Supply Chain Management Challenges Facing the Food and Beverage Industry

The food and beverage industry faces a lengthy list of unique challenges concerning logistics and supply chain management, right from volatile commodity pricing and inventory management to quality and safety requirements combined with frequent new product introductions, high demand uncertainty, complex manufacturing constraints, and perish ability. The need for inventory optimization in the food and beverage industry is growing due to the increase in customer demand, expanding product portfolios, and lengthening supply chains.

Inefficient inventory management in the food and beverage industry results in spoilage of products, resulting in bad supply chain management. This results in poor decision-making at all the levels of the supply chain. These leads to a vicious cycle, ultimately reducing sales, profit margins, and customer loyalty.

At Stand-edge, we understand the impact of better warehouse management on supply chain management. And to help companies strive in the competitive food and beverage industry, our experts have highlighted some major challenges that they must be aware of and prepare themselves for accordingly.

Challenges in the Food and Beverage Industry

1. Accurate demand forecasting

Companies in the food and beverage industries has analyzed the importance of an accurate and repeatable demand forecasting process. Accurate forecasts help maximize production efficiency, minimize inventory, optimize distribution, streamline purchasing and ensures confidence in growth projections. However, developing a demand plan that people in different roles and areas used to build global supply chain management plans can be very challenging.

2. Efficient inventory management

Inventory management is one of the most visible global supply chain management expenses in the food and beverage industry and is a line on the balance sheet under current assets. The amount of inventory required is a by-product of supply chain design, customer service levels, product quality, and the ability of the company to predict demand and produce a product in a timely manner. Basic warehouse management that does not consider unique demand variability, the customer service targets, lead-time and lead-time variability of each product/location combination will result in a controlled inventory positions. Inventory management solutions are the best way for organizations to free up capital, boost service levels, and free up time for employees to focus on a value-adding task.

3.Time-phased Replenishment Planning

he output from inventory and demand planning, provides better future visibility of the product, customer demands, and material requirements. This is, in fact, one of the best practices for global supply chain management. The output also guides the actions needed by suppliers and manufacturing to satisfy the market demand efficiently. Manufacturers in the food and beverage industry are increasingly being asked to manage inventory at locations of the customer or guarantee a rapid replenishment cycle. Advanced replenishment planning that can help develop cost-effective strategies in global supply chain management that ensures customer service levels remain high while minimizing costs.

4.Optimize master data in supply chain management

As the food and beverage industry continues to increase in complexity and speed, you may find that your business solutions, and enterprise resource planning do not provide the depth and breadth of data capabilities needed to support advanced global supply chain management. The continued adoption of mature processes of businesses plus the capacity to leverage the Internet-of-Things (IOT), further drives the need to connect multiple systems of your organizations.

5. Planning of sales and operations

Sales and operations planning in supply chain management in the food and beverage industry focus on balancing and aligning supply and demand over the tactical time horizon while ensuring that the financial objectives of the company are met. It can transform diverse information from finance, sales, production, marketing, procurement, and transportation in the food and beverage industry into one robust central resource for analysis and decision-making. With a comprehensive sales and operations process in place, you can reduce days or weeks from your supply chain management planning process, streamline the cycle of planning, and complete multi-divisional analysis in a fraction of the time. Following sales and operations, best practices allow you to compare multiple “what-if” scenarios, evaluate critical decisions and prepare contingency strategies to avoid risk and preempt your competition when market situations change.