food supply chain

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food supply chain

Food Supply Chain Management: 5 Key Strategies to Succeed in the Market

Food supply chains have a proven history of transportation delays, spoiled food, and counterfeit food and beverages. In order to optimize the food supply chain, companies need to attain more knowledge about suppliers they collaborate with and devise effective supply chain strategies. If they fail to do so and issues arise, consumers will switch to different brands. Also, recalling the items triggers negative publicity and requires significant resources.  

Ways to Optimize the Food Supply Chain

Supplier monitoring and performance evaluation

Suppliers are an inevitable part of the food supply chain. There exists a process to properly monitor and audit prospective suppliers. As a retailer, you need to question them about food safety regulations, recall programs, and recordkeeping processes. Once suppliers meet these criteria, then you can proceed with the contract and auditing. Auditing could be performed internally by suppliers or a third party could be hired to perform an audit on your behalf. The latter is a better option as it keeps the evaluation unbiased.

Want to know how top companies in the market are evaluating their suppliers and improving the food supply chain? Request a free proposal and our experts will get back to you in 48 hours. 

Quality Analysis 

Quality of food products may become a major issue for companies. Vendors across the globe may offer cheap products due to cheap labor and lower compliance requirements. While it enables companies to make products affordable, quality becomes a major concern. The FDA tests a small portion of the food imported, leaving a major portion of food entering the food supply chain unchecked. Companies, therefore, must perform the safety of items imported to mitigate any unprecedented risk. 

Wondering how you can identify the key quality certifications that could help you address food supply chain challenges?

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Manage the budget 

Budget remains one of the top concerns for companies managing the food supply chain independently or with the aid of their party logistics (3PL) company. Even basic management software and technology may cost too much. Collaborating with a reputable third party service provider will allow companies to improve the food supply chain management for the growth of the business. They can align the entire supply chain process to meet the evolving business needs.

Inability to identify 3PL companies could lead to excess spend. Stay a step ahead by requesting a free demo of our procurement platform to gain exclusive insights and better manage the food supply chain.  

Keep a check on inventory

Refrigeration, condensation, and shipping timelines are crucial for companies managing a food supply chain. Some products require special storage and a particular kind of inventory management. Efficient processing of goods within a warehouse could help companies to effectively manage such products and delineate picking errors when it’s time to ship or deliver a product. Also, inventory could be moved quickly to avoid spoilage.

Improve the processing

The advent of technologies such as electronic data interchange (EDI) is gaining immense popularity in the food industry. It provides fast processing and speeds up deliveries and shipments, limiting clerical errors and improving time management for companies. Such technologies enhance the efficiency of the supply chain process and make it run smoothly.

To know more about the latest strategies to improve the food supply chain process, request more information from our analysts.

How will E-commerce Impact the Food and Beverage Supply Chain?

food and beverage

As per expert predictions, the online food and beverage market is expected to experience steady growth in the years to come. But in comparison with the total share of e-commerce market worldwide, there is ample room for improvement in the online food and beverage space. As far as the players in the online market are concerned, maintaining and building upon the consumer trust is a key to future-proofing supply chain processes in the future. Due to the high chances of the perishability of products, e-commerce companies handling food and beverages must ensure that the products do not compromise on freshness and quality until they reach the final consumers. To ensure this, it is imperative for online companies to have a robust supply chain and storage faciSE_Demo2lities. So, how is online shopping transforming the food and beverage supply chain?

Transparency in processes

For maintaining round-the-clock efficiency, it is essential for food and beverage companies to maintain accurate sales and lead-time data in real-time. In the eyes of retailers and logistics companies, supply chain transparency and e-commerce are the important consumer-driven trends that are influencing the future of food and beverage supply chain logistics. The growth in online food and beverage sales is increasing the demand for suppliers in the e-commerce space. However, this rise in demand has made it easier for fraudulent parties to exploit the retail industry and put customers and companies in real danger of theft, contamination, and fraud. This has brought in the need to invoke increased transparency in the processes. Investment in multi-party networking infrastructure can help companies to improve visibility between service providers, manufacturers, and retailers to provide dynamic inventory control in an increasingly fragmented, global supply chain. This also gives online food and beverage companies an opportunity to explore innovative supplier options.

Improvement in warehousing

Advanced cold chain logistics is an inevitable factor for food and beverage companies to maintain the quality of products till their reach the final consumers. To maintain high standards on a global scale, Cold chain logistics is becoming increasingly reliant on modern technologies.  But it is important to note that different countries maintain their own standards and certification, so ensuring compliance in a global scenario requires transparent communications and reliable monitoring, with real-time actionable data such as live equipment readings and alerts for machinery in need of maintenance.

Accurate marketing insights data

With the help of marketing analytics data, companies can choose the right advertising and promotion activities that would help push products that may be sourced from local suppliers, or appeal to the individual’s preferences. Additionally, online players can enhance the customer experience using personalization data and on-demand services through dedicated online platforms.The data about the shopping patterns of customers can not only help companies to identify what products should be promoted to a particular customer, but it also gives valuable insights on how customer shopping experience can be enhanced and made easier.

 Building the customer trust

As far as the food and beverage market is concerned, customer buying decision is impulsive and largely based on the trust they have on your brand. Companies operating online have come up with various ways by which they can provide better assistance to customers and gain their faith in the brand. A popular example is assistive chatbots that perform the functions of a customer care associates at a traditional retail store in assisting the customers to choose the right products to suit their needs. Additionally, companies can also analyze the past browsing data of customers to provide product recommendations and recipe ideas, maximizing the chances of up-selling and cross-selling.

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Will Blockchain Technology Ever Rule the Food Supply Chain?

Blockchain, the technology behind the most famous cryptocurrency, Bitcoin, has been thought of as a revolutionary innovation that could disrupt the financial industry. However, the applications of blockchain technology, an open and distributed ledger, surpasses far beyond financial industry with applications in distributed cloud storage, digital identity, smart contracts, and IoT. One such area of blockchain technology application, which has been largely ignored is in the food supply chain. Food contamination and foodborne diseases kill about 420,000 people worldwide each year. Consequently, governments and food safety agencies are increasingly focusing on food safety, nutrition, and food security to improve health conditions. Blockchain technology can help solve such issues by increasing transparency in the food supply chain.SE_Demo2

Blockchain Technology in Food Supply Chain

Blockchain technology enables processing and storing of large amounts of data that is stored on a network of computers across a distributed ledger. Such records are tamper proof and are accessible by everyone on the network. Such capabilities allow suppliers and consumers to tackle issues in the food supply chain such as food frauds, illegal production, contamination, and other foodborne diseases. For instance, in the year 2008 in China, a major milk scandal by the largest milk company in the nation took place. The scandal involved adulterating milk with melamine, with 54,000 babies hospitalized due to kidney stones and kidney damage. Implementing blockchain technology provides openness, transparency, and data history that cannot be tampered. Additionally, each ingredient or chemical in the food can be traced back to its original supplier. As such information can be accessed even by the general public, the chances of fraud, adulteration, and illegal production could be easily addressed.

Companies Using Blockchain Technology

Recently, IBM announced that it is working with major retailers and food suppliers like Walmart, Nestle, and Dole to incorporate blockchain technology. In the context of food supply chain, this technology can track every single changes and event that happen to food products reducing the chances of fraud and contamination. The food industry is also looking at food supply chain traceability system for real-time food tracing based on HACCP (Hazard Analysis and Critical Control Points). Also, Kouvala Innovation is using pallets with RFID tags to communicate their need to get from one point to the other by a specific date. The RFID tag automatically provides a contract to the carrier that best meets a shipper’s price and service needs. Another company, Provenance, is using sensors and RFID tags to record it in a blockchain to authenticate tuna caught in Indonesia and track the fish from “hook to fork.”

Blockchain and the Future of Food Supply Chain

With the use of blockchain, digital product information like details of origin, batch number, manufacturing and expiration dates, storage temperature, factory and processing data, and shipping data are digitally connected and stored in the distributed ledger. Apart from increasing transparency and food safety, blockchain can also optimize the food supply chain. The technology enables better visibility and data management across the entire food supply chain which helps them manage food with varying shelf life and use predictive analytics to forecast demand and optimize the supply chain.

For more information on the use of blockchain technology in the food supply chain, reducing food frauds, adulteration, and illegal production, and food distribution logistics:

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Butter Shortage in France – Why are the French Bound to Compromise on their Croissants?

France is the place to be if you are a food lover. The country is primarily known for its love for croissants and pastries. However, you might not want to be in France right now if you share the same cravings. The country is facing massive butter shortage which is affecting the availability of croissants (constituted mainly of butter). The supermarket butter shelves are empty, and the issue has been widely mocked online.SE_Demo2

So What has Caused this Butter Shortage?

Back in early 2015, the EU abolished its system of milk quotas that triggered a flood of milk supplies. Consequently, it caused the collapse of milk prices that prompted the dairy farmers to cut down on their milk outputs. The shortage in French milk subsequently crippled the suppliers to fulfill their butter orders.

The Demand-Supply Side of the Problem

The global demand for butter more than doubled in a span of two years right after a research suggested that saturated fats were not as harmful as they were once thought to be. This surge in demand has led the butter prices to skyrocket. For instance, butter prices in France have almost doubled compared to previous year. Add to that the shortage in supply, then the butter crisis in France seems inevitable.

Is the Butter Crisis in France Resolving Anytime Soon?

There have been differing views on this shortage problems, with some experts saying the shortage will last until Christmas, while others disagree with the opinion. The demand for butter does not seem to be discouraged by the price hike, as consumers are more than willing to pay extra for something natural and less processed. Also, farmers, who lie at the bottom of the butter supply chain are facing biggest volatility risks, as just a year ago they were struggling with meager margins for milk production.

It’s already high time that governments and unions look into the issue of food shortage with a little more care. The procurement and supply chain management of food products should be handled with utmost care as it hits not only the consumers but also the farmers who are highly dependent on the proper supply of food products.

For more information on how a better procurement, supply chain management, strict regulations, and proper forecasting can help avoid food crisis and butter shortage:

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Chipocalypse and Food Shortage – How Better Procurement Practices and Supply Chain Management can Help Avoid Such Situations

Supermarkets in New Zealand posting notes on chips shortage likely to last until New Year has hit the panic button for most food and crisp lovers there. Potato chips or potato crisps suppliers are facing challenges meeting the demand for potato chips after a year of heavy rain and two serious floods have wiped out almost 20% of New Zealand’s annual potato crop. The majority of the potato crop affected were of the variety that was used to make crisps. Also, the production of more potato crisps seems dubious after the news that planting new season crops have been delayed as the ground is still too wet for plantation. Japan also faced a similar food shortage problem earlier in the year as bad weather in Hokkaido, where 80% of country’s potatoes are grown, caused the vegetables to reach the retail store very late.SE_Demo2

So how can such food shortage situation be avoided in the future?

IoT and Predictive Analytics

A majority of crop losses are mainly due to adverse weather conditions. There was not much a farmer could have done in the past, but IoT coupled with predictive analytics can help farmers by analyzing weather data to build predictive weather modeling. Such models can provide farmers with insight to make decisions regarding time to plant crops, and when to take actions to prevent damage from adverse weather conditions.

Supplier Diversity

Supplier diversity is an essential procurement strategy that recognizes opportunities for economic advantage by tapping into the strength of small and diverse suppliers. Many companies opt for supplier diversity in a bit to promote sustainable procurement practices. Additionally, such practices also provide buyers with multiple procurement channels for agricultural goods, along with increasing the competition amongst supplier, which can drive the prices down.

Investment in Innovation

Investment in agricultural research, technology transfer, and farm extension and advisory services can significantly improve the ability of the farmers to not only deal with food shortage but also rapidly improve productivity. With the increase in food supply, the markets can deal with pressure on food prices and price volatility.

Supply Chain Optimization

In order to avoid food shortage situations, suppliers and buyers should look to optimize their supply chain management. Organizations should develop efficient sourcing strategies to maintain an optimal stock that can meet operational needs along with buffer stocks that will suffice as contingencies. Buyer can choose from various models and tools are available to set the buffer stock levels accurately.

For more information on how better procurement practices, supply chain management, sourcing strategy, and supplier relationship management can help avoid food crisis:

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Challenges in Managing the Cold Chain Logistics of Perishable Goods

The expansion of global trade and optimization of the supply chain has made it possible for perishable goods to travel long distances to reach the final consumer. Products such as flowers, vegetables, fruits, meat, and bakery items decay or deteriorate in quality when exposed to environmental conditions such as humidity or moisture. The transportation of such perishable goods is done with the help of temperature controlled cold chain logistics. Transporting such temperature-sensitive goods across thousands of miles poses some procurement challenge for cold chain logistics. Here are some of the major procurement pain points for cold chain logistics:

Lack of Traceability Across Supply Chain

Perishable goods may damage or decay when proper conditions are not met, and it is hard for the end consumer to identify where the break occurred in the transportation process. The break in cold chain logistics may take place during loading/unloading process, at freight forwarders place, or in unrefrigerated containers. The advent of RFID and GPS technology along with traceability standards in the cold chain logistics ensure the food safety.

Request Free SampleLack of Technical Expertise

Unlike the logistics of regular goods, different perishable goods have specific ranges of temperature that needs to be maintained. For instance, an ice cream needs to be kept at a temperature of -25°C; whereas, a temperature of 0-4°C will suffice for milk products. The staff may not be aware of such technicalities and may damage the product in-transit. As a result, it is essential for the buyers to engage with the suppliers to conduct training and offer technical expertise.

Lack of Communication Between Service Providers and Buyers

At present, IoT systems have not developed to a level where it can facilitate seamless communication between the service providers and buyers. Such a communication problem can cause delays in transportation and cause other problems as the goods are passed through multiple channel members across vast geographies. In the future, when IoT systems are widely used, buyers and sellers can communicate easily to clarify timeframes, delays, or variations in the transit period.

Read more about procurement pain points in the cold chain logistics and perishable goods transportation market along with supply market landscape, pricing, and procurement insights in SpendEdge’s upcoming procurement report on the perishable goods transportation market.

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Category Management Study for a Baby Food Supplier in Europe

Category Overview

Over the past few years, the baby food supplies industry has been proliferating due to the growing urbanization and changing lifestyles across the globe. Additionally, factors such as the increasing awareness about nutrition, rise in organized retail marketing, urbanization paired with a significant upsurge in the count of working women population are some of the key factors boosting the growth the industry. However, according to SpendEdge’s category management experts, the upsurge in commodity prices and increase in the level of competition across the supply chain have resulted in the sluggish growth of the industry in the last couple of years. As a result, players in the baby food supplier have started adopting category management studies to reduce maverick spends and develop better sourcing strategies across the supply chain.

Moreover, the category management solutions offered by SpendEdge help baby food suppliers to reduce their overall spending.

The Procurement Pain Point and Insights Offered

A leading baby food supplier from Europe wanted to evaluate the dynamics of the market and key category drivers influencing growth. They also wanted to develop a better sourcing approach and maintain healthy relationships with their suppliers. Additionally, they wanted to gain insights into the suppliers pricing, cost structure, suppliers’ diversity, and evaluate competitors’ best practices.request free proposal

To address the specific requirements of the baby food supplier, the category management experts at SpendEdge carried out a comprehensive two-step research methodology, which included primary and secondary research and assessments of industry journals, magazines, and interviews with key market stakeholders.

During the course of this category management study, the baby food supplier was able to evaluate the dynamics of the market and key category drivers influencing growth. Additionally, with the help of SpendEdge’s SWOT analysis, the client was able to develop a better sourcing approach and maintain healthy relationships with their suppliers. The client was also able to evaluate the dynamics of the market drivers and gained insights on the supplier’s cost and pricing structure, which helped them assess competitors’ best practices.

Key questions answered in this category management study include

category managementBusiness Outcome

The category management study helped the baby food supplier develop superior sourcing strategies across the supply chain. Additionally, the client was recommended tools to reduce source-to-pay cycle times and enhance their supplier selection decisions. This helped them build effective strategic sourcing strategies and maintain better relationships with their suppliers.

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IoT: A Gamechanger in Supply Chain Planning

The age of computer and robotics is being overtaken by the advent of big data and Internet of Things (IoT). IoT is stirring up a revolution in all major industrial areas with a network of interconnected devices sending out commands to be executed without human intervention. Supply chain planning is one such area where IoT is altering the market landscape. Organizations adopting IoT are already reaping its benefit with reduced overall costs and increased efficiency. In the area of the supply chain planning process, IoT enables the business to monitor, communicate, analyze, and take actions in real time.

How can IoT Help Perfect the Supply Chain Planning Process?

Automate Inventory Levels

IoT can automate the process of maintaining optimal inventory levels. With the help of RFID and barcodes, sensors can identify stock levels for each item and automatically place orders to the suppliers.Get More Info

Predictive Maintenance

Various sensors in the manufacturing unit such as temperature, humidity, vibration, and speed can gather data and feed it to the central unit. The unit can thus analyze such data and alert users before a possible machine breakdown so that the necessary maintenance task can be performed.

Logistics Optimization

IoT significantly improves the in-transit visibility within the logistics ecosystem. Cloud-based GPS and RFID technologies allow for accurate tracking in terms of identity, location, and other information. Suppliers can then automate shipping and delivery by gathering data on estimated time of arrival, along with maintaining and tracking the quality of the product in-transit with temperature and humidity sensors.

Other Areas

Apart from these, IoT is also being used in fleet management, building intelligent networks, vendor management, and many other applications.

How Walmart Used IoT to Create a Competitive Advantage?

Walmart has recently secured a patent for a system of connected sensors to monitor customer’s product consumption patterns. The sensors are attached to products and are identified using technologies such as RFID, Bluetooth, bar codes, and radio frequencies. These sensors track how a product is used and its location. For instance, the tag reader on a fridge could scan the number of items inside it and monitor the food condition and reorder as per necessity. It analyzes usage pattern of the product to determine when a replenishment is required or if the item should be replaced or upgraded.

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7 Benefits of Short Food Industry Supply Chains

Short food supply chains are characterized by few intermediaries and shorter physical distances between producers and consumers. These supply chains are good for increasing profits of farmers and other producers, revitalize rural economies, and give consumers access to fresh, fairly-priced foods. Short food supply chains are garnishing more attention as consumers are concerned about the spread of foodborne diseases as well as issues such as the horse meat being identified in packaged foods in Europe. In this article, we have talked about some of the greatest benefits that the use of short food industry supply chains offers:

Benefits of Short Food Industry Supply Chainsrequest proposal

#1. Improved negotiating positions for farmers

These short food industry supply chains offer farmers greater power during negotiations, especially during those with retailers. Using short food industry supply chains that do not consist of multiple processors, traders, and wholesalers give farmers and small producers more direct access to the market.

#2. Increased communication between producer and consumer

Short supply chains can lead to job creation, especially in rural areas, which also helps to increase the farmer or producer’s reputation and the trust that consumers place in them. Operating locally allows producers and consumers to have more direct communication and interaction, which also helps to build loyalty and trust.

#3. Reduced transportation costs

Short supply chains typically serve a local area, reducing the energy costs, transportation costs, and CO2 emissions used to transport goods in longer supply chains. Because of this, these supply chains have a greater potential to be made sustainable and to remain sustainable over the long term.

#4. Increased transparency 

It’s easier to make short food industry supply chains with few or no intermediaries transparent than it is longer and more complex ones. Producers are also able to offer more detailed information about their business and practices, helping to build their reputation, increase customer retention, and build loyalty. It also makes it easier to make procurement decisions.

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#5. Reduced risk

Short food industry supply chains reduce the risk of damage, contamination, or theft of the products during transportation, packaging, or production. Minimizing the number of players involved in the supply chain helps to make it safer and more secure, which helps to protect farmers and producers as well as their end-users.
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#6. Increased quality

Doing business and transporting goods locally increases their overall quality by reducing the need for freezing and use of preservatives, allowing customers access to a fresh food supply. Additionally, short food industry supply chains reduce food waste and disposal costs for farmers and producers.

#7. Greater profits

Short food industry supply chains offer farmers with greater profits while keeping the end-price more or less the same for consumers. By eliminating middlemen, reducing the length of the food industry supply chains, and operating on a more independent basis, farmers and small producers are able to keep more of the resulting profits for themselves rather than share them amongst other suppliers.

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Lightweighting in the Food and Beverage Supply Chain

Lightweighting is becoming a popular practice with packaging manufacturers and food vendors. It is generally achieved by reducing either the weight of the packaging material or the amount of material being used. It can lead to considerable savings in terms of shipping costs, lowering food and beverage procurement expenses. It can also reduce a company’s carbon footprint, as less energy is required to ship lighter products, and fewer emissions are produced.

Despite this environmental benefit, however, lightweighting can still end up at odds with sustainability. Lightweight packaging materials are often not recyclable, or at least the cheaper ones aren’t. These products are often multi-compositional and simply end up in a landfill, unlike heavier materials such as glass.

However, with sustainability become a growing concern worldwide, many companies are developing packaging that is both light and recyclable. For example, PepsiCo recently announced its goal to reduce greenhouse gas emissions and use only packaging that is recoverable or recyclable by 2025. The food and beverage giant has partnered with Danimer Scientific to develop biodegradable film resins for its packaging. These resins are also lightweight, making them cheaper and more environmentally friendly to transport.

Stand-up pouches are also seeing sustainable innovation. VTT Technical Research Centre of Finland has just announced that it has created lightweight, 100% bio-based stand-up pouches. They are made from renewable raw materials and nanocellulose and have high technical performance. Companies like VTT are demonstrating that one does not need to sacrifice light weight for sustainability, or vice versa.

In terms of beverage procurement, the current focus is on making bottles lighter and reducing cap size. Recycling centers are generally not equipped to deal with beverage caps, so smaller caps mean less waste (and, in a small way, less weight). Brands such as Sobieski are switching from glass bottles to plastic. While these may feel less luxurious, they are considerably lighter and also shatterproof. This results in less waste and expense from broken products.

Aside from sustainability, another challenge in terms of lightweighting is quality and appearance. Lighter materials can be seen as cheap, and may be lacking in durability. If the primary packaging is not strong, it may require greater amounts of secondary packaging to protect it in transit, thereby negating some (or all) of the benefits gained from the lighter materials. It is important to take this into account when developing or ordering products — something that appears to be a great improvement may not actually be one.

It is possible to counteract the issue of lightweight products either looking cheap or being expensive by focusing on the selling point of sustainability. As consumers are becoming more concerned with environmental friendliness, many are willing to overlook underwhelming packaging if they know it is sustainable. Alternatively, it is possible to choose more expensive packaging and charge a premium. A report by Neilson found that 66% of consumers are willing to pay more money for sustainable brands, so it is possible to find an audience for products with premium packaging.

Regardless of which route you take, there are several options for companies looking to take advantage of lightweighting in the food and beverage industry supply chain. And with many manufacturers developing innovating new products, more options are sure to appear in the near future.

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