The Biggest Supply Chain Challenge Facing Food and Beverage Companies

The Biggest Supply Chain Challenge Facing the Food & Beverage Industry

Rising Customer Expectations Present Biggest Challenge for the Food & Beverage Industry

Changing consumer shopping habits and rising customer expectations are putting added pressure on the food and beverage industry. Shoppers are becoming used to having dozens of choices at their fingertips. Whether this is a choice between multiple flavors and varieties where there might have once only been, or the choice to purchase groceries online, at a traditional grocery store, in a convenience store, or any other location, there are more options than ever. This presents a big challenge for food and beverage companies that need to support more SKUs and deliver to more retail locations.

Consumers Are Demanding More Convenience From Their Grocery Shopping

Gone are the days when everyone made a single trip to their local grocery store to purchase the same list of weekly groceries. While some people still maintain this habit, it’s becoming increasingly common for people to shop for food at a variety of locations. Shoppers often want to grab a loaf of bread of a gallon of milk while they go about their busy lives. This means many different retail locations have the opportunity to draw in shoppers by offering an assortment of essentials. Convenience and pharmacy locations like CVS and Walgreens have jumped on this bandwagon, expanding their grocery sections to include more shelf-stable and frozen products. Big box stores like Target and Wal-Mart as also capitalizing on this trend.

Online shopping is growing in popularity across all industry and it’s no different for food and beverage. There are now hundreds of options for shoppers to order ahead to pick-up in store or at a special location as well as have groceries delivered directly to their door. This is not to mention to rise in popularity of meal subscription services which take the planning out of meal prep.

These new ways for consumers to shop for their groceries adds a new level of convenience, but also comes with many challenges for food and beverage supply chains. Instead of just delivering to the dock of routine grocery stores, now manufacturers have multiple lanes to multiple retail locations to fulfill. Juggling the increasingly complicated routing as well as inbound delivery restrictions can be a challenge for food and beverage manufacturers.

Consumers Want More Options than Just Chocolate or Vanilla

In years past, many common grocery items came in only one or two varieties. Soda came in one or two sizes and in standard flavors, yogurt was strawberry, vanilla or plain, and burgers were simple beef patties. Now, these and many other products and categories come in a multitude of flavors and options! When you walk into the dairy aisle of a grocery store these days, you’ll find yourself confronted by a wall of yogurt types. Soda comes in different sized containers and you can find diet options, natural and organic, and even foreign brands. Burgers have transformed from just simple beef patties to an entire food category of their own encompassing meat-free options, health-conscious choices, and even different proteins like chicken and mushroom.

Brand loyalty is also a fading trend. With the advent of the internet and easy ways to compare products as well as learn about new ones, shoppers are more willing to try something new or quite a brand that has disappointed them. As such, manufacturers are now constantly working to maintain their customer base and offer new and more exciting options.

While these new flavors and varieties cater to consumers’ new expectations and shopping habits, adding more SKUs to any product presents challenges for food and beverage manufacturers. Considerations like shelf-life and seasonality need to be factored in as well as where different products are manufactured. Instead of shipping a truckload of a few products from one location, manufacturers may find themselves shipping more LTL from multiple zip codes.

Keeping store shelves full also presents an issue for demand planning teams. Shelf space and backroom space are at a premium, meaning replenishment from the manufacturer needs to happen in smaller batches more frequently in order to keep shelves stocked. Consumers are more willing than ever to buy from a competitor rather than visit another store for the brand they prefer and this can be a risk for manufacturers with a growing SKU list.

How Transportation Management Technology Helps Food & Beverage Companies Face These Challenges

Food and beverage businesses have complex supply chains with many unique characteristics: tight margins, fresh products that may spoil, expiration dates on products, complicated inbound requirements and more. On top of these challenges are industry issues that center around the lack of carrier capacity, shortage of truck drivers and increased regulations and compliance requirements.

Getting the right volume of products at the right time, and at the right location, is no easy task. Visibility into and control of supply chain processes will allow food and beverage businesses to address rising customer expectations all while meeting business goals.

Transportation management systems like Kuebix TMS can help food and beverage companies face the challenges of increasingly complicated supply chains due to rising customer expectations. With features like rating, booking and tracking all from within a single system, any company can save countless hours and realize real, bottom-line benefits by comparing all their rates side-by-side. With added features like ERP integrations and collaboration portals, communication between systems and partners becomes seamless and issues can be avoided before they even begin. Dock scheduling and yard management features help manufacturers keep their supply chains moving so that products don’t spoil and products reach stores with the maximum amount of shelf life.

By incorporating technology into everyday operations, food and beverage companies can address the challenges created by rising customer expectations, save time and improve their bottom lines all at the same time.

Kuebix TMS Sustainability Meat Alternative Labor Day

What’s Your Burger Made of This Labor Day Weekend?

Beef burgers have been a summer barbecuing staple for generations of Americans. From Memorial Day to Labor Day families and friends will gather to share this favorite food in backyards across the country, not to mention year-long at many popular fast-food chains. The traditional beef burger is changing, however. Now, when you head to your neighborhood BBQ this weekend, you may find yourself with a wider selection of burger patty options than you expected.

Meat-free options, health-conscious choices, and other patty alternatives are currently trending with consumers. The $90B global meat market is facing disruption unlike anything it’s seen before, with new fake-meat products entering the market every day and consumers branching out from traditional beef products.

Here are a number of popular beef patty alternatives that you may find at your Labor Day barbeque this year.

Beef patty alternatives:

  • •     Fake-meat patties (Beyond Meat, the Impossible Burger, etc.)
  • •     Veggie burgers (MorningStar, Gardein, Dr. Praegers, etc.)
  • •     Mushroom burgers
  • •     Homemade black bean burgers

Why Are Beef Patty Alternatives So Popular?

According to FAIRR, a global network of investors addressing ESG issues in protein supply chains, “Alternative proteins, which include plant-based substitutes for animal-based foods, are expected to capture 10% of the meat market in 15 years and are now worth around $19.5 billion.” It’s easy to see that beef patty alternatives are popular, but the question still remains, why?

Sustainability

Consumers continue to place a heavy emphasis on sustainability, with 68% of US internet users citing product sustainability as an important factor when making a purchase. The Food and Agriculture Organization of the United Nations (FAO) reports that livestock supply chains account for 14.5% of all global anthropogenic GHG emissions, a number which includes the burning of fossil fuels worldwide. Many consumers are searching for a more sustainable way to continue to enjoy burgers without contributing as highly to global emissions.

Changing Diets

Changing diets are having an impact as well. You’ve probably heard about diet trends like Paleo, Low-Carb, Vegan, Vegetarian, Keto, and Low-FODMAP. These and many other diet types play a role in consumers desire for patty alternatives. Some diets focus on weight-loss, reduced-sodium content, eating more “whole” foods, eliminating allergies, improving digestion, and adhering to religious or personal ethics. Consumers are becoming used to having more options to choose from to fit their lifestyles and the burger industry is only the latest industry to see a great diversifying of products.

What Does This Mean for the Supply Chain?

Many large brands are jumping on the meat-alternative bandwagon, and this doesn’t just include burgers! Most recently, Burger King, KFC and Dunkin’ Donuts announced that they would be adding fake-meat products to their menus. Now, you can get a vegetarian Whopper, vegan fried chicken or a plant-based sausage breakfast sandwich. Conagra’s Gardein meat-alternative unit saw its share of the meat alternative market rise to 11% in 2018 from 6% in 2013. Not wanting to be left out of this lucrative market, Nestle is launching its own plant-based Awesome Burger this fall.

The surge in popularity of meat alternatives is having both positive and negative effects on the supply chain. In the short term, manufacturers are facing issues with production. In May, the Impossible Burger’s creator, Impossible Foods, was forced to hire a third shift for its production line and begin building a second line to double supply. Many brands have signed new contracts with food service companies which they may not be able to fully supply at first.

Some grocery chains are also struggling with where to shelve fake-meat products. Some have shelved Impossible Burgers and other meat-like options in the meat aisle, much to the confusion of some. Others are creating or expanding their vegetarian and vegan sections to accommodate new products. These short term problems are expected to slacken as production lines boost output, procurement teams become accustomed to a new category, and retailers adjust their offerings.

In the long term, meat-alternatives promise to be easier for supply chains. This starts with a reduction in the need for livestock which require their own complex supply chains to function. In general, plant-based products have fewer touch-points compared with meat-based products, meaning logistics teams will have fewer points to manage. Patties will also be easier to transport and have higher levels of food safety. Once the initial hurdle of transforming supply chains to accommodate new SKUs and product types is complete, this promises to be a new, lucrative industry for food manufacturers to compete within.

So, if you get to the grill this weekend and see more options than just the standard American beef patty, pick the one that works best for you and remember to have a great Labor Day weekend!

Grocery Food Supply Chain Kuebix TMS

Rising Consumer Expectations are Prompting Change in Food Supply Chains

The food industry is no stranger to steadily rising consumer expectations and standards. It’s becoming increasingly normal for consumers to shop for food in a variety of ways. Whether they stop at the grocery store to grab a frozen pizza on their commute home, order delivery upon arrival, or subscribe to a delivery service, there’s no shortage of ways consumers are shopping for food. Customer loyalty also seems to be a thing of the past, with many shoppers jumping from brand to brand and flavor to flavor as the mood takes them. For food suppliers, this means getting their products into the hands of their customers whenever and wherever they want, making supply chain operations increasingly complex.

The “Food Anywhere” Trend

Supermarket prepared food departments have seen double-digit sales growth in recent years, and food delivery is expected to grow 12% every year for the next five years. This aligns with the food anywhere trend, which challenges traditional ideas about availability and requires suppliers to conform to consumers’ notion that food should be able to be enjoyed anywhere at their convenience. Now, consumers expect to be able to purchase some traditional groceries at their local pharmacy, have pre-portioned meal kits delivered to their doorways, or order online for pickup at the location of their choice. Regardless of location, consumers expect their food to maintain the same quality and taste. Achieving this standard while keeping products in stock can be quite challenging for many food manufacturers.

Transporting food to local vendors for distribution is just as complicated as keeping up with all the final mile options consumers have come to expect. Trucking companies with food-grade truck assets must conform to extensive rules and regulations that ensure food is transported safely from one point to another. Even the smallest misstep can lead to degradation in the quality of the food and render products unsellable. Potential roadblocks to take into consideration include the distance being traveled, the temperature within the truck itself and the risk of cross-contamination depending on what products are being transported together. Drivers need to be aware of FDA, USDA, and DOT regulations in order to ensure products arrive at their destinations in a sellable and safe condition.

Healthier Alternatives

Manufacturers of prepared foods are struggling to meet demands for fewer, healthier ingredients while maintaining the same taste and texture customers expect. This can cause issues in the longevity of prepared foods, leaving products with shorter shelf-lives all while consumers are requiring more variety.  

However, change does come with reward – 73% of consumers are willing to pay more for a “clean label” product. Some food manufacturers have turned to individual quick freezing technology (IQF) to help achieve this standard while still retaining longer shelf-lives. This is a process that is growing in popularity because it flash-freezes products and preserves their nutritional value. The ice crystals created from IQF are small enough that they don’t rupture the cell walls of the products, extending shelf life and reducing food waste because consumers can cook in portions and keep unused leftovers frozen. This may be a compromise for food manufacturers and consumers who demand options, accessibility and health from their food.

Meeting Consumer Expectations With Technology

Food manufacturers have complex supply chains with many unique characteristics: tight margins, fresh products that may spoil, expiration dates on products, complicated inbound requirements and more. Getting the right volume of products at the right time, and at the right location, is no easy task. Visibility into and control of supply chain processes will allow food suppliers to address these challenges while meeting business goals. 

The best way to handle the complexity of transporting such intricately manufactured products is by using technology that provides complete visibility and control of supply chain processes like Kuebix TMS.  Food and beverage companies can use Kuebix TMS to seamlessly rate, book and track their freight. Through the direct integration of purchase orders from ERP systems into the TMS, companies can save time and improve order accuracy, ensuring that their customers’ growing expectations are met.

How Saint Patrick’s Day Became a Major Holiday for the Supply Chain

Saint Patrick’s Day has been a major holiday for Americans going back to well before America split off from Great Britain. In fact, it might surprise you to know that the first St. Patrick’s Day parade was actually held in Boston in 1737, not in Dublin. On St. Patrick’s Day, much of America celebrates Irish culture by wearing green, cooking an Irish meal, or hitting the town for a pub crawl and some Guinness. This means that supply chains have their work cut out for them to deliver St. Patrick’s Day specific products across the country.

The National Retail Federation has conducted their annual report on how consumers will spend and celebrate during this popular cultural holiday. In 2018, spending for St. Patrick’s Day reached an all-time high at $5.9 billion. The data proves why shippers of all kinds should take special care with their supply chains during this time. A large percentage of the American people will purchase something related to celebrating St. Patty’s Day this year.

Check out the NRF’s interactive infographic below:

 

What was once a religious holiday has become a widely popularized commercial holiday known for beer, crazy hats, and turning everyday items green (like the Chicago River in Illinois.) Industries ranging from the food and beverage industry to manufacturing, retail and logistics will be impacted by this holiday.

Retail and food and beverage companies need to pay extra attention to St. Patrick’s Day. After the mega-holidays of Thanksgiving and Christmas, it can be easy to ignore a holiday that wouldn’t seem to have as much impact. However, many retailers will need to stock shelves with season-specific items. This means ordering products early, getting them onto shelves quickly, and moving all product before March 17th.

Food and beverage companies that produce special seasonal items (think green waffles or green beer) should pay attention as well. Not to mention any food and beverage company selling “Irish staples” like cabbage, corned beef, or soda bread. During the weeks leading up to St. Patrick’s Day, shippers dealing with these types of products need to ensure prompt delivery and full visibility to orders to keep their customers satisfied.

Here are some more food and beverage related stats for Saint Patrick’s Day!

•     13 million pints of Guinness will be consumed on March 17

•     Cabbage shipments will increase by 70% during the week of March 17

•     Corned beef is eaten in America on St. Patrick’s Day, but the Irish traditionally eat lamb or bacon

•     Over 60 million of McDonald’s Shamrock Shakes have been sold since 1970, despite the fact that they are only offered a few weeks of the year prior to St. Patty’s day