Is disruption becoming the new norm?
Infor’s Industry and Solution Strategy Director for Food and Beverage, Marcel Koks, examines how food producers may strengthen supply chain resilience through technology in the face of continuous upheaval.
Some have even gone so far as to claim that COVID-19 broke the food supply chain entirely, pushing it to its breaking point. We have a perfect storm of issues facing the world’s food industry. Numerous food producers are finding it difficult to meet demand while maintaining a profit due to a severe labor and talent shortage, sea containers delayed in harbors, skyrocketing transportation expenses, and escalating raw ingredient prices.
The already-existing vulnerabilities in the global food supply chain have been made worse, and food companies everywhere are pulling together and making every effort to persevere in the face of adversity. However, what steps can food makers take to strengthen their own resistance to such harsh circumstances?
The impact of Covid
Pressures associated with COVID-19 do not appear to be abating anytime soon, as more and more food industries come to terms with the possibility that disruption will become the “new normal.”
“The interconnected system of everything and everybody that influences, and is influenced by, the activities involved in bringing food from farm to fork and beyond” is how the Centre for Food Policy defines the food system. Food producers and processors are situated in the center of this intricate system, where they are vulnerable to flaws and difficulties in both ends of the larger supply chain. The global pandemic exposed and exacerbated pre-existing supply chain weaknesses, which forced many food producers to quickly reevaluate how resilient their supply networks actually are. These firms were already under strain from seemingly never-ending client expectations and supplier issues.
The main issue is still getting the right product to the right consumer at the right time, even with the additional demands of higher expenses and longer lead times. Numerous companies saw the need for increased adaptability and agility throughout the supply chain, as well as for more coordinated efforts, thorough visibility, and a renewed emphasis on developing more intelligent supply chains that can rapidly and effectively respond to shifting demands. Encouragingly, supply chains can be strengthened by taking action today to detect possible bottlenecks and inefficiencies before they have a negative effect.
How can food firms overcome these weaknesses and create more resilient supply chains that can adapt and scale in response to constantly changing demands and challenges, given that disruption is increasingly becoming the new normal?
converting to digital
“Digital transformation,” the buzzword of the past few years, is frequently hailed as the solution to every corporate problem, including supply chain problems. However, full-scale root-and-branch digitally changed supply chains aren’t always a practical choice, especially for food manufacturers in particular, for whom ever-shrinking margins are a constant issue. This is especially true if the goal is change for the sake of change. Rather, by decomposing more ambitious projects into smaller, more achievable goals, real results can be achieved that support the need for additional organizational transformation.
Increase the visibility of your organization
Making the most of the data available from the larger supply chain to optimize operations and guaranteeing optimal levels of visibility and openness throughout the organization must rank highly on the list of priorities. Standardizing and integrating business processes throughout the company is the only method to achieve this. This was true of Kalsec Inc., a well-known manufacturer in the world of innovative hop solutions, food protection, natural taste and sensory solutions, and color solutions for the food and beverage sector. Its supply chains are extensive and intricate due to its eight global sites, 80+ countries of client service, and roughly 40 nations of sourcing. In addition, Kalsec must deal with the administration of hundreds of ingredients in the creation of formulas and goods. However,
Robert Wheeler, Executive Vice President and Chief Supply Chain Officer of Kalsec, said, “We implemented Infor’s M3 enterprise resource planning (ERP) system and Infor’s product lifecycle management (PLM) system for process (Optiva) across our global sites to not only connect all regions but to gain a single source of truth for our core business processes.” The ERP system, for instance, aids in inventory management across all locations. Kalsec now has real-time visibility into every step of its supply chain, from shipments to customers to outstanding supplier receipts, and everything in between.
“This technology is giving us the information we need to make decisions quickly and intelligently, which is obviously essential to creating an agile company,” Wheeler stated.
Furthermore, because of this degree of monitoring and visibility, organizations are better able to pinpoint the locations of inefficiencies and bottlenecks and take the appropriate action before these impending issues have a detrimental impact on operations.
Enhanced effectiveness
Combining different systems also gets rid of laborious manual procedures, which simplifies operations and boosts productivity. “We required a system that could interface with other critical business applications in order to help us improve customer response times and streamline processes,” Wheeler continued.
All of this was provided by fully integrated systems, eliminating the need for repetitive data entry—a laborious and prone to error procedure. Such efficiency is crucial for fundamental aspects of any food business, like guaranteeing regulatory and health and safety compliance. It not only ensures higher information accuracy but also expedites the administrative burden that is a necessary part of operating in the global food and beverage industry.
Planning mastery
The correct ERP system can also make a huge impact in terms of meeting client demand. A food firm may guarantee order fulfillment by having access to accurate and timely stock and inventory levels and projections. It can also take essential precautions, such as instituting contingency plans in case of anticipated delays in ingredient supply. Accurate stock holdings can also be taken into consideration while making purchases. All of this is made possible by the conversion of data into insight, which gives organizations the confidence to make wise decisions based on precise, timely, and contextualized information. Because the correct systems can offer knowledge and foresight, this leads to the creation of an agile business that increases supply chain resilience.
Food companies need to adapt to this new normal as the disruption keeps happening and shows no signs of ending. Supply chains must adapt to this new environment and be strong enough to withstand unforeseen difficulties. They can only achieve this if the companies at the center of the supply chain increase their agility in line with it and use deep business insights to inform not just their own operations but also the supply chain as a whole.
Food manufacturers should set a good example by utilizing the information at their disposal and fostering the development of supply networks that are fluid, adaptable, and unfazed by unforeseen obstacles.