The efficiency of the food supply chain and food distribution is crucial for safety and profitability. When one stage of the food industry’s supply chain stops operating at peak performance, all other stages are negatively impacted. This is when understanding, “What is food supply chain management?” comes in handy.
Improved technology in food distribution channels is what has allowed countless food manufacturers to embrace new trends. They do this to explore a more efficient management process. Such new opportunities improve safety, efficiency, and productivity.
Similar to food trends, beverage trends, and restaurant technology trends, supply chain management trends also change. The latest supply chain management trends streamline processes while allowing you to take control of necessary steps to ensure consistent manufacturing.
Identifying and focusing on these trends allows you to tap into various resources that are required in order to have a productive supply chain. Before we get into the top three supply chain management trends for the 2022 food industry, let’s go over the basics.
What Is Food Supply Chain Management?
Food supply chain management refers to the handling of the production process of consumable goods. This process starts off with raw materials inventory and the goods in transit make their way to the hands of the consumer as finished goods inventory.
There are five parts to the supply chain management process. These include:
- Demand Planning. This part involves the planning and managing of resources to meet customer demand for a certain product or service. Metrics measure the efficiency and effectiveness of the supply chain based on company goals.
- Sourcing. During the supplier relationship management process, suppliers are chosen to provide raw goods that are required to create the products, otherwise known as merchandise inventory. They are then responsible for establishing processes such as ordering, inventory management, receiving, and authorizing payments. Common payment methods include ACH payment, eCheck, and B2B payments.
- Manufacturing. This process requires organizing activities to accept raw materials, test product quality after the manufacturing process, eCommerce packaging, shipping and handling, and scheduling deliveries.
- Delivery and Logistics. This stage involves coordinating customer orders through order management practices, scheduling deliveries through 3PL companies, dispatching loads, creating customer invoices, and receiving payments.
- Returning. Networks or processes are created to take back unwanted, defective, or excess products. This is part of the warehouse management process flow.
An effective supply chain management system is necessary to minimize cost, product waste, and time spent in the production cycle. An ABC inventory analysis is useful in this case. This happens by analyzing the process, identifying potential problems, and utilizing innovative supply chain technology, such as an ERP system. Understand the ERP meaning to learn how such systems streamline business processes.
Supply Chain Technology
Technology allows for high-quality improvements to be made in the supply chain, and it ensures operational efficiency. Tools such as ERP solutions and farm management software optimize workflow processes and improve business productivity through automation. To better understand how they help, look into the ERP meaning and ERP system examples.
Some technological tools have analytical functions that assist businesses during the decision-making process. This is what allows them to make well-informed and timely decisions.
Technology that is continuously transforming the food supply chain includes:
- Warehousing process automation
- Analytics
- Cloud compliance
Warehouse Process Automation
Technology that is used for the warehouse inventory management process allows the use of bar code readers, scanners, and robotics. Bar code readers include those that can conduct SKU rationalization by reading a UPC code and SKU number.
This kind of technology can connect with warehouse software, such as warehouse management software and vendor-supplier configurations. The software makes it simple to track operations and products.
Analytics
Real-time technology and automated warehouse operations allow for tracking the product flow. There are also warehouse systems that identify where a product was ordered from, who the supplier is, and all product tracking information.
Most boxes and pallets have logistics sensors on them. Those sensors allow for the tracking of tampering, humidity, and temperature of the goods. Knowing how to ship food is essential here. They issue automatic alerts when necessary.
Cloud Compliance
Complying with the FDA (Food and Drug Administration) and the FSMA (Food Safety Modernization Act) is often time-consuming. Some companies have designated personnel that takes on these tasks, but it’s not always enough.
There are still gaps and some confusion as to what the regulations mean. This is where cloud-based SaaS solutions come in handy. Technology-based cloud compliance software ensures that companies comply with the necessary regulations while still maintaining seamless operations.
3 Supply Chain Management Trends
Now that you have a better understanding of “What is food supply chain management?” we can dive into the supply chain management trends for 2022.
There are countless opportunities to improve efficiency, productivity, and safety within the food supply chain. Taking advantage of the latest trends can ensure that your supply chain is managed effectivity, provides high-quality and safe products, and boosts profitability.
Similar to food trends, beverage trends, DTC trends, and supply chain management trends can also change on a regular basis. Here are three supply chain management trends to look out for in 2022:
- Innovative Technology and Applications
As your product moves along the supply chain, it’s important for you to collect data to manage its process. Without the use of technology, this kind of data collection is time-consuming and allows for more errors.
Advanced and innovative technology allows for professionals working in the food industry to automate such processes. This makes them more precise and efficient. New technology and applications such as GPS systems, delivery route planner apps, inventory tracking systems, and predictive analytics are some examples.
When companies are open to the idea of incorporating innovative technologies into their supply chain management techniques, they can increase accuracy and sustainability on all fronts. This kind of technology also helps reduce costs and increase profits, which is calculated using a restaurant profit and loss statement for restaurant business owners.
Innovative technology and applications that help improve food supply chain management processes include:
- Inventory control systems. These systems take advantage of new technologies such as order tracking and automated inventory counts. This ensures that you have accurate and up-to-date numbers.
- Cloud-based communication. Real-time data exchanges are crucial for decision-making for transportation, inventory, and procedures. This kind of technology allows for that to happen across various devices.
- Predictive analytics. Inventory forecasting is possible with predictive analytics as it provides information on when certain food processing equipment will require maintenance, and it calculates transportation costs. Blockchain technology also helps provide vital information during the supply chain process.
- Improved Demand Forecasting Methods
Demand planning and forecasting is an efficient way to stay on top of the supply chain management process within the food industry. Using technology to forecast product demand will ensure that you have the right inventory, safety stock, and processes on hand to meet the demand.
Automated data analytic systems help improve the demand forecasting process. They provide the latest data, show how certain events and promotions affect inventory and production, and they predict seasonal demand increases. Technology keeps track of previous demand forecasts and provides you with the opportunity to analyze the accuracy of prior predictions.
- Food Sourcing Alternatives
About 5% of the U.S. adult population in 2018 reported that they considered themselves to be vegetarian. This means they were more focused on shopping for fresh produce and taking advantage of produce industry trends.
In the supply chain, it’s tough to provide a product that is exciting to all consumers. However, technology is what helps to expand product lines. With supply chain management technology, you have the ability to consider food replacements and alternative diets. This includes plant-based foods.
Over the years, there have been many advancements in consumer demand and the food industry that make it easier to produce plant-based foods for those opening a restaurant or opening a grocery store.
Wholesale meat and dairy replacement products are some items you might consider managing in the supply chain. However, managing multiple wholesale items that require production in different facilities oftentimes makes the process more complex. With innovative technology, you get access to consistent communication and forecasting analysis that will assist with the management process.
Frequently Asked Questions About Food Supply Chain Management
What Is Food Supply Chain Management?
Food supply chain management refers to successfully overseeing the flow of consumable goods as they move through different stages of production. Managing the supply chain allows companies to cut costs and deliver products at a faster pace to consumers.
Why Is the Food Supply Chain Important?
The food supply chain is important because it optimizes the supply chain, builds brand loyalty, and improves customer satisfaction. Monitoring the stages of the supply chain allows for those in the restaurant industry to meet these objectives.
What Are 3 Supply Chain Management Trends for 2022?
Three supply chain management trends for 2022 include:
- Innovative technology and applications
- Improved demand forecasting methods
- Food sourcing alternatives