Supply chain challenges have become a constant source of stress for food and beverage companies and the businesses that contract with them. Any disruption along the supply chain can upend plant operations, production schedules, logistics, and the customer experience.
While not every disruption can be avoided, many of them can be managed. Preparation and planning are vital for businesses that want to avoid delays and shutdowns now and in the future. Before you can manage the challenges, you’ll have to identify them. Here are eight challenges that food and beverage supply chains face currently and in the future.
1. Increasing Demand for Food Shipping Traceability
Today’s consumer has raised the bar for food and beverage companies as they think about where their food came from and pay more attention to their lifestyle choices. Likewise, manufacturers and sellers of products have a growing desire for access to detailed ledgers that trace and track materials, from farm to fork, allowing them to identify potential issues in the supply chain and make better predictions.
One of the primary drivers for traceability is the concern surrounding food-borne illnesses, which can be spread through the supply chain. Considering that 52% of all recalls cost over $10 million and a quarter of U.S. adults are managing a health condition through diet, traceability is vital.
2. Dealing With SKU and Order Complexity
Food and beverage orders aren’t as simple as they used to be. Consumers are demanding a wider range of options, driven by a variety of trends as well as some health concerns. Just one example is the shift away from mainstream soft drinks, milk, and beers to products like health drinks, soy milk, and craft brews.
Because there are so many options (more than 75 types of craft beers and hundreds of labels), there is a new drive to stock an ever-increasing variety of products. Because SKU and order complexity has soared, warehouses and outlets can manage these with technology solutions like RFID tags.
3. Poor Communication Between Food Supply Chain Partners
If the past 18 months have taught us anything, it’s that there are some glaring weaknesses in the global supply chain. When food and beverage companies create relationships with materials suppliers and transportation providers on the other side of the planet, things are bound to fall through the cracks when a crisis arises.
A single missed deadline somewhere down the supply chain can cause a ripple effect that leads to significant delays. When you are dealing with food, it can lead to spoilage, bacteria growth, and those costly food recall issues that we just mentioned.
One surprising revelation was how the computer chip shortage has impacted the foodservice industry. Everything is connected, and communication is vital.
4. The Potential for Food Fraud
If you outsource any part of your food and beverage business, you’ll need to be on the lookout for food fraud. In the food industry, this is defined as the intentional adulteration of food by misbranding or counterfeiting, substituting one product for another, using approved additives or enhancement, or intentionally contaminating food with various substances. For example, a supplier might ship cheaper alternatives and charge you the same price. Or, they might inject them with enhancers or additives and not tell you about it.
Why is this a problem? First, you aren’t getting what you pay for. Second, your customers aren’t either, and it can be a serious health and liability concern. Over 10% of the U.S. population (more than 26 million people) have serious food allergies, and about 19% believe they have a food allergy.
Misrepresentation is illegal in most countries, including the U.S., so knowing what your supplier is sending you is critical.
5. Lack of Honesty and Transparency
How can you run your food and beverage business effectively without honesty and transparency in the supply chain? The answer is, you can’t. But manufacturing and shipping mistakes can not only lead to customer satisfaction issues; they can also be dangerous and deadly when food spoilage becomes an issue.
Some companies in this industry have begun using continuous communication logs. Essentially, all of the players in the food supply chain are now connected and sharing data relative to the cargo location, temperature and humidity readings, and any inspection checkpoints. This provides complete transparency to give companies peace of mind as well as accountability to each other and their customers.
6. Ensuring a Superior Customer Experience
The food and beverage business is highly competitive. If your products aren’t available or there is a dip in quality, consumers won’t hesitate to give your competitor a try. Missed delivery windows, spoiled food, or mislabeled products can be a customer service nightmare. And restaurants and grocery stores are also likely to impose penalties for late or missed deliveries.
Manufacturers and distributors should insert sufficient redundancies into their processes to allow for any disruptions. Equally important, there should be visible across the entire logistics function to spot and prevent bottlenecks.
7. Growing Food & Beverage Regulations
Regulations that impact food and beverage companies are a given. They are put in place to protect the public, but they can lead to increased costs and inconveniences for the companies that must adhere to them.
For example, the ELD Mandate is a regulation requiring trucking companies to electronically log and monitor a driver’s daily service hours. While this is intended for safety, it has increased shipping rates and caused delays in the transfer of perishable goods.
8. Cost Reduction and Productivity Pressures
There will always be a need to reduce costs and optimize productivity in the food and beverage supply chain. While labor costs continue to rise, companies can begin looking at technology solutions that will help workers get the job done more efficiently and reduce human error.
An investment in technology is a long-term solution to many of the troubles that plague that supply chain. Consumers remain highly price and service-conscious. Companies that put efficiency first will achieve better results.
The global food supply chain has become increasingly complex. While consumers assume that supply chains act like finely-tuned machines, the past 18 months have proved otherwise. As businesses in this industry adopt new initiatives and leverage technology solutions to address these many challenges, they’ll be able to deal with these hurdles more effectively and produce better overall results.
