PL should be much farther ahead of the technological curve than the shipper. Good 3PLs are agile enough to have resources on-hand to stay on top of the very technology that will cut costs and increase efficiency times.  

3. Scalability – Once a 3PL is in place, the shipper is entering a shared-space environment. This is the natural advantage of outsourcing, so ensuring the 3PL can scale in a parallel manner with the shipper will facilitate economies of scale.

4. Location Networks – A seasoned, successful 3PL will take a more nuanced, strategic approach to network configuration, ensuring the shipper can count on the right distribution center locations.

5. Commitment to Improvement – While last, this is a key point because every 3PL will be faced with pressure to continuously evolve and improve. During initial conversations, addressing what these challenges have been and how the 3PL addressed them in the past will reveal much about the firm. 

3PL Key Issues

As a 3PL charged with perishable freight, the issues are frankly numerous. On the trucking side, it is not machine nor technology-based–it’s humans. Driver shortages are a major concern, with Bloomberg reporting earlier this year that the shortfall has leaped to 296,311 as of the second quarter of 2018. The root of the issue goes back to 2004, when federal law mandated stricter oversight of hours worked per day. Cuts were made, which meant more drivers were needed due to the current crop having to work less. Couple this with the aging trucker population and shortages have been rampant ever since.   

A strong economy has been another issue that partly explains the trucker shortage. Manufacturing and construction have had an easier time finding new entrants into those sectors than has trucking. The former sectors are tapping into the same general population as the latter, and weeks on the road, away from families, is not as attractive as working at a given site and returning home every evening.

To combat this, 3PLs need to provide better services and remain highly efficient. Transportation is still the weakest link in supervising what’s known as the “cold chain.” Low-cost providers can enter easily, which results in a host of marginal players making it hard for suppliers to weed out the true high performers.

On the sustainability side, shippers are increasingly seeking 3PLs with the smallest carbon footprint possible. Packaging and warehousing are well-known polluters, which has put pressure on 3PLs to generate as few pollutants possible. Utilizing eco-friendly electric vehicles to adopting “green storage and packaging” processes, logistics innovation and alternative fuel implementation are major issues larger and savvier suppliers are seeking. 

As with any industry, challenges are ever-present, but the 3PL sector is revolutionizing how we consume and enjoy perishable items on a global scale. Thanks to these nimble entities, hundreds of millions of people have regular access to affordable products in ideal states, something our grandparents and many of our parents could not have said.