3 Best Practices for Supply Chain Management In Food Industry
Utilizing technology solutions and data analysis to improve Supply Chain Management In Food Industry will prevent illness, streamline supply chain processes, and increase customer satisfaction. Here are the top 3 practices to utilize.
The supply chain has grown more complicated due to globalization, the coronavirus, and an increase in consumer demand for traceability. Managing a worldwide operation from one location can be nearly impossible without an optimized technology solution and policies in place to improve communication among participants.
Thankfully, modern society has provided options for restaurants and grocers who aren't sure how to comply with growing regulations and an increasingly fragmented global chain. Improving collaboration and implementing health-based programs with suppliers can also help grocers and restaurants optimize supply chain management.
Supply Chain Management and the Food Industry
Supply chain management refers to the tracking, streamlining, and monitoring of all of the processes that transform food on a farm to a product eaten by consumers. As the food industry continues to evolve due to an increase in regulations, globalization, and COVID-19, efficient supply chain management has become more essential.
Consumers are more invested in knowing the details regarding the quality and safety of their food items. Sustainability is also a growing concern among governments, consumers, and interest groups. To satisfy these customers and meet sustainability requirements, restaurants and grocers have no choice but to improve their management of the supply chain.
Proper supply chain management ensures quality food arrives safely for the right people at the right time. It also helps pinpoint foodborne illnesses, contamination, and potential outbreaks before they ever reach the consumer.
Furthermore, a streamlined supply chain depends on collaboration and communication among all participants. Food needs to be packaged properly, in a sterile environment and stored at the correct temperature to prevent spoilage. Utilizing technology systems to optimize tracking and manage quality control during logistics has helped to improve supply chain management, but operators still need to take more ownership of the process.
Here are the top 3 best practices for improving supply chain management in the food industry-
3 Tips to Optimize Supply Chain Management
1. Improve Demand Forecasts
Predicting future consumer demand can help optimize inventory management, particularly when it comes to re-ordering. Streamlining the re-ordering process based on collected data that shows past demand and sales can help to know how much to order in the future. However, utilizing past data to predict future demand isn't always entirely accurate due to-
- Fluctuation in customers
- Increased or decreased demand in an item's popularity
- Introduction of a new menu item or product
- Fluctuation in demand due to a promotion or limited offer
These software solutions can also compare monthly current purchases from these customers to their previous forecasts to see if there were any discrepancies. Utilizing an automated software solution to improve inventory management will streamline the re-ordering process and help minimize waste in the supply chain.
2. Ensure Purchasing Compliance & Save Money
As the food supply chain has become globalized, the United States government has implemented new regulations to help prevent fraud, ensure quality food, and prevent waste/loss. Though these laws help protect consumers and restaurants/grocers, complying with them can be meticulous and challenging.
Gaining full visibility into purchase orders and spending data can decrease the chance of non-compliance with regulations and laws. Unapproved purchases or supplier substitutions should be addressed immediately to better manage to spend and ensure quality products.
Restaurants and grocers should maintain their relationships with contracted suppliers, as off-contract purchasing can often be 12% costlier. Utilizing an optimized software platform to analyze spend and contract data can help operators verify any off-contract spending in the organization.
3. Create a Quality and Safety Program with Partners
Incorporating education and training materials to ensure participants have knowledge of food safety standards is essential for every grocery and restaurant. However, it's not enough to make certain that one's workforce is well-versed in food safety and quality control.
Restaurants and groceries need to implement a food quality and safety program with their partners/suppliers to improve the entire supply chain and hold each other accountable. One option is to utilize a business intelligence solution that performs data analysis to pinpoint problems with a product/supplier before it turns into a disaster.
Working to improve communication with participants will help prepare for a recall or foodborne illness, preventing consumers from getting sick and maintaining both companies' reputations.
Key Takeaways
In conclusion, here are the key takeaways to remember about supply chain management in the food industry-
- Stakeholders should improve supply chain management to monitor all of the processes that transform food on a farm to a product eaten by a consumer.
- Proper supply chain management prevents foodborne illnesses, contamination, or potential outbreak. It also ensures sustainable practices are in place to satisfy health-conscious consumers and comply with FDA-based regulations.
- The top practices to improve supply chain management include utilizing technology to improve demand forecasts, ensuring purchase compliance to save money, and creating a quality and safety program with all partners/suppliers as a preventative measure.
