Supply chain optimization: Major challenges facing food & beverage companies

UK – The food and beverage industry faces a lengthy list of unique challenges in terms of logistics and supply chain management – right from volatile commodity pricing and inventory management to high demand uncertainty.

These challenges are known to spread into quality and safety requirements combined with frequent new product introductions, complex manufacturing constraints as well as perishability.

Moreover, the need for inventory optimization in the food and beverage industry is growing due to the increase in customer demand, expanding product portfolios, and lengthening supply chains.

In one of its latest updates on supply chain management, SpendEdge, a leading provider of procurement market intelligence solutions, highlights some of the top constrains that food and beverage companies battle with in regard to supply chain management.

Accurate demand forecasting

While companies in the food and beverage industry have analyzed the importance of an accurate and repeatable demand forecasting process, according to SpendEdge, accurate data forecasting is one of the major challenges the companies face.

The firm notes that developing a demand plan that people in different roles and areas use to build global supply chain management plans can be very challenging.

However, accurate forecasts help maximize production efficiency, minimize inventory, optimize distribution, streamline purchasing, and ensures confidence in growth projections.

Efficient inventory management is also one of the most visible global supply chain management expenses in the food and beverage industry and is a line on the balance sheet under current assets.

SpendEdge claims that the amount of inventory required is a by-product of supply chain design, customer service levels, product quality, as well the ability of the company to predict demand and produce a product in a timely manner.

According to SpendEdge, basic warehouse management that does not consider unique demand variability, the customer service targets, lead-time and lead-time variability of each product/location combination will result in misaligned inventory positions.

“Inventory management solutions are the best way for organizations to free up capital, boost service levels, and free up time for employees to focus on a value-adding task,” the company opines.

Another major constrains identified is time phased-replenishment planning. Well, companies in the food and beverage industry are increasingly being asked to guarantee a rapid replenishment cycle or manage inventory near to customer locations.

With this at hand, they require advanced replenishment planning to develop cost-effective strategies that can enhance customer service levels while reducing costs.

Master data optimization

As the food and beverage industry continues to increase in complexity and speed, it is likely that business solutions and enterprise resource planning do not provide the depth and breadth of data capabilities needed to support advanced global supply chain management.

In addition, the company notes that adoption of mature processes of businesses plus the capacity to leverage the Internet-of-Things (IoT), will further drive the need to connect multiple systems of your organization.

Ultimately, the output from inventory and demand planning, provides better future visibility of the product, customer demands, and material requirements. SpendEdge says that this is “in fact, one of the best practices for global supply chain management.”

“Advanced replenishment planning can help develop cost-effective strategies in global supply chain management that ensures customer service levels remain high while minimizing costs,” the company said.

Furthermore, with a comprehensive sales and operations process in place, the company believes that food and beverage firms can rip big.  

Actually, SpendEdge sees this as an opportunity saying that; “It can transform diverse information from finance, sales, production, marketing, procurement, and transportation in the food and beverage industry into one robust central resource for analysis and decision making.”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.