I have worked as a supply chain practitioner in a number of industries, but have found the supply chain challenges in the food & beverage industry to be some of the toughest to address. The combination of long raw material lead times, high demand uncertainty often driven by seasonality, perishable products with short shelf-life, a high percentage of new product introductions, strict regulations and the need to meet increasing customer expectations for safe, healthy, high quality products at a low price puts many obstacles in the way to maturing supply chain capabilities. What’s needed is a synchronized and optimized plan across the entire end-to-end F&B supply chain— one integrated business plan from “Field to Fork.”
The first and most obvious question is, “How do we get here?”
We need to start at the beginning with new product development as well as the onboarding and managing of suppliers and partners. Next, look at your ability to develop accurate forecasts that feed efficient sourcing and production plans including sensing demand changes as they happen. These should include the positioning of raw materials or bringing components from multiple sources together while considering factors like seasonality and capacity. Once we have this in place, it’s time to look at distribution— regional, national, global; omni-channel including distribution centers, stores, restaurants or direct-to-consumer. All of these need to be seamlessly connected and executed. The three areas outlined above are just the tip of the iceberg of factors to consider, which is why I consider making supply chain operational improvements in the F&B industry to be extremely tough.
The benefits of taking a concept to customer approach to supply chain management are significant. Advantages include decreasing planning time by as much as half, reducing risk and costs, replacing inventory with actionable information and increasing service levels while improving margins. Creating a concept to customer plan allows you to breakdown silos across your network. To be successful, you need the following six capabilities to act as one:
Artificial Intelligence and Advanced Analytics – Embedded AI and advanced analytic capabilities are more important than ever to a company’s ability to reduce costs, meet ever-increasing customer expectations and attract and retain talent. Top supply chain talent wants to spend their time creating value not sifting through spreadsheets containing last week’s data. Structured and unstructured data is doubling every 18 months and humans are quickly losing the ability to review that data and find the golden nuggets of information that can improve supply chain performance. AI and advanced analytics can help to identify key data, conduct in-depth analysis, and identify new opportunities and risks sooner.
Product Life Cycle Management – The old way of developing a product in isolation and throwing it over the wall for the supply chain team to determine how to commercialize, manufacture and get it into the customer’s hands does not support the speed and efficiency required of today’s integrated business. Product development efforts have to be part of the broader integrated business planning and execution process to increase speed to market and new improve product success.
Sourcing Management – Today’s number one priority for consumer focused companies can be summed up in a single phrase: speed to market. The push towards faster cycle times is driven by the “we want it now” mindset of today’s consumers. Companies are increasingly looking to improved supplier management through real-time collaboration as a way to compress time to market.
Quality & Compliance – Product safety regulations are increasing at a rapid pace, and there is no slowdown in sight. Food and beverage companies must ensure their products meet a host of governmental and social regulations. History has shown that product quality can literally make or break your brand’s reputation, and with it your financial performance. The quality of your supplier’s supplier has to be monitored and tracked to ensure food safety compliance.
Supply Chain Planning & Optimization – The digital economy requires an intelligent supply chain platform to get the most out of your efforts, one that leverages AI, Machine Learning, and advanced algorithmic planning to automate and/or augment analysis and decision making to take advantage of business opportunities while mitigating risks. To allow your supply chain team to focus on a new vision for your food and beverage supply chain, you need AI powered capabilities for demand, inventory, supply and sales & operations planning.
Retail Optimization – Lack of visibility across the supply chain inhibits the ability to get the right merchandise to the right customer in the right place at the right time. An integrated approach to merchandise planning, assortment, allocation and replenishment eliminates blind spots that drive up inefficiencies and costs associated with disconnected legacy systems. Visibility into comprehensive retail planning data enables forecasting down to the SKU and individual store level, making omni-channel merchandising activities more efficient and helping to increase customer satisfaction and improve margins.
Food and beverage companies need to effectively and efficiently manage the entire supply chain from product concept to customer consumption. Luckily, the emergence of AI embedded advanced supply chain capabilities enabled by more powerful computers, new ‘Big Data’ sources and a tech savvy workforce makes the timing ripe to take your food and beverage supply chain to the next level of performance.
When I was leading supply chain operations at a Fortune 500 food company I could only dream about a seamless flow of information flowing into an AI powered advanced planning platform that enables automated and collaborative processes across teams, departments, continents and even customers and suppliers. Today, this isn’t a dream, it’s a reality. It’s up to you to take the next step forward.