Supply and Resource Shortage in Global Unrest; How Food and Beverage Companies Can Navigate
Published on 29 June 2022
Industries all over the world have been going through truly extraordinary supply and resource shortages, and there is little to suggest the disruption will stop soon. With continued disruptions plaguing supply chains around the globe, the importance of speed, visibility, and agility is higher than ever. It is crucial for businesses to evaluate exactly where key pain points are to identify which technologies would best minimize risk and improve supply chain resiliency.
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Before coming to grips with the supply chain crisis and both the short- and long-term implications for food and beverage brands, it's helpful to take a look at the big picture.
A global shift in spending
Strains in global production networks, also referred to as supply bottlenecks, are a direct reflection of imbalances between the supply and demand of specific goods. Drastic shifts in economic activity throughout, and now subsequent to COVID-19 pandemic, have inspired significant imbalances between the supply and demand of goods. Additionally, throughout the pandemic, severely restricted sectors (particularly travel and tourism) inspired a major redirect of consumer focus on merchandise goods.
Faced with an enormous surge in demand, suppliers of goods worldwide have been struggling to deliver on production.
Assessing geopolitical events and risks has become an increasingly crucial risk mitigation strategy for businesses around the world.
The U.S.-China trade war triggered a rise in economic nationalism. Additionally, the Russia-Ukraine crisis has created massive barriers in the market with more than 600,000 businesses worldwide relying on Russian and Ukraine suppliers, with more than 90% of those based in the U.S.
While being called to ramp up domestic production, increase local employment locally, and reduce dependence on international trade–food and beverage transformation businesses are also having to reimagine their use of lean manufacturing approaches and minimize the amount of inventory held in global supply chains.
Structural shifts in the labor market have left organizations in the food and beverage industry struggling to recruit and retain employees. These shifts have hit warehouses particularly hard with rising costs of labor being felt across the entire chain, while the work itself can often be physically demanding–leading to a limited labor pool. Subsequently, many manufacturers’ on-time delivery rates are falling, a challenge only exacerbated by supply shortages.
Consumer expectations haven’t stalled
Regardless of these challenges, consumer’s expectations will not balk. Shoppers will continue to expect low prices (especially as we head into a recession), and demand a seamless, friction-free shopping experience. Competition will ensure that the importance of extending manufacturing optionality to accommodate seismic market changes will remain unrelenting.
Impact to the warehouse
Uncertainty will remain, and global, domestic, and local disruptions will continue to happen. These events directly impact warehouses around the globe. The challenge for manufacturers will be to make their warehouse processes more resilient without weakening competitiveness.
Leaders in the food and beverage space can take the following preventative measures and best practices to better detect and respond to major disruptions in their warehouse operations. Here are a few to consider:
1. Diversify sourcing
By implementing diverse sourcing points throughout their supply chains, both globally and domestically, brands will enable more effective and dynamic responses to disruption, allowing for more “traditional” business-as-usual operations.
2. Optimize warehouse design
Designing a warehouse layout to optimize productivity across your organization is key. Inventory should be located in the most efficient positions and the general flow throughout the warehouse should be frictionless. Business intelligence is crucial for uncovering which products are selling well. Inventory that sells fast needs to be quickly accessible to ensure employees aren’t spending too much time traveling back and forth throughout the warehouse.
Warehouse design must also be reactive to shifts in sales trends. If products become more popular, or if they are seasonal, then a flexible strategy needs to be adopted so that products can be moved in and out of the prime warehouse locations as needed.
3. Prioritize warehouse innovation
Innovative technologies and concepts like automation, artificial intelligence (AI) and machine learning (ML) facilitate decisive systems for forecasting and planning, while predictive and prescriptive analytics allow supply chains to better detect the potential for disruption ahead of time and adapt in real time across your entire supply chain as disruptions occur.
When combined, the following capabilities give supply chains the strongest chance of successfully driving through crises:
AI/ML enabled forecasting and planning can optimize inventory through unstable demand periods while reducing capital inefficiencies.
Automation can support workforces in times of both increased, and decreased demand, volume, along with labor shortages through more efficient production, fulfillment, and distribution.
Predictive analytics consider external events and recommend course corrections to minimize risk.
4. Integrate key technologies
Stand out manufacturers are first to adopt best-in-class technologies, knowing that the competitive advantage comes in being first to market with the right tools. Companies that adopt technology after it has matured are merely catching up to companies who have already mastered and found ways to even optimize the technology.
The most successful manufacturers will incorporate technology such as warehouse management systems (WMS) into their supply chain strategies and warehouses. WMS helps to automate the inventory management and increase overall efficiency.
Real-time visibility across the entire supply chain will include the ability to highlight inefficiencies and identify and prevent potential technical issues from occurring. With a full 360-degree perspective, your WMS can also monitor facility metrics in real time, and reduce or increase stock to ideal levels.
Further, a WMS will help manufacturers improve inventory-handling accuracy, enabling a more precise allocation of human resources, and reduced operational costs. And because a strategically implemented WMS allows for more of a supply chain execution vs. management approach, food and beverage companies can address labor shortages through a more inclusive workplace where many of the operations are automated and not dependent on the ability to lift and move heavy goods back and forth.
For example, here’s how Yakima Chief Hops improved the workplace environment for employees and enabled them to perform with higher accuracy and effectiveness.
Structuring your supply chain and warehouse strategies with innovative technologies, and intuitively designed tools and strategies will mitigate the risk and impact, and unlock opportunity.
The good news is these strategies and tools exist, and can deliver immediate return on investment ( ROI).
A best-in-class WMS is more often than not, a core technology required. Generix Group’s Solochain Warehouse Management System has been battle-tested, end-to-end, across some of the most valuable supply chains in the world.
The demands on manufacturing leaders to rapidly respond to change and increase profitability are greater than ever. The tools they use should be low-risk, high return, and proven.
Learn more about SOLOCHAIN WMS
About Generix Group
Generix Group provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.