Supply Chain Risk Management Helps a Leading Food Manufacturing Company to Reduce Risks for its Ingredients Portfolio

Overview of the global food manufacturing industry

The global food manufacturing sector is enormous and comprises of large global players as well as national and regional organizations – many with well-recognized brands. Products range from crisps and confectionery to beverages and convenience foods. In several countries, the food manufacturing industry is a major contributor to the health of the national economy. In the same way, the sector is impacted by both the local economy, where it manufactures products, as well as by the global economy in terms of food logistics and imports and exports. Moreover, the shifts and changes in population size, regional economies, food consumption, and the food and beverage industry, in general, all have significant implications on food manufacturing.

However, a few factors are expected to hamper the growth of the global food manufacturing industry over the next few years. They include:

• Meeting consumer demands: Challenges faced by food manufacturing firms pose a challenge while meeting the varying consumer demands. However, this needs to happen quickly and with costs kept to a minimum. Additionally, consumers change their behavior all the time and with new preferences and emerging fads dominating many buying decisions. This often happens, meaning that food manufacturing firms must develop products to meet these demands in ever-shorter time frames.
• Healthier product options: Today, consumers want healthier products but without any compromises on the taste. As a result, food manufacturing firms are studying product labels more than ever before, to know precisely what is in the food they are consuming. This means that food manufacturing firms need to develop products with reduced or no salt, sugar, saturated and trans fats, and without compromising on flavor.

Several such factors are forcing food manufacturing firms to leverage the use of robust supply chain risk management solutions. Supply chain risk management solutions help companies in the food manufacturing space to create a competitive advantage. These solutions also help firms in the global food and beverage industry space to truncate their supply chain and improve: lead time, customer service, transportation risks, the risk associated with transportation and profitability, and order- fulfillment times.

The Business Challenge and Journey

Client background: A multinational food manufacturing company. They specialize in manufacturing convenience food products with facilities spread across 15 countries across the globe.

Client issue: The client sought processes/insights to identify its supply chain risks and develop strategies to mitigate them and ensure supply continuity. Additionally, the client recognized that there was no proper mechanism to identify any threat to supply continuity. The gravity of risk was realized when one of the single-source ingredient suppliers failed to clear the quality audit, which led to the use of last-gasp measures to ensure supply continuity through an alternative supplier approval process. This affected the products supply to the market.

The supply chain risk management experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the global food and beverage industry space to help the client reduce discrepancies across the supply chain.

Client journey: During the course of this supply chain risk management engagement, the food manufacturing client was provided with a mechanism for category managers to collaborate with cross-functional teams like R&D and Quality to work on risk mitigation plans. This helped insulate the client against unforeseen price risks through the development of alternative sources of supply.

Key questions answered in this supply chain risk management engagement

The Results

With the help of SpendEdges supply chain risk management solution, the food manufacturing client was able to identify ingredients with high supply risks and prioritize development of risk mitigation strategies. This helped them reduce the risk for its ingredients portfolio through measures such as supplier quality assurance, alternative supplier development, sourcing from alternative regions, and forex hedging and liaising with suppliers.