What’s Keeping Food and Beverage Companies Up at Night in 2021?
Published on 3 March 2021
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.
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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 address 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.