Spend Analysis for a Canned Food Manufacturer Helps Achieve Logistics Savings of USD 2.4 Million

Overview of the canned food industry

One the of the key growth drivers for the canned food industry is the rising need for convenience in terms of food consumption due to hectic lifestyles. The hectic lifestyle of millennials has led to an increased demand for nutritious and convenient food offerings – and canned food fits into this criteria. Additionally, one of the key trends in the canned food industry is the innovation in packaging. With the increasing demand for chemical-free canned food, manufacturers across the food and beverage industry are focusing on innovations in packaging. Furthermore, many brands of canned food products have started offering products in BPA-free containers.

Despite such promising growth prospects, our analysis of the global food and beverage industry shows that canned food manufacturers across the globe are facing predicaments in terms of:

• Consumers looking for convenience: One of the critical drivers for the success of canned food is convenience; easier opening, packaging to cook in, resealable and so on. However, metal cans have struggled to address these issues adequately. The metal can do what it does, very well. Consequently, volume share will be maintained, particularly where food needs to be stored for longer
• The challenge of new pack innovations: Over the years, the metal cans have not evolved very much, apart from easy-open closures. This lack of evolution means threats from newer pack types, such as thin wall plastic containers and pouches, which offer added functionality.

Many such predicaments are compelling firms in the food and beverage industry, especially canned food manufacturers, to leverage the use of robust spend analysis solutions. Spend analysis solutions provide knowledge into an organization’s procurement activities and outlays. These solutions also allow an organization to identify the key areas for process improvement and cost reduction.

The Business Challenge and Journey

Client background: One of the world’s largest producers of canned food, the client employs 50,000+ packers, processors, and general employees in more than 40 countries. 

Client issue: The company’s overall logistics costs were on a rise, driven by high import transportation costs owing to the location of the import warehouse and the use of multiple 10-wheel trucks. Additionally, low-quality warehouse operations, sub-optimal storage patterns, and lack of supply chain visibility contributed to high warehousing costs.

To help the client redesign their supply chain network and help them reduce costs and increase visibility, the spend analysis experts at SpendEdge tailored a two-step research methodology, which included qualitative and quantitative data collection methods to classify and categorize spend data accurately. The experts also collected information from a wide array of reliable secondary sources including industry forums, trade shows, and company presentations.

Client journey: The canned food manufacturer implemented a warehouse management system to improve visibility. The client also switched the location of their import warehouse, which helped them reduce inbound transportation costs and enhance warehouse management capabilities. They also eliminated the Less-than-Container-Load (LCL) trucking and reduced transportation costs by making use of empty reefer containers to transfer the import cargo.

Key questions answered in this spend analysis engagement

The Results

With the help of SpendEdge’s spend analysis solution, the canned food manufacturer achieved a total logistics savings of over USD 2 million. The client also streamlined their supply chain activities, increased visibility, and developed a good foundation for the future.

To know more about our spend analysis solutions for food and beverage manufacturers