Retailers, wholesalers and foodservice providers focus keenly on the expectation of their customer: to select the best quality product from a variety of superior quality goods.
That means delivering the freshest products possible. Considering a perishable item's journey through the supply chain, it is particularly important for those in the food industry to order just the amount of each good needed to satisfy demand—no more, no less. A few extra days of inventory sitting around can cost millions of dollars.
Yet, with limited knowledge of upstream inventory and future demand, your best course of action is to increase safety stock to ensure you provide the freshest goods possible to the grocery stores, restaurants, hospitals and schools you serve "just in case."
The food industry faces not only the traditional challenges of handling perishables and dated products, but also additional challenges have been recently introduced that were unimaginable a few years ago:
- Increased globalization;
- Competitive pricing from mass-retailers-turned-grocers;
- Tighter standards for compliance and security;
- Bioterrorism regulations requiring two-year histories on all food shipments.
If you are constricted by these issues and their associated costs, you are probably feeling the industry-wide pinch on your profit margins and revenue growth. But your customers' expectations have not changed.
Today's advanced supply chain solutions can help you transform your business processes so that you can more accurately balance supply with demand, trim processes for inbound shipments and outbound distribution and actually cut down on operational costs and inventory excess. For decades, warehouse management and transportation execution solutions have provided crucial support to the food industry through key functionality to speed product flow through the warehouse—from catch weight and date/lot tracking to temperature zoning and compliance to USDA, FDA, COOL and HACCP standards.
Since your daily operations today hinge on many things outside your warehouse and your immediate control, it is more likely a lack of communication with trading partners that is costing you profits.
Benefits Of Demand Driven Supply Chain
Your supply chain is most effective when it incorporates your warehouse capabilities with other supply chain capabilities—from transportation, order management and labor optimization to planning, replenishment and forecasting—to create a unified, integrated process that offers you enterprise-wide visibility to orders and inventory, source-to-consumption product tracking, real-time information-sharing with trading partners and automated demand forecasting and inventory optimization.
You suddenly have access to the advanced knowledge of a demand-driven enterprise—allowing you to divert your inventory dollars to other capital investments.
An integrated demand-to-consumption supply chain can help you:
- Match orders with inventory: Increased options for inventory allocation can ease the urge to hoard safety stock. A distributed order management solution can optimize inventory at an enterprise-wide level, providing a single view of orders and matching multiple sources of demand with multiple sources of inventory.
With visibility to inbound shipments, you can plan how you will receive and divide shipments before they arrive, optimizing facility space and manpower and distributing certain items to fill immediate orders.
- Synch up with your trading partners: Cooperative technology is beneficial to both you and your suppliers, increases information-sharing and synchronizes business processes. Work with your bigger suppliers to shorten lead times on specific items to help you decrease safety stock.
If your suppliers are growers, farmers, raw material manufacturers or smaller companies without EDI (electronic data interchange) or ASN (advanced ship notice) capabilities, consider investing in a trading partner management solution that offers access to a Web or EDI portal so your suppliers can more easily conduct purchase order activity and provide shipment notifications.