Food and Beverage (F&B) supply chains are strained. The industry has been facing significant challenges due to inflation and labor shortages, in addition to global disruptions which continue to materially impact supply chains, including the Russia-Ukraine war and the energy crisis. In the UK, 60% of businesses in the sector have been affected by the rise in energy prices. In this highly uncertain environment, the need to reinvent supply chain operations to respond with greater resiliency and enable business growth is critical.
A recent supply chain survey conducted by IDC1 showed that two thirds of F&B manufacturers have experienced negative effects from persistent global disruptors, especially in the area of transportation, both with delays and significant price increases. This research also found that 81% of F&B manufacturers have changed their investment priorities for supply chain following recent disruptions, with supply chain networks and orchestration as the most common focus areas for investment.
Digitalization has earned a critical role to driving a more insightful decision-making process, providing granular and timely data insights and increasing visibility across the network. Evaluating real-time data across the supply chain is now one of the most powerful assets for companies to both sense and respond to obstacles and turn challenges to opportunities.
While new risks emerge and markets change, one thing that remains constant is the need for resilient supply chains. A resilient F&B supply chain mitigates disruption, reduces risk once disruption occurs, and accelerates recovery.
Here are four tactics companies can consider in their strategies to gain an edge and drive supply chain resilience to manage disruptions.
1. Assess Demand to Accelerate Response
Consumers demand safe, fresh and healthy products delivered across a variety of channels. As tastes and behaviors shift, product SKUs have proliferated to meet dynamic changes in demand. Meanwhile, suppliers require more frequent deliveries and shorter production cycles – adding complexity to supply chain planning.
Companies need the ability to quickly evaluate demand for products across a variety of channels and shelf-life profiles. Organizations should look at how they can leverage multiple demand signals, including historic demand, seasonality, point of sale, and online buying trends to improve the accuracy of the plan. Assess what signals are available to you and perform a gap analysis to identify what you may be missing and how you can bring them in.
To help transform the data, using analytics to evaluate demand for all channels is a critical step to synchronize raw materials, packaging and production schedules.
2. Create a Digital Twin to Increase End-to-End Supply Chain Visibility
As IDC’s survey showed, ongoing disruptions are affecting priorities in the industry, and the focus is on making the right investments to increase supply chain visibility. This means more and more businesses are recognizing the ability to dynamically control the supply chain as a top priority to improve resilience.
To gain a competitive edge, organizations must seek to enhance visibility across the value chain and enable orchestration across the network. Digital supply chain twins provide end-to-end visibility to make it possible to spot disruptions sooner, uncover single points of failure, and model multiple scenarios to determine the best course of action. The enhanced visibility also breaks down data silos to facilitate connections between existing systems while enabling transparency and collaboration throughout the ecosystem.
With digital twins and advanced analytics, planners can gain previously unknown insights into the business, visualize market events in real time and create “what-if” scenarios to assess trade-offs across the supply chain and make better data-driven decisions.
3. Optimize Inventory to Respond to Changing Business Models
The implications of constant disruptions have led to significant changes in consumer behavior and dramatic shifts in demand. The increasingly uncertain market has highlighted the importance of understanding market demand and consumer channel preferences to gain a competitive advantage, along with the need to gain agility to harness new insights and capture greater market share.
F&B companies must improve agility and flexibility in key areas of the supply chain, with inventory being an important one. The once dominant just-in-time inventory approach has proved vulnerable in the face of major global disruptions.
Inventory strategies such as Multi-echelon Inventory Optimization (MEIO) align inventory targets with specific channels, service, and investment goals. Ensuring the right form and function of inventory is located when and where it should be ensures working capital is working for you, not sitting there eroding cash flow and margins.
4. Invest in Real-time Analytics for Commercial Innovation
Constant disruptions and changes have laid bare a dependence upon overly complex and inefficient supply chains for many in the food and beverage industry. Amid unpredictability, companies looking to thrive ought to embrace innovations in technology to advance their supply chain planning maturity to better handle complexity and volatility.
Technology is moving fast, changing how the end-to-end supply chain operates powered by advanced analytics, and it’s time for supply chains in F&B to catch up. Recent research by Gartner2 shows that while F&B companies are focusing on developing real-time operational capabilities, they are not investing in analytics at the rate of other industries, due to its lower penetration of direct-to-consumer business. Accelerating investment in real-time analytics must be an area of focus and is an important step forward for enabling commercial innovation.
It’s critical that companies align their technology strategy with their transformation journey. Identify a pathway to drive supply chain maturity from where you are now to where you want to be. Look at the team and processes. Are you set up for change? Are you prepared for the next phase?
Embracing the Latest Technology
Global disruptions are unlikely to subside in the near future and will continue to materially impact Food & Beverage supply chains. Companies in the sector must take a proactive approach to addressing these challenges by investing in digital technologies that improve visibility and agility in their operations. This is crucial in order to mitigate risk and to be able to adapt to the constantly changing business environment.
Excellence in the F&B supply chain relies upon resilience powered by data and technology. Advanced analytics, fueled by machine learning and artificial intelligence, provide the mechanism to address top supply chain challenges. Companies that leverage data from internal and external sources make fact-based decisions that identify and mitigate risks and provide greater agility to take advantage of new opportunities.
Our Atlas Planning Platform offers an advanced end-to-end supply chain planning solution that helps leading organizations master the interconnectedness of their multi-enterprise supply chain ecosystems, with the ability to sense and analyze complex demand signals to create actionable plans that reduce uncertainty, improve collaboration, and reduce waste. Let’s take a look at how you can leverage advanced AI and machine learning to enhance your supply chain execution and support a more robust supply chain planning process to support your business goals through intelligent orchestration.