The food and beverage (F&B) supply chain is certainly very complex to understand and control for business optimisation. It involves numerous components that are all at the mercy of uncontrollable factors, further adding to the onerous task of the manufacturer.
Seventy seven per cent of manufacturers have reported the complexity of their supply chain poses the most amount of risk to their company, and the risk only grows as the world becomes a more global marketplace. Underpinning all supply chains is inventory management, and when correctly applied, it can reap amazing rewards. Read on to learn about some complexities of the F&B supply chain and how inventory management can help.
Going bad… very bad
With the increase in globalisation and the growing trend of sourcing raw materials from afar, food and beverages are at risk of contamination or even spoiling. It is inevitable that, the larger the supply chain becomes the harder it is to have control over its entirety and the more one must fight for transparency. Likewise, the larger it becomes, the more likely it is that contaminants will find their way into food products as different nations operate under very different manufacturing and consumption laws. Therefore, it is exceedingly important to dedicate time and persistence to maintaining the integrity of your supply chain through control and management at every point. Without this, recalls are likely possibility in the future, which can cost money and affect the health of your consumers.
In 2013, the UK food industry faced a major scandal, resulting in public humiliation and backlash with the discovery that meat or beef patties were in fact 100% derived from our equine friends. This occurred in a developed nation with stringent regulatory laws. The fact remains that this type of thing can even more readily happen with the increase in materials deriving from developing and seemingly underregulated nations. Meticulous checks of your suppliers should be carried out with site visits conducted. Once due diligence is done and standards are satisfied, then the supplier can be added to an approved supplier’s list, creating a shortlist of acceptable, value-adding providers.
Too many cooks spoil the broth
The more involved supply chains are, the more vulnerable they are to errors both in manufacturing and administration. Despite the requirements for manufacturing processes to be followed rigorously, this is all in vain if the administration surrounding products is prone to error. For example, if the wrong labels are fixed to packaging, the effects could be dire, especially with the F&B industry whose products can contain potential allergens if consumed in error.
The greater the number of hands which touch the product, the greater the risk for errors to arise if quality assurance is not enforced at each step.
Mother Nature’s fury
With globalisation, manufacturers are heavily reliant on freight, the dependability of which is largely affected by weather. With increased global warming, we are seeing changing weather patterns worldwide with increased frequencies of volcanic ash clouds, earthquakes, floods and droughts. Some of these phenomena may affect the shipping routes of products or indeed, the growth and harvesting of raw materials. Natural phenomena aside, shipping routes are also vulnerable to pirates which certainly adds a complex aspect to freight companies worldwide.
With so much out of your control, how are you to approach these issues? The process of inventory management and the software packages available can make the task a lot easier. It facilitates the practice of holding stock in exactly the right amounts to account for risk exposure be it from unreliable suppliers, natural events or the behaviour of the product.