Another new year is almost upon us, meaning food and beverage distributors will be taking a look at their results and the trends that will influence the industry in the coming year. For businesses to operate as effectively as possible, it’s important to take a close look at the conditions shaping the industry, including the various challenges. Here are some of the challenges still facing this industry and three technology trends food distributors are likely to embrace in 2023.
Ongoing Challenges Facing the Food Distribution Industry
The U.S. food distribution system continues to be in a bit of turmoil. The COVID-19 pandemic turned global supply chains upside down, and few systems have returned to what could be considered normal. The traditional way of doing things just doesn’t work, leaving distributors looking for innovative solutions. Here are some of the ongoing challenges facing the food distribution industry.
1. Rising Costs
Whether caused by shortages in raw materials or inflation, food and beverage manufacturers continue to face rising operating costs. This has led to increased consumer prices. According to the Bureau of Labor Statistics, at-home food prices have risen 13.1% year over year, the largest 12-month increase since 1979. In the UK, prices are up 14.6% since January of this year, a 42-year high.
Food producers and distributors aren’t necessarily content with charging higher prices because the conditions have upset consumers. According to a recent report from IDC, food and beverage executives are concerned about the price trends, naming inflation and high operation costs as top pressures in the industry.
2. Supply Chain Disruptions
While border closures and stay-at-home orders are no longer restricting the movement of goods and people, supply chain disruptions continue to negatively affect the food and beverage industry. Labor shortages remain rampant due to a lack of workers in the agricultural sector and something called the Great Resignation, where millions of workers have resigned from positions in favor of better opportunities.
Food and beverage distributors are continuing to focus on various supply chain disruptions. Beyond labor issues, things like unreliable transportation, freak weather events, and political unrest have impacted supply chains over the past several years.
The push for brands to become more sustainable isn’t completely new. But it continues to grow in importance thanks to consumer demands to have access to greener and more responsible brands. Fortunately, business leaders are paying attention, with over half (55%) of business leaders saying that their businesses have boosted investment in sustainability.
While a top motivating factor of businesses in addressing sustainability is keeping up with customer demands, there’s more to it. By making this a priority, food and beverage distributors can reduce spoilage and waste throughout the supply chain, which can be incredibly costly.
4. Changing Consumer Preferences
More consumers than ever have turned to online sources for shopping - even for food and beverage essentials. This massive shift started with pandemic lockdowns, where consumers either couldn’t or were too frightened to purchase groceries using conventional methods. Now, many have found that they love the convenience of online shopping.
A rise in online grocery store orders has presented multiple challenges for the food and beverage industry. First, retailers must figure out how to better manage inventory. Second, transportation and delivery is a significant part of the customer experience.
3 Technology Trends for the Food Distribution Industry in 2023
As the food market continues to evolve, distributors must adapt and reset to remain competitive. With the ongoing challenges just described, the pressure on distributors to transform their operations isn’t going to go away anytime soon. Many distributors have conceded that conventional methods are no longer sufficient and have accelerated investments in technology innovation. Here are just three of the technology trends we’re likely to see in the food distribution industry in 2023.
1. Supply Chain, Asset, and Order Management
In the past, it seemed as if the supply chain operated like a well-oiled machine. Recent events have revealed many flaws in the system, one of which is the lack of visibility throughout the supply chain. Food and beverage distribution partners are increasingly investing in supply chain and order management systems to improve visibility and efficiency.
Many companies have begun using RFID tags to track products and assets. These tags are simple to use and can automatically transmit data about a product, its location, and much more. Combined with order management and supply chain technology, RFID tags can inject visibility and manageability into the food and beverage distribution system.
2. Warehouse Management and Automation Solutions
Food and beverage distributors rely on precise timing for order fulfillment, particularly when it comes to perishable goods. Therefore, more of these businesses are implementing robust warehouse management systems (WMS) and automation solutions to improve efficiency and reduce errors.
A WMS can integrate with RFID tags and other technology solutions for things like inventory tracking and order fulfillment. Food and beverage warehouses are also using voice technology solutions to automate the picking and packing process. These wireless solutions can reduce or eliminate many manual, repetitive tasks, thus increasing efficiency and improving worker satisfaction.
3. Real-Time Data Analysis and Predictive Analytics
Food and beverage distributors have access to more data than ever. But making sense of that data can be a challenge. Using real-time data analysis and artificial intelligence (AI), companies can now face the challenge of managing inventory, orders, and various disruptions in the supply chain.
Businesses in this industry can leverage advanced analytics to achieve real-time visibility across different channels, giving them data-driven support for business decisions. Further, predictive analytics can help participants manage risk and even uncover areas of previously undiscovered revenue sources.
Food distribution companies have continued to be impacted by supply chain and other issues that affect the customer experience and overall business results. Therefore, distributors of every shape and size are embracing digital transformation to enhance the capabilities of existing systems and boost efficiency and visibility throughout the food supply chain.