Food manufacturers face an array of concerns, from regulations compliance to consumer demands. Your supply chain is the point–or series of points–where many of these concerns converge.
Taking a hard look at your supply chain can positively impact your processes, your product, your relationships with suppliers and consumers, and ultimately, your business growth.
Global supply-chain revolution
Developments in technology and demands for transparency are pushing for change at every level. Outside your plant walls, shifts in distribution channels and increases in population are impacting how food moves around the world.
Reporting on the 2016 MHI Annual Industry Report, Forbes identifies eight technologies that will revolutionize supply-chain operations in the next 6 to 10 years. These technologies, along with the skilled workforce required to run them, have the potential to intensify competition by disrupting traditional operations and to raise user expectations to new standards, end-to-end.
Time for a change
Elizabeth Sinclair, chair of the Food Track-and-Trace Committee for AIM Global, says food companies bear more burden of proof than ever. Meeting current “free-from,” natural, and clean labeling trends in the food industry requires impeccable supply chain tracking and transparency, says Sinclair. “It’s now incumbent on manufacturers who make such claims to own a depth of product information not previously gathered, or even considered important.”
Reluctance to adopt automation and interoperability initiatives will ultimately hurt transparency, says Sinclair. She believes the food industry has a lot of catching up to do. Even though automation is not presently required in global track-and-trace law it’s a tall order for companies that use manual tracking systems to maintain regulatory compliance and enable traceability. Essentially, Sinclair says, “the complexity of the food supply chain makes manual tracking unsustainable.”
Sam Werner, CMO of process mining company Celonis, says consumer and regulatory demands are secondary concerns. The bigger question is a company’s agility and adaptability. Often, those qualities come down to process. Werner asks whether food manufacturers have business processes in place that can support rapid shifts in consumers’ desires and quickly respond to new disruptive entrants to the market.
Transparent process, transparent product
Sinclair recognizes that transition can be difficult and complex, but “an interoperable, automated supply chain also creates the opportunity to evaluate and integrate existing processes, and gain new efficiencies.” Sinclair suggests starting with auto-identification and RFID labeling systems, maintaining that “real-time visibility automation initiatives offer early adopters a competitive edge.”
Werner’s focus is on process transparency. He says companies with little visibility into their processes will find it difficult to rapidly add new products or change their go-to market strategies.
According to Werner, a process investigation can yield many competitive advantages:
- Cost savings, which can give result in price advantages and lower operational expense
- Improved supply chain and inventory management, which can lower costs and reduce waste
- Simpler ordering, quicker lead times, and more on-time deliveries, which improve relationships with distribution and retail channels
The main competitive advantage, Werner maintains, comes in the form of agility and the ability to quickly respond to changing demand from consumers.
Tools of the revolution
For the food manufacturer ready to develop a more automated, interoperable supply chain, it’s important to know which tools are right for which tasks. Some will attach directly to your product and follow it through, from source to shelf. Some will provide insight into your sources and suppliers. Still others will look at your processes to determine where you can cut costs and gain efficiency.
Sinclair believes the interoperable, transparent supply chain starts with auto-identification technology. “Knowing what you have, where it came from and where it’s going begins with the marking and tracking that RFID tags and barcodes provide.” Active RFID tags can monitor and report on things like product temperature throughout the value chain, including product as it travels to delivery.
Andrew Good, CEO of DynamicsFood ERP, says an ERP system is best for tracking the movement of goods from receipt through delivery. ERPs can target operations as specific as lot control to show which products went to which customers.
“There’s no downside to the transparency created by getting to know your source,” says Good. He believes knowledge and control of supply networks is crucial to instilling consumer confidence. “If we reverse lot control for such things as fresh fish, we’re getting to know our fishermen better. Getting to know your source is an effective way to provide transparency to your customers.”
Companies like Celonis aren’t trying to replace the applications that help manufacturers execute processes, says Werner. Instead, they use machine learning and AI to help visualize the inefficiencies of those processes. These can include unnecessary approvals, slow handoffs, process loops, and ineffective vendor management.
Process mining, says Werner, has been specifically designed to help enterprise manufacturers visualize their core business processes and to identify issues and their root causes before they impact a business.
Although food producers may be slower to adopt, the effects of technology will be felt farther up and down each end of the value chain, reducing commodity costs and waste, improving food safety and environmental impact, and vastly increasing the value and efficiency of the new networks that emerge.