A leading player in the food processing industry was looking at devising effective supply chain risk management strategies. Their inefficient procurement strategies had greatly impacted their bottom line as a result of which they wanted to implement a detailed risk assessment process to gain a competitive advantage.
SpendEdge was approached by the food processing client to leverage its expertise in risk assessment and develop an accurate strategy to mitigate risks in procurement. The supply chain risk assessment engagement entailed a quantitative analysis of various supply chain categories to enhance the risk management process.
The client is a well-established food processing firm with business units and operations spread across Europe.
The food processing company was facing several challenges owing to their inefficient supply chain risk management strategies.
How did SpendEdge Help the Client?
- Step 1: Identify the risk factors
The initial step revolves around the identification and estimation of the impact of supply chain risks on business operations. Risks in the supply chain of food processing companies can deter them from achieving their business goals. Hence, an effective risk assessment process plays a key role in helping them achieve their organizational goals. Also, by doing so, food processing companies can classify risks based on the severity of their impact.
- Step 2: Evaluate the risks and devise effective control measures
Any risk assessment process deals with three types of resources namely – people, business functions, and technology. However, identifying the hazards and employing effective control measures can go a long way in helping food processing companies prevent their future occurrence to avoid catastrophes. Also, it’s imperative to establish a risk assessment process that is dedicated to continuously gathering, interpreting, and acting on the gathered data.
- Step 3: Review the risk assessment process and make necessary changes
To select an effective supply chain risk assessment process, it is essential to analyze the gathered data to identify potential risks and develop strategies to avoid major losses. The devised risk assessment process played a major role in enhancing the procurement capabilities of the client.
Key questions answered in this supply chain risk assessment engagement include:
Benefits of the Engagement:
The risk assessment experts at SpendEdge devised a three-step holistic approach that helped the food processing company to devise a precise risk assessment process top tackle their supply chain challenges.
Importance of Risk Assessment for Food Processing Companies
A major concern for food processing companies revolves around effective supply chain management (SCM). But many are unaware of the fact that the key to an effective supply chain management system lies in its ability to detect and prevent risks. Hence, leading food processing companies are focusing on leveraging the efficiency of the deployed assessment process to overcome supply chain failures.
Our supply chain risk assessment solutions are guided by the principles of supply market intelligence to help clients enhance their overall supply chain efficiency. Also, a customized risk assessment process empowers food processing companies to be more confident in their data by quickly detecting supply chain risks.
In this engagement, the devised process followed a three-step approach that enabled the client to enhance supply chain efficiency. The risk assessment process revolved around analyzing the level of risk exposure to determine the best way to mitigate them. SpendEdge’s process undertakes the best approach in risk management and focuses on helping food processing companies understand their impact. It is more of a collaborative process where supply chain risk assessment plans are developed to tackle the challenges of stakeholders who understand the risks and are best able to manage them.
Unattended supply chain risks tend to paralyze most supply chain operations. Hence, its right to conclude that it is essential for every organization to identify the key risk elements within their supply networks and keep them under close supervision. Successful businesses are those that are capable of managing such risks and restoring confidence throughout the global supply network. Nevertheless, if correctly done, by employing a suitable risk assessment process, the benefits are much more than mere cost reduction.
A must-read case study for procurement specialists and decision makers looking to develop an understanding of the food processing industry
What the Client Wanted
The fast food industry client wanted to review how much they were spending on office products. The supplier of office products to the client also happened to be the co-sponsor of several annual, high-profile events. As a result, they wanted to device better negotiating terms with the supplier, while ensuring the supplier continued to sponsor these events.
Analyzed the office products supplier’s individual stock keeping units (SKUs), pricing, and which items were on-contract and off-contract. This helped the client achieve 17% savings with the supplier.
Fast Food Industry Overview
The global fast food industry is driven by the explosion of new concepts and menus, especially within the limited-service segment. Additionally, individuals today are increasingly seeking inexpensive and fast breakfasts from quick service restaurants. With lunch and dinner meals sales lagging for years, fast food chains are focused on winning over brunch fans. Furthermore, consumers have a growing number of options to get quality food served at their doorstep, which places great demands on fast food operators to offer the highest levels of food quality and service.
Fast Food Industry Challenges
Booming competition: There are several remunerative opportunities for the companies in the fast food industry. This has increased the number of new market players and most brands are now trying to overshadow their competitors by adopting various marketing strategies.
Shift to healthy food options: A healthy lifestyle is the need and demand of the hour. Moreover, there is a common belief that fast food has a lot of side effects and consequently, people generally consume such foods rarely or occasionally. As a result, companies in the fast food industry have been compelled to come up with ways to re-create their products.
About the Client
The client is an American fast food company.
The client wanted to review how much they were spending on office products. The supplier of office products to the client also happened to be the co-sponsor of several annual, high-profile events. As a result, they wanted to device better negotiating terms with the supplier, while ensuring the supplier continued to sponsor these events.
Key questions answered in our spend analysis engagement
To gain in-depth insights into our spend analysis solutions
With the help of SpendEdge’s spend analysis engagement, the client analyzed the office products supplier’s individual stock keeping units (SKUs), pricing, and which items were on-contract and off-contract. This helped the client achieve 17% savings with the supplier. The client also tracked the usage of office products in all their business units every month.
Spend Analysis Solution Insights
Spend analysis is one of the key tools that procurement establishments must use to proactively manage risks, recognize savings opportunities, and enhance the organization’s buying power. Spend analysis is also often regarded as the fundamental foundation of sourcing. It is a tool that sourcing managers can utilize to engineer superior performance.
To know more about how spend analysis helps fast food industry players
Today, the restaurant business is witnessing impressive growth, and it applies to the fast food industry as well. According to a recent report, the fast food industry has registered a turnover rate of 150%, which is perhaps the highest since data recording started in 1995. For many companies in this market, the aim to offer quick, affordable easy alternatives to home-cooked food for working professionals, bachelors, and families is one of the main objectives to expand their market share.
At SpendEdge. we meticulously study the latest market trends and challenges, and their subsequent impact on the fast food industry to give companies an edge when it comes to planning their market strategies.
Fluid pricing to land soon
Tracking consumer data is a common practice of many food companies. This data is used to make changes in the base fair prices of discount coupons, holiday offers, and in-app menus available for the customers. Restaurants in the fast food business are soon going to adopt this dynamic method of pricing. The tracked data would provide information on consumer’s preferences and companies in the fast food industry to provide a discount on the overstocked items, adjust prices as per the location, and charge high during peak hours
Automation into the play
2018 is going to be marked as the year when technology will bring significant changes to the fast food industry. 3 C’s – Convenience, Comfort, Customization are the three demands of customers. This can be best served when automation comes into play. The need for technology in the fast food industry is also felt due to labor restrictions. Many fast food chains are now using artificial intelligence and chatbots along with chat screens and kiosks to receive orders from social media platforms.
Continue reading to know more…
The rise in veganism was initially feared to be a great threat to meat and other animal-based products. Despite this, according to records, six million calves are killed for food every year in Europe. Veal meat is produced by slaughtering calves when they are 18-25 weeks old. Often, dairy cows are repeatedly impregnated to produce milk. This is done by artificially inseminating them throughout their lives. The calves are then removed so that the milk can be collected and sold. The meat of younger animals is more tender and softer than older animals, which is emerging as a major factor driving the market’s growth. Moreover, the meat obtained from grass-fed calves that are raised under proper conditions and fed with natural milk is denser in nutrients. In terms of trade, the exports of veal meat and beef from Mexico, Japan, China (Taiwan), South Korea, and Hong Kong have increased over the past couple of years and are expected to increase further by 2022. (Source: Global Veal Meat Procurement Market Intelligence).
Increased consumption of meat-based products such as burgers and hot dogs in developing economies mainly by fast food or dine outs has spiked up the demand for veal meat. The major reason for the increasing number of fast food outlets in APAC is the changing consumer spending patterns in countries such as India and China. However, dwindling supplies of calves in India, one of the leading exporters of veal meat, due to religious sentiments of Hindus associated with cows have affected the growth of the market. Europe is another leading market with France and the Netherlands being the largest producers of veal in the region. Major end-users of veal meat in the region include supermarkets, traditional butcher shops, and hotel and catering industries.
Over the past few years, this market experienced a significant increase in prices owing to the rise in costs of key input elements such as manure management, animal feed costs, grain, milk, and milk replacers. The increase in prices of such inputs has affected the breeding activities; thereby, driving the prices of veal meat. Veal meat has a higher retail price compared with beef due to higher protein content and nutrition value, and finer texture than beef. The price of veal meat fluctuates based on seasonal demand due to its dependence on biological and market fundamentals and climatic conditions. Suppliers of veal meat are focusing on reducing labor costs through automation. These costs are expected to decrease up to 6% by 2022.
Over the years, several players in this market have been experimenting with market innovations to reduce costs without compromising on the quality. For instance, in the Netherlands, a prominent integrator has developed a new type of fattened calves. These calves are fed with grains rather than milk replacers, thus resulting in low processing cost of veal meat. Suppliers are also trying to incorporate innovative methods to obtain meat by avoiding slaughtering and packaging technology for increasing shelf life and preserving the quality of the veal meat.
SpendEdges’s latest report on the global veal meat market provides in-depth insights on the procurement best practices, pricing insights, supply market insights, and market innovations.
The client wanted to leverage spend management to enhance spend capabilities across their supply network to drive topline revenue growth. To proactively address the challenges emerging due to inefficient spend management, the fast food industry client approached SpendEdge to devise an all-inclusive approach to spend management throughout their global supply network.
A detailed quantitative analysis of the various spend factors across their supply network was carried out to identify, assess, and prioritize each factor contributing to irrelevant spend. Using a robust spend management framework, the client was looking at devising appropriate strategies to reduce unwanted costs and inefficiency out of the supply chain. By doing so, the client wanted to gauge the impact on their bottom line and free up resources to address changing consumer predilections.
Furthermore, to address the issues of the fast food industry client a robust three-step spend management framework was developed, it included – collection, spend data analysis, and the development of a spend management framework. Following this, the fast food industry client redesigned their spend management system to leverage and include proactive spend management strategies.
About the Client:
A leading fast food chain in the US. The client is a prominent player in the fast food industry with multiple branches across various geographies.
The fast food industry player was facing difficulties in enhancing the spend management capabilities across their global supply network. To help the client overcome their challenges, the experts at SpendEdge developed a three-step methodology to tactically address the burgeoning nature of an inefficient spend management system.
How did SpendEdge Help the Client:
- Step 1: Extraction and clean-up of spend data from legacy systems
In the first step, spend data from across the client’s supply network was extracted, standardized, de-duplicated, and enriched to ensure effective spend data management. Our spend management experts followed a structured approach to develop a framework to effectively track the client’s organizational spend.
- Step 2: Collection and categorization of organizational spend data
It is essential to collect and categorize spend data from a multitude of sources within the organization’s supply network to identify irrelevant sources of spend. By doing so, organizations can effectively reduce and overcome the inflexibility caused by an incompetent spend management system.
- Step 3: Devised a flexible spend management framework aimed at reducing the organizational risks
The dynamic nature of the supply chain called for the refinement of the client’s spend management capabilities. The development of a proactive spend management framework required a combination of measures, which included – changes to the organization’s data management structure, spend data management strategies, and the use of advanced spend management.
Key questions answered in this spend management study include:
Benefits of the Engagement
Our spend management experts helped the fast food industry client devise an effective spend management framework to diversify their sourcing strategies to and minimize the risk of catastrophic supply chain failure due to an ineffective spend management system.
Leveraging spend management enabled the fast food industry client to enhance the visibility of their supply chain processes by establishing an interconnected relationship between different tiers of the supply network. The development of a holistic spend management approach also accounted for major changes in data management, organizational processes, and data governance, which helped address changes in market trends including the changes in regional and global demands.
Why is spend management necessary?
To deal with the inadequacies of traditional spend management systems, leading fast food industry firms are increasingly recognizing the need to incorporate spend management strategies across their global supply network. Click To TweetWith the easy availability of advanced technological solutions, it is now possible to bring in massive cultural transformations through the adoption and implementation of spend management as a fundamental part of business maneuvers.
While leading business establishments often turn to spend management solutions to reduce purchasing spend, they quickly realize that a precise spend management framework ultimately relies on the reliability and quality of the underlying spend data. This case study on spend management concludes that a successful spend management system must be based on a robust data management foundation.
To know more about our spend management solutions for the fast food industry
- SpendEdge’s Supply Chain Analysis Helps a Leading Auto Parts Manufacturer Realize Annual Savings of US $300,000
- Spend Analysis Helps a Leading Processed Meat Manufacturer to Develop Effective Category Strategies for their Manufacturing Units
Modern consumers are characterized by their hectic lifestyle and busy lives. This trend has opened the doors for packaged, ready-to-eat, and convenience food such as processed meat products. Companies in the processed meat market are increasingly on the lookout for new technologies that can improve their offerings and provide customers with the experience and taste of eating fresh meat (Source: Global Processed Meat Procurement Market Intelligence Report). Furthermore, the growth of the food service and retail industry has increased the demand and supply of processed meat products. The growth of fast food giants will further fuel the rise of the processed meat market. However, one of the major factors that will negatively impact the processed meat market is the increasing obesity level globally, which is rising due to the high intake of processed meat products.
Chilled meat will account for the largest contribution to the growth of the global processed meat market. Between 2012 and 2016, the category contributed over 70% to the market’s value growth. The poultry segment accounted for over 42% of the total processed meat market share in 2017. The segment registered significant growth during 2010-2017 due to the introduction of enhanced breeding stocks, availability of feedstocks such as soybean meal and maize, and better marketing infrastructure.
The processed meat market is in for a steady growth with a CAGR of 12% between the period 2017-2022. In addition, factors such as increasing trade liberalization policies through multilateral and regional trade agreements have led to rapid growth in food processing, which is expected to augment the growth of the market. Suppliers in the processed meat market are involved in strategic alliances with raw material suppliers and adopting vertical integration practices. This enables them to achieve significant bargaining power and obtain cost savings between 3%- 5 %.
Largest market for processed meat products
Increasing population, demand for animal source food, and growing urbanization are the major factors that are expected to drive the global demand for processed meat by 2022. The APAC region is one of the biggest markets for processed meat products. Regions such as China, Pakistan, and Southeast Asia are expected to observe the highest growth due to the increasing consumer spend on food products. Furthermore, the export of processed meat from suppliers, especially in APAC, is expected to increase due to the growing adoption of standard protocols in production methods.
There are two main types of pricing models for processed meat products – volume-based pricing and market pricing. In volume-based pricing, buyers can be assured of consistent product supply and availability of the product during demand-supply fluctuations. Market pricing is transparent, as it is based on variable costs of production and market prices.
Increasing adoption of technologies in production practices has led to higher outputs and efficiency in operations for companies in the processed meat market. Some of these technological innovations include data collection technologies for analysis of flock, in-shed sensors for monitoring production data, and aero scalding techniques for improving energy efficiency.
Read more about the market outlook of the processed meat products market along with procurement best practices, pricing insights, supply market insights, and market innovations in SpendEdge’s report on the global processed meat market.
You might be quite familiar with the ‘eat more fiber’ advice from dieticians or even healthcare professionals. What exactly is dietary fiber and why is it an integral part of your nutrition intake? Dietary fiber refers to a type of carbohydrate that is typically found in edible plant foods such as cereals, vegetables, fruits, nuts, dried peas, lentils, and grains. Dietary fiber not only helps keep the gut healthy, but also plays an integral role in reducing the risk of diseases such as coronary heart disease, diabetes, and bowel cancer. (Source: Dietary Fiber Procurement Market Intelligence Report). A good majority of modern customers are highly conscious about the health aspects of their food intake. This is one of the main factors fueling the dietary fiber market.
Archer Daniels Midland Company(ADM)
One of the leading dietary fiber suppliers in the world, ADM is headquartered in Chicago, Illinois. Archer Daniels Midland Company (NYSE: ADM) has transformed crops into products that have served the vital needs of a growing world for more than a century now. Today they are one of the world’s largest agricultural processors and food ingredient providers, with approximately 31,000 employees serving customers in more than 170 countries.
Cargill provides food, agriculture, financial and industrial products and services to the world. The company has a workforce of 155,000 employees in 70 countries. It is privately held global corporation in America based in Minnetonka, Minnesota. In terms of revenue, Cargill incorporated is the largest privately held corporation in the United States.
DowDuPont brings together the portfolios of two innovative, science-based companies that hold leadership positions in the Agriculture, Materials Science and Specialty Products industries- Dow and DuPont. They are also one of the top suppliers of dietary fibers in the US. The company is headquartered in Michigan, United States.