The food supply chain is notoriously complex. From farm to fork, every step needs to be meticulously planned, monitored, and executed to ensure that food products are delivered fresh, safe, and at the right time.
If you’re involved in food supply chain management or want to improve your software, this guide will provide you with the knowledge and insights needed to succeed in this complex industry.
Food supply chain management refers to the processes and activities involved in producing, processing, distributing, and retailing food products.
It encompasses everything you do, from sourcing raw materials and ingredients to ensuring that finished products reach consumers in optimal condition.
Your food supply chain management responsibilities will vary depending on your position within the supply chain.
For example, suppliers are responsible for maintaining the quality of food and beverage products while those items are under their control and ensuring efficient distribution to downstream businesses, which may include restaurants and retailers.
All companies along the food supply chain have some shared goals as well, which include ensuring that customers have access to safe, high-quality food and beverage products.
Safety represents a foundational element of your business’s supply chain management strategy. You must also work to keep costs down, save time, and maintain adequate inventory to meet current demand.
Food supply chain management involves a series of interconnected steps that work together to ensure food products are delivered to consumers in a timely, safe manner.
Here’s a closer look at how it works.
Step one involves sourcing the raw materials and ingredients needed for production. You may need to work with farmers, fisheries, or other suppliers to obtain the necessary ingredients for your products.
It’s crucial to establish strong relationships with reliable suppliers who can consistently deliver high-quality ingredients.
Once the raw materials are sourced, they move to the processing and production stage. Here, product manufacturers transform the raw ingredients into finished food products.
Members of this supply chain link prioritise efficiency above almost everything else to ensure products are created in accordance with required specifications and in sufficient quantities.
Food safety and quality control are paramount in the food supply chain. While a product is under your control, you are responsible for ensuring it remains within safe temperature ranges and is protected from spoilage.
You must also do your part to promote traceability and guard against potential contamination.
After production, food products are packaged and stored. Packaging should make the items appealing to consumers while also protecting them from damage and contamination.
Proper storage conditions and careful handling are vital to maintain product quality.
The distribution and logistics stage involves transporting finished products downstream along the supply chain.
You’ll need to coordinate closely with carriers and distributors and plan carefully to ensure that products arrive at their destination on time and in good condition.
The final leg of the food supply chain involves getting the products into the hands of consumers. You need to make sure that products are accessible, fresh, and appealing to consumers.
Here are the four principles that will help you succeed in food supply chain management:
Traceability focuses on ensuring that you can determine the origins of a food product while also following its path down the supply chain. No matter where your business fits into the supply chain, it should be able to trace a product back to its source.
Consumers and regulators increasingly demand to know where food products come from and how they are produced. By implementing traceability systems, you can track this movement.
Transparency involves clearly communicating with all stakeholders in your supply chain. You want to build trust with suppliers, distributors, and consumers.
Maintaining a state of mutual trust will bolster your brand’s reputation and help you forge lasting relationships with other members of the industry.
What quantity of each item should you order? Do you know what demand will be next month? These are just a few of the critical questions you can answer through demand forecasting.
By analysing historical sales data, market trends, and other relevant factors, you can predict future demand with a high degree of accuracy and adjust production and inventory levels accordingly.
Once you have an accurate estimation of future demand, you can tailor your inventory management strategies to align with customer preferences.
Avoid overstocking less popular products and ensure your storage facilities have the flexibility necessary to adapt to emerging purchasing trends.
Strong relationships with suppliers are critical to maintaining a steady flow of raw materials and ingredients. Supplier relationship management involves regularly communicating and collaborating with your trade partners.
While you must ensure that they meet your quality and delivery standards, you must also work to be a good partner by maintaining realistic expectations and open communication.
Consumers are becoming increasingly conscious of the environmental and social impact of the products they buy. They expect your company to take responsibility for how it sources and supplies food and beverage items.
By adopting sustainable practices, you can enhance your brand’s reputation and appeal to environmentally conscious consumers. There are numerous ways to integrate sustainable strategies into your day-to-day operations.
Sourcing ethically produced ingredients, reducing waste, and minimising carbon emissions are a few strategies.
There’s no denying the importance of effective food supply chain management. However, many companies get it wrong due to the wide range of challenges in managing food logistics.
By familiarising yourself with the potential roadblocks that you will encounter in food supply chain management, you can build a more resilient supply chain and better serve your customers.
Here are a few reasons why food supply chain management remains a significant challenge:
One of the biggest hurdles in food supply chain management is the perishable nature of food products, compared to most other goods, which have a multi-year life cycle.
Conversely, many food products have a limited shelf life and must be stored in a climate-controlled environment. Even if you are dealing with shelf-stable goods, these items must be kept out of extreme temperatures to maintain product quality.
Delays or disruptions in the supply chain can lead to spoilage and waste. To avoid major losses, you must plan meticulously and implement multiple layers of monitoring and risk mitigation.
If food or beverage products are exposed to conditions that could lead to spoilage, you could lose tens of thousands of dollars in inventory.
The food industry faces stringent regulations at country, regional, and international levels. While some common themes span most regulatory bodies, subtle nuances in each set of laws can make compliance costly and confusing.
As a member of the supply chain, you must comply with a range of regulations and standards, including labelling and traceability requirements, environmental restrictions, and food safety laws.
You’ve also got to ensure that the materials you incorporate into your products align with relevant safety regulations. If you incorporate unsafe or unethically sourced ingredients into your products, your reputation will suffer.
Demand for food products can be highly unpredictable. Consumer preferences can shift without notice. Seasonality and economic conditions also have an impact on buying habits.
On the front end, raw materials can be affected by factors such as weather conditions or geopolitical events. As the cost of your inputs rises, you will have to adjust your production volume and pricing accordingly.
It’s vital that you have flexible pricing strategies that can adapt to changing conditions without making your items cost-prohibitive for consumers.
Natural disasters and political instability can have a significant impact on the food supply chain. On a smaller scale, transportation delays could disrupt your organisation’s production levels and lead to product shortages.
Any disruption can lead to delays and increased costs. Shortages of key ingredients can be particularly detrimental to your bottom line and leave consumers unable to purchase the goods they want.
Resilience is a critical principle in food supply chain management. Your infrastructure must be able to adapt to the unexpected so you can pivot in the face of a major disruption.
Some strategies include partnering with secondary suppliers and diversifying your portfolio of raw materials providers.
Virtually all inputs involved in food supply chain management experience volatile price fluctuations. The cost of raw materials, transportation, labour, and other inputs can fluctuate significantly. If multiple inputs rise in prices simultaneously, profit margins may be eroded.
For example, let’s say that fuel and raw material costs experience a huge uptick within a few months of one another. You must continually monitor these and other variables to better understand cost drivers.
You must also implement cost-saving measures wherever possible to maintain adequate margins and mitigate the need for major price increases.
Visibility in food logistics helps maintain control over the supply chain and ensure that your goods are delivered safely and efficiently. By making visibility a priority, you can:
If you don’t have an end-to-end view of your food supply chain, it becomes next to impossible to make informed decisions and be transparent with consumers.
Conversely, visibility promotes efficient decision-making and enables you to strive for continuous improvement.
You can’t optimise food supply chain management without adequate visibility. To achieve that visibility, you will need robust technologies that gather real-time data and provide a complete view of your supply infrastructure.
Modern technologies that promote end-to-end connectivity can help you:
Visibility allows you to identify potential risks and vulnerabilities in your supply chain. You can pinpoint the underlying cause of delays and mitigate them through proactive measures.
For example, let’s say that a particular shipment frequently gets delayed. Better visibility will help you identify why the order is delivered late and take steps to remedy the problem before it significantly impacts profitability.
Do you have a clear view of food products at every stage of the supply chain? Blind spots can cause serious product issues to go unnoticed, putting your reputation at stake. Better visibility allows you to monitor the quality of food products at every stage of their journey.
You can better understand where your goods come from, what happens during production and transport, and any points of friction that may be compromising safety and quality. Enhanced quality control not only reduces waste but also helps maintain customer satisfaction and brand loyalty.
Traceability has become a top priority for organisations at every level of the food supply chain. The concept of traceability focuses on illuminating a product’s journey from farm to plate.
By tracking every step of a product’s journey, you can help promote public health and increase your ability to detect and control foodborne illness outbreaks.
Currently, food recall strategies use the “cast a wide net” approach. While safety officials can determine which products are potentially affected, they are often unable to obtain accurate batch and lot-level data to narrow their focus.
The market can shift without warning. You’ve got to be able to adapt. Visibility provides the real-time insights needed to make swift decisions in response to disruptions, demand fluctuations, and supplier issues.
This agility allows you to maintain continuity and avoid the costly impacts of supply chain interruptions.
Trade partners and suppliers value transparency and honesty. If you have better visibility into every link in the supply chain, you can set clear expectations for your trade partners and help them meet their contractual obligations.
By sharing data and insights, you can work together more effectively and address challenges that may negatively impact efficiency or food quality. A collaborative approach also strengthens relationships and builds trust among partners.
Effectively introducing a new model for food standards regulation, the UK Food Standards Agency (FSA) has published the revised Food Law Code of Practice for England and Northern Ireland. Since summer 2023, the new model has been rolled out in phases. If these items are part of your supply chain, you must adhere to the provisions laid out in the Food Law Code of Practice to ensure compliance and avoid fines or other repercussions.
Visibility tools can help you track and document compliance with food safety regulations. You can also trace products back to their origin and quickly respond to any issues, such as recalls.
Better visibility means faster decision-making. Whether the demand for a particular food item surges or a geopolitical event threatens supply chain visibility, you’ll know about it sooner and can act swiftly.
Visibility allows you to offer higher-quality products and more reliable delivery. It can also give customers peace of mind knowing that your items are stringently monitored and protected throughout the entire supply chain.
Supply chain management (SCM) technologies show the key to a more nimble and adaptable food supply chain.
Several food and beverage organisations have paved the way for streamlined SCM by partnering with Epicor, a leader in enterprise resource planning (ERP) solutions. Here’s a look at a few of their stories.
Founded in 1958 as a family farm in England’s West Country, BV Dairy is now a thriving modern business. Each year, the company purchases 35 million liters of milk from dairy farms within a 25-mile radius of their production facility in Shaftesbury, Dorset, and turns them into dairy products for food distribution and manufacturing firms. BV Dairy’s range includes their award-winning Dorset clotted cream, as well as yogurts, buttermilk, soft cheese, and mascarpone.
BV Dairy is committed to ongoing annual growth of at least 10 percent, and they’re keen to secure new market share and explore new product ideas. To continue their growth journey and to help their team meet these targets, the company wanted to expand their use of Epicor Kinetic.
The company had already been using Epicor Kinetic for some time, as they initially started using the solution for financial processes. However, as BV Dairy continued to grow, ERP Systems Manager, Mark Damen, wanted to extend the use of Epicor Kinetic to optimise efficiency and outputs.
BV Dairy had started to integrate multiple processes with Epicor Kinetic—including label printing, traceability assurance, customer data exchange, and more.
S.M. Jaleel & Company (SMJ) wanted to become an international player in the beverage space. However, it didn’t have scalable technological solutions in place to support that level of growth.
SMJ partnered with Epicor to implement Kinetic, a manufacturing ERP that helps businesses manage the entire supply chain and improve operational efficiency.
Epicor engaged in a hands-on implementation process to help SMJ move on from its legacy systems, which relied heavily on manual inputs and paper-based documents.
Once complete, the transformation will help SMJ scale its business, target new markets, and unlock significant cost savings by reducing its reliance on manual inputs.
Succeeding with food supply chain management requires top-down commitment and robust technological solutions.
We can provide customisable ERP technology and automation solutions that address your biggest food supply chain pain points while supporting your company’s short and long-term goals.
Contact us to learn more about our food supply chain management solutions.
