Internet-Based Technology Redefines F&B Supply Chain Operations

A Data Explosion Calls For New Logistics Systems

August 14, 2015

Are you spending more time trying to organize your time? No matter what your role is in the food and beverage supply chain, there is more data to keep track of that affects the decisions you make. Whoever said that computers and technology will make us more efficient forgot about the data explosion these tools unleash. Whether you oversee truck deliveries, keep track of warehouse temperatures, update inventory records or fill out government compliance reports, “big data” can be a big help but it can also bring an organizational nightmare.

Data storage capacity continues to expand to allow us to manage more data faster. But knowing how to do this can be compared to driving a high-performance sports car. You must know how to control the horsepower.

Gartner Research characterizes data as “the oil of the 21^st century, and (data) analytics is the combustion engine.” Says Peter Sondergaard, senior vice president of research at Gartner Research: “IT leaders must embrace the post-modern business, a business driven by customer relationships, fueled by the explosion in information, collaboration, and mobility.”

Today, Internet-based technology is redefining all types of commerce.

From transaction to interaction

Consumer goods industries are rapidly evolving from transaction-based commerce to interaction- and observation-based analysis and decision making capabilities, says Brent Buttolph, a principal consultant in national retail practice at Teradata, a Dayton, Ohio-based analytics provider. In order to achieve new business insights, consumer goods providers need to access a much broader set of data types fueled by the explosion of digital data (mobile, social, sensors, etc.).

In addition to inventory, consumer goods providers need access to customer interactions across a myriad of devices (smart phones, kiosks, lockers, websites, etc.), surveillance cameras, call centers, social media sites, etc. They also need the ability to integrate data in different formats other than traditional structured (column and row) data, such as: text, video, web logs, geo-location, as well as third-party data such as weather maps and customer demographic data.

F&b manufacturers and self-distributing retailers in particular need access to onboard computer and sensor-based data such as: cargo temperature, driver speed, tractor idling time, maintenance readings, etc. “That data is continuing to come in a streaming fashion,” Buttolph says.

Two of the biggest changes technology is bringing is the speed by which data moves and the growth of algorithms that allow for improved data analysis.

Software now allows companies to conduct analytics and do more advanced modeling on data being captured at faster speeds than a decade ago, says John Richardson, vice president of supply chain analytics at Transportation Insight, the Hickory, N.C.-based 3PL.

The increased pervasiveness and predictiveness of data solutions give new strategic heft to the traditional “what/if” analysis to questions that arise in the f&b supply chain, Richardson says. Such questions include:

How do we get orders to customers most efficiently?
Where should we source/make particular products?
How many products should we source/make?
Where should inventory be?
From whom do we purchase materials? How many?
What’s the most efficient transportation mode to use?
Which DC should ship products to particular customers?
What if demand increases X percent?

Data explosion continues

In any supply chain organization, the data has expanded at an alarming rate.

In the f&b supply chain, there are several factors driving data proliferation.

A major factor driving data proliferation is warehouse automation. The f&b supply chain lags some other industries in its use of automation, but equipment providers unanimously agree the rate of investment is increasing. The amount of data will continue to increase along with automation.

“Material handling organizations are seeking data that gives them insight to drive better business decisions, particularly around asset utilization, safety and productivity,” says Jim Gaskell, director of global technology business development, Crown Equipment Corp. “The challenge is filtering data in a way that presents managers with only the data they care about in a format that makes it easy to both monitor operations and drill down into potential problem areas. For customers that are just getting into analytics, we see the most interest in forklift impact reports, which correlate directly with safety, and forklift operator productivity reports.”

Consumer demand for more information about food will also expand data in the f&b supply chain, Teradata’s Buttolph notes. As consumers are increasingly making purchase decisions based on product origin (i.e., local), social consciousness (i.e., fair trade) and ingredients (i.e., gluten-free), retailers are looking to trade partners to provide a richer level of detailed attribution on all products. “That’s what consumers are looking for, Teradata’s Buttolph notes.

Auto ID technology expands

Automatic identification (Auto ID) technologies—including barcode, RFID and voice, point-of-sale systems, imagers, and beacons—are one of the evolving supply chain technologies, according to the Material Handling Institute (MHI) 2015 Annual Industry Report. Auto ID systems generate vast amounts of data. Auto ID feeds corporate information systems with the precise identity and location of each physical item in a supply chain in an automated and timely manner.

Auto ID technology provides a big opportunity to improve tracking and tracing systems, process control, and inventory management. Longer term, Auto ID systems can give a company full visibility into its supply chain by removing a number of traditional limitations.

One of the fastest growing Auto ID technologies among transportation and logistics companies is radio frequency identification (RFID). According to MHI, RFID achieves: near 100 percent accuracy in shipping, receiving, orders, and inventory accuracy; 30 percent faster order processing; and 30 percent reduction in labor costs. By 2018, the total market for RFID is expected to more than double in size to $20 billion. The retail industry is the primary user.

Newer technologies, such as two-dimensional imagers, are gaining momentum because of their ability to read two-dimensional bar codes for coupons and other smart-phone applications, MHI notes.

Computer capabilities improve

In addition to material handling equipment, companies are also finding newer computer hardware and software allows them to access data faster. Hardware and software providers alike continue to introduce new ways to access data, such as mobile devices and data visualization software. These systems often deliver new data platforms to support innovations like productivity dashboards.

Melinda Laake, manager of enterprise solutions at Raymond Corp., says there are four elements needed to utilize Internet-accessible data: 1) an identity for whatever holds data, be it a machine, a report or a person, 2) a way for the entity to connect to the Internet, 3) the entity’s ability to be sensed, and 4) the ability to interpret the information being sent, be it by a mobile device, a PC or something else.

Utilization and activity reports are providing a more complete view of the supply chain as more data becomes available, adds John Rosenberger, manager of iWarehouse Gateway and global telematics at Raymond Corp. For instance, data from lift truck sensors can allow a supply chain manager to know if the driver should be driving instead of walking certain distances.

Current warehouse management software allows companies to collect data, analyze it and present reports for making decisions. In the new era of “big data,” Rosenberger says decision makers will also be able to verify data collected, correlate more data sources, and better predict what will happen based on the data.

Transportation management software similarly gives management access to data sets such as geolocation of vehicles, engine performance, weather reports, maintenance records, driver compliance with government and company regulations. A statistical modeling report can allow a fleet manager to determining what drivers cause excessive idling.

Food safety drives data tools

The growing interest in food safety – be it government mandated or industry driven – also pushes the adoption of data collection systems. Food companies are collecting more data to ensure both that the product stays safe and that they know what went wrong if anything compromises the product. Where records have traditionally been tracked with paper-based logs, more companies are using devices pre-loaded with checklists that instantly transmit data over the Internet. Sensors are able to track the condition and quality of food as it’s produced, transported and stored.

Traceability information can now be exchanged between each stakeholder in a supply chain, from the raw ingredients supplier, through the pack-house/ manufacturer and then on to the retailer, via logistics and distribution. “This vital information about what happened to products at each stage of the manufacture from raw materials through to arriving on the retailer shelf is essential in enabling a food organization to comply with ever increasing food safety and traceability requirements,” says Carl Iversen, vice president of product development at LinkFRESH, the Ventura, Calif.-based ERP provider

Internet cloud changes the playing field

Another driving force is the emergence of the Internet cloud.

“What supply chain models did to manufacturing is what cloud computing is doing to in-house data centers. It is allowing people to optimize around where they have differentiated capabilities,” says Gartner Research’s Sondergaard.

Cloud-based systems are playing a big role in allowing f&b companies to integrate data siloes. The July Food Logistics explored how cloud-enabled enterprise-wide software is gaining traction in f&b.

F&b companies typically have 20 to 25 separate data siloes, says David Gustovich, founder and president of Wexford, Pa.-based IQity Solutions, LLC, a provider of cloud-based software systems for the food industry. Integrating sales, order management, shipping and invoicing into one system reduces time, labor and cost.

“I find there is a growing level of awareness of the value of an integrated system,” says Gustovich, who has ownership in a food company with multiple operating locations. “The next generation of business technology is more integrated.”

Users of legacy systems have plenty of third party providers at their disposal willing to customize and integrate these siloes of data points for a cost. The end result will be usable, digital representations of data that would otherwise elude users.

Universal Lumpers, the Denver, Colo.-based provider of lumping services to f&b facilities, recently moved its services to the cloud, says Joe Curry, vice president of operations. “For any manager in the supply chain to have a snap shot of the grand picture and have everything integrated is absolutely critical,” Curry says. “Just collecting data is one thing. Being able to analyze it and figure out what it’s telling you is another.”

“We are finding a lot of advantages to cloud-based deployment of our forklift fleet management system,” says Gaskell of Crown Equipment Corp. “On-premise deployment is still a viable option for organizations that aren’t comfortable with the cloud, but a cloud-based system is easier to deploy and maintain and can more easily scale to support multiple facilities across an enterprise. Most importantly, as more users move to the cloud, data can be aggregated across organizations to provide industry-specific benchmarks that food companies can use to analyze their performance relative to industry averages.”

Integrated data enhances safety

Gary Neights, a senior director at Elemica, a Wayne, Pa.-based supply chain software provider, says integrated operating networks are especially helpful in establishing safety and quality control. If a food processor, wholesaler or retailer suffers a listeria outbreak, an operating network will let them quickly determine which batches are affected and whether they are in trucks or railcars or sitting on a shelf some place. Putting cross-company data into a single, searchable silo gives a supply chain operating network a unique ability to let a user quickly retrieve information whether it resides in an order, shipping documents, delivery schedule, receiving documents, laboratory records and more. A transportation management system, by contrast, may have some of this information but it might not have all of it, Neights says.

One technical function Elemica performs related to big data for inbound logistics is what Neights calls “ETL” – extract, transform and load. All the cross-company data flowing through the network is loaded into the company’s alerting, analytics and reporting platform.

“Precision agriculture” has done a lot to educate the f&b industry about supply chain operating network software, Neights says. Precision agriculture refers to observing, measuring and responding to inter and intra-field variability in crops. GPS was a key development in the growth of precision agriculture.

The farmer’s ability to locate a precise position in a field allows for the creation of maps of the spatial variability of as many variables as can be measured, such as crop yield, terrain features/topography, organic matter content, moisture levels, nitrogen levels, pesticide levels, pH, etc. This supports optimal application of seeds, fertilizer, herbicides, and pesticides to maximize production with minimize waste. A “pedigree” of each seed or plant could be created that show exactly what chemical (and even batch) that was applied to each plant. This pedigree can be communicated through the supply chain operating network across all steps in the food and beverage value chain.

New competitors drive data capabilities

Another driving force to make use of more data faster is a new set of f&b competitors, says Ranga Bodla, industry leader for wholesale distribution and manufacturing at NetSuite. Specifically, the ecommerce merchants. Dedicated ecommerce players like Amazon are fairly new and are able to invest in the latest supply chain technology.

Besides bringing more competition to the fray, the ecommerce players are changing consumer buying behavior in ways that forces established retailers to reconsider their supply chain strategies. In some cases, companies need to gather data faster and organize it better.

Companies are striving to bring new products to market faster, streamline supplier processes and improve supply chain efficiencies, according to a white paper by Amber Road, the Rutherford, N.J.-based technology consultancy. “During the journey from new product innovation to the final physical product, executives know they must share accurate product information with a variety of global suppliers without confusion and delays. Connecting all of these processes, systems and suppliers is challenging. Success in delivering innovative products to the market relies on the ability to fully integrate trading partners to connect the entire supply chain.”

The HR challenge rises

For all the advanced technology coming to the fray, one of the biggest challenges users must address is the human one.

Another big challenge is deciding what technology solution best fits an individual company. The data explosion isn’t making this task easier. “You have to figure out what is the right configuration for your current IT infrastructure and the organization skill sets needed to support it,” Buttolph says. But in his mind, this is not an insurmountable task.

“The key is to start small and grow with a longer term view in mind,” he says. “Standing on the sidelines is no longer an option in this highly competitive industry. There are a lot of good, solid providers available to help.”

Still another factor driving change is a lower technology investment and new skill sets required to leverage these emerging analytic tools. Teradata’s Buttolph cites this as they key challenge facing the f&b supply chain. “Technology (in and of itself) is not a barrier to entry in pursuit of deeper business insights,” Buttolph says.

How Technology Is Shaping Food’s Future

Tech Republic, a technology news source, recently published the 10 ways technology is shaping food’s future. Food Logistics deems this list relevant to the supply chains since these technologies impact the level of supply chain data.

1) GMOs

The biotechnology used to create genetically modified organisms (GMO) is both critical and controversial in food technology. A GMO is something that has been genetically engineered to have certain traits, like herbicide resistance, pest resistance, and increased nutritional value.

In 1997, just three years after the first genetically modified food hit the grocery shelves, Europe made GMO labels mandatory, but the U.S. still hasn't made a federal regulation. Currently, there are crops in development that are genetically modified to grow in habitats besides their native ones, to increase yield productivity to feed more people. Examples of this include wheat, rice, and other grains. Fish, poultry, and beef are also often modified to increase the quantity of meat by quickening the rate of growth of an animal or by adding proteins or other nutrients to the meat.

2) Precision agriculture

Precision agriculture is often called satellite farming, and refers to the use of GPS tracking systems and satellite imagery to monitor crop yields, soil levels, and weather patterns to increase efficiency on the farm. Precision technology is increasingly important as the issue of feeding 9 billion people by 2050 becomes more apparent. The technology was adopted in the early 1990s, and started with crop yield monitors. Now, there are tools such as weather analysis software and soil testing kits to monitor nitrogen and phosphorous levels.

Using these precision technology systems, farmers can pinpoint an exact location in a field to determine how productive the area is. Before, the entire field was treated as one unit, but now, farmers can find out which areas are more suitable for which crops so they don't waste seed, fertilizer, or pesticides. It is also important from an environmental standpoint — farmers can have more sustainable practices and use less resources such as water to tend their fields.

3) Drones

Farms often span large distances, and farmers need help to monitor the productivity of the areas. Drones are becoming a popular alternative to extra farm hands or satellites, and advanced technology is making the drones more productive. With drones, farmers can locate precisely where a diseased or damaged plant is, more accurately release

fertilizer and pesticides, or take photos and have immediate information about a certain area of the farm.

A report released in March by the Association for Unmanned Vehicle Systems International said that drones could create 70,000 jobs after the Federal Aviation Administration approves commercial drones. But in farming, drones may replace more jobs than they create.

4) Internet of Things

Sensors are (and will continue to be) very important to food technology. The Internet of Things has already come to the farm in the forms of irrigation technologies, crop yield monitoring. A system called WaterBee collects data on soil content and other environmental factors using wireless sensors to reduce water waste.

Sensors in grain bins allow farmers to monitor the temperature and moisture levels remotely. John Deere added sensors to some of its equipment to monitor soil moisture or productivity to increase or decrease speed or prevent overlap of fertilizer or seed. Another example of IoT use on farms is Z-Trap, a device used to monitor insects and analyze data on crops remotely using GPS coordinates and wireless sensors. The base station targets specific destructive bug species, but the tool has its own communication network between all the traps on a certain field and uploads the data to a cloud.

5) Food waste tracking

Forty percent of U.S. food is thrown away each year. With the help of social media and new technology, this number can be drastically reduced. Strides are being made with apps and web platforms to put the food to good use. Leloca is an app that helps restaurants minimize waste by allowing people to get deals on food within 45 minutes of a posting at nearby restaurants. Another app, 222 Million Tons, gives a suggested grocery list with a user's selected household size and meal preferences. A particularly innovative platform called LeftoverSwap matches people with leftover food to others in their area who would like to purchase cheap food and pick it up, and they offer anything from pizza to produce.

6) Hackathons

Food-centric hackathons are popping up around the globe to improve the food industry. It is a movement that is gaining traction. Food+Tech Connect held the first food hackathon, and continues to host them annually, including ones that have tackled the Farm Bill, and the meat and restaurant industries. The Future of Food Hackathon and Forum is an assembly of food innovators, chefs, entrepreneurs, and designers to create solutions for the future of food. The Rural Advancement Foundation International and Farm Hack, an open source community for agriculture projects that lists local hackathons and innovations, have launched a collaborative campaign on Kickstarter for Growing Innovation, an online community to share agricultural innovations and maps of sustainable farms.

7) 3D printing

The idea of 3D printed food isn't exactly mouth-watering, but the technology stands to disrupt the food industry on at least some level. Right now, the most talked-about 3D printed food is 3D Systems' candy, which is made of pure sugar with the ChefJet, but the leader in the 3D printer industry recently teamed up with Hershey's to print chocolate. Startups like Modern Meadow are trying to save cows and help reduce carbon emissions by creating meatless meat. NASA used a 3D printer to make a pizza, possibly a step forward for astronaut meals in space. The Foodini is a 3D printer designed for the home kitchen. The user prepares the ingredients with a food processor or blender, and the 3D printer can print shapes out of the mix. It's meant to take out the time-consuming process of making things by hand. The Foodini has created food items such as burgers, pizza, and desserts.

8) Farm locations

As farmland becomes less available, we must come up with innovative places to grow food. The latest trend is underground; in London, a hydroponic farm was built in abandoned underground tunnels that were once air-raid shelters, so that local restaurants and stores can have fresh produce and herbs. Hydroponic technology is growing in popularity because food can be grown without soil using a nutrient-rich water solution. Philips is working on creating special LED bulbs that produce specific wavelengths to appropriately grow plants indoors for Green Sense Farms in Chicago, which is a one-million cubic foot growing space. Since LED bulbs don't get hot, they can sit closer to the plants and can produce lights particular to different species of crops.

9) Access to recipes

AllRecipes has been around for many years, and the platform is extraordinarily popular. In 2012, on its 15th anniversary, the site conducted a survey, asking users questions about their use for their recipe services. It found smartphones and tablets are changing the way we prepare and cook food. More than a third of respondents said they use phones to look up recipes and cooking techniques.

Recipe sites have well surpassed cookbooks and magazine recipes in usage. From gluten-free to vegan to paleo, we can find guidelines for just about any type of diet or lifestyle on the internet today. With blogs, Pinterest, food-centric Twitter accounts, and Facebook groups, sharing recipes across borders has never been easier. And with video sites like YouTube, we can learn how to chop up an artichoke in a matter of four minutes.

10) Promoting local food

The farm-to-fork movement is strong. People want to know where their food comes from, and as industrial agriculture, GMOs, hormones, and carbon emissions become increasingly concerning, it becomes more important to know the lifecycle of food. Websites like Farmigo offer a place for people to find local harvest from farmers in their region, creating an online farmer's market community, of sorts. Farm to Table is a web service that distributes locally grown produce, grass-fed beef, and cage-free chickens to restaurants, independent grocery stores, and cafeterias. There are profiles of the farmers and the farms they tend, as well as detailed descriptions of the food that is available for purchase. The company is based in Austin, Texas, but services like these are growing around the country.

FL Web Exclusive: How Big Data Is Changing Retail

Scott Bolduc, director of supply chain strategy for SPS Commerce, offered the following assessment of big data in the retail supply chain.

When retailers, suppliers and other trading partners share their data and insight, a detailed snapshot of item sell-through, inventory and order fulfillment emerges. Sharing such intelligence across a business network strengthens collaborative relationships for improving delivery of products when and where they’re needed, boosting profitability for all parties involved. Suppliers that have real-time visibility into product performance can spot and respond to new opportunities and sales trends, while more accurately refining forecasting, quickly identifying what needs their attention, and proactively adjusting inventory to avoid stock-outs or oversupply.

What’s more, using data analytics to track vendor performance, such as order fill rates and on-time metrics, makes suppliers and trading partners more accountable. Quality improves throughout the chain, to the benefit of supplier, retailer and consumer alike.

What is the takeaway from all of this? Simple: Big data is essential for optimizing performance in omnichannel retail. Are you embracing the big opportunities that it can provide?