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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.

food manufacturing
Archives, Global Logistics, Global Trade Daily

Managing Risk in the Food Manufacturing Business

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The food industry is one that the world cannot do without. It often experiences various evolutionary stages that make it difficult for food manufacturers, suppliers, and retailers. There are several risks involved, and managers need to be prepared to combat them when they arise.

Some of the common risks involved in the food business are customer taste changes and compromised quality of ingredients and materials. Contamination and poisoning of ingredients and end products are also problems food manufacturers deal with. Thus, it is vital for food manufacturing businesses to manage risks in non-harmful ways that won’t affect their company and customers.

What Is Risk Management?

According to the Corporate Finance Institute, risk management entails identifying, analyzing, and responding to risk factors that form a business’s life. Effective risk management means finding proactive ways to control future elements that might lead to problems. Companies that imbibe the culture can reduce the possibility of risks and its negative impact.

Most food manufacturing companies are not prepared to manage risks because they have ineffective data management software. At other times, the solutions they have do not support their risk management strategy. It affects how the business can effectively manage and reduce problems, which affects their profits.

How should companies manage risk to reduce disruptions and improve running costs and profits? Let’s find out.

How To Effectively Manage Risk in the Food Manufacturing Business

A business that desires to manage risk in the food manufacturing industry effectively must do the following:

Manage the Supply Chain

The food industry has a history of being adversely affected by its supply chain conditions. A drought, too much rainfall, or sudden pest infestation can affect a supplier and interrupt business operations. While these circumstances may seem beyond anyone’s control, there are ways to handle them.

One of the best ways is to have business interruption insurance. The policy protects a company while giving them time to sort out their supply chain problem. This way, the business doesn’t shut down entirely or resort to lesser options in a bid to remain in production.

Inspect Equipment for Risks

The food industry is nothing without its equipment. If a piece of equipment fails, it could potentially cost you an average of $25 per minute of downtime. Thus, it’s evident that the benefits of having a piece of functioning machinery far outweigh the risk of not owning one.

To prevent situations where the company bleeds funds, train employees to clean and sort out faulty equipment. Ensure they clean and replace damaged parts with suitable components. Beyond the preceding, carry out regular maintenance using a professional, and invest in backup equipment.

It would also help to have more than one machinery for a particular task, for increased efficiency. Automating equipment reduces the need for human intervention, thereby limiting operating problems. The only downside is that it requires highly skilled personnel to run.

Insure Spoilage and Containment

Anyone who ever visited https://nancyloo.net/ knows how vital it is to eat the right and uncontaminated food. As mentioned earlier, food spoilage and contamination are two of the most common risks manufacturers face. It could be from a problem with the supply chain or storage equipment failure.

It’s worse if any of the tainted food left the company facility, and there’s a recall. Whatever the case, the best way to mitigate this risk is by having food spoilage insurance. The policy supplies a business with funds to repurchase supplies and covers other spoilage liabilities. Like the classic case of the moldy yogurt from Chobani, no one is immune to manufacturing risk, so plan.

Have Soundproof Food Safety Plan

A significant risk management factor is food safety and the prevention of outbreaks. Carrying out antimicrobial testing of food products can prevent disastrous situations. Bacteria aren’t just specks; there are specific ways to test them, especially the common ones like Staphylococcus, E. coli, Listeria, and Salmonella.

Get a testing company that tailors its procedure to each pathogen to examine products before shipping them out. Doing this will prevent recalls and the millions of dollars spent settling personal injury and defective product lawsuits.

Invest in the Right Technology

In the 21st century, technology plays a decisive role in the way company’s effectively manage risks. When choosing a tech to help determine high-risk areas, it should be one that is capable of providing market and industry insights on developing trends.

The software must flag inefficiency and detect bottlenecks in the running processes. Other things to watch out for are whether the tech can strengthen the system functionality, track contamination causes in real-time, and improve data accuracy.

If the technology can perform these functions, among others, then it has a greater chance of effectively managing risks. This way, food manufacturers can match opportunities with capabilities, achieve category leadership, and get a holistic view of problems.

Additionally, companies will quickly detect areas of non-compliance and share product data across several platforms and partners. Measuring ROI will be more accessible, and manufacturers can cut high-risk areas and be better managers.

Conclusion

Risk Management starts with prevention and ends with recovery methods for better and more efficient productivity. As a food manufacturer, it is essential to cut down risk factors using the techniques discussed. Be proactive when approaching problems, and always have a backup plan. Lastly, risk management might seem complicated and tedious, but it pays off in the long-run and will keep the business going for a long time.

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Nancy Loo is a professional blogger who has a lot of creativity and likes writing about spiritual development, food and her adventures. She is the author at nancyloo.net blog, where she covers different cooking topics.
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.