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.