When you’re the largest distribution market in the world, you’re always under a microscope. Valued at U.S. $7-trillion, the global Food and Beverage (F&B) industry faces a myriad of challenges beyond just the safety of the food supply. There are the issues of urbanization, the demands for local ingredients and fresh food, a growing regulatory environment, and the expectations of sound sustainability practices. It’s survival of the fittest, and not just for the produce.
So how do F&B distributors meet these challenges while concurrently improving efficiencies, managing costs and adding value for their customers?
Here are three things distributors ought to be thinking about:
Be Attuned to Customer Requirements and Ready to Deliver a Solution
For example, when the customers of a large regional F&B distributor demanded fresher and locally produced, pre-packaged vegetables and fruits, the company recognized that it needed to address these demands head-on. So it partnered with another local company to build a 36,000-sq.-ft. greenhouse near its distribution warehouse so that local farmers could provide a more dependable supply of fresh produce. It’s no surprise, then, that this enterprising company has since been recognized as an innovative thought leader.
And it’s not just the larger distribution companies that this impacts. All distribution companies need to be more attuned to their customer needs in order to continually adjust their procurement and delivery strategies to best meet ever-changing customer demands. That may translate to partnering with small, local farmers and serving in a 3PL role to on-board them into the larger supply chain. That means knowing the shelf-life requirements of selling goods to a high-volume food store chain vs. those establishments that have a much lower volume, like your neighborhood corner store. Technology can offer visibility into the process and intelligent tools to rapidly alter business operations, but being attuned to customer requirements is the key.
Enforce Tight Integration between Workforce Automation and Warehouse Management Systems
To no one’s surprise, the margins on food items are very low. That’s why it is imperative to form a tight bond between technologies in a distribution organization. Newer technologies, such as warehouse automation and hands-free picking of inventory, are driving operational efficiencies, but a strong WFA/WMS bond can also help ensure that processing is done efficiently and accurately since there isn’t money to deal with poor picking strategies, incorrect shipments and returns.
In addition, the “fresh” phenomenon is forcing smaller and more frequent deliveries to customers, and that adds a layer of complexity to the supply chain. With tight integration among warehouse operations, workforce automation, load building, and transportation management systems, distributors can even segregate goods on a pallet based on shelf and aisle locations for a particular store. Doing so dramatically reduces shelf-stocking time and allows store employees to focus on more strategic responsibilities – like assisting customers and improving the overall customer experience.
Insist on Clearly-defined Strategies from Customers
Paraphrasing a line of thinking that business management guru Tom Peters asked during one of his recent keynote presentations, I would like you to consider the following: How do you create consistent supply chain management practices and map these to ever changing consumer purchasing behaviors?
The answer involves working closely with customers to understand their vision and to build an integrated strategy that supports the extended supply chain. Technology is not the solution – it’s an important enabler of the strategy, and is most valuable when applied with firm knowledge of how best to address the overall goals of a company.
Distributors should consider sharing marketplace trends, relating experiences, and helping their clients clearly delineate their strategies. These are among the most important things they can impart to their customers.
Then they need to learn what’s driving their customers (besides profitability) – is it sustainability, the safety and security of their supply chains, risk mitigation, customer service? Once known, an intelligent strategy can be implemented.
Reflecting on these questions, as well as the best practices addressed earlier, can help distributors be that “breath of fresh air” their customers so desperately require in the rough and tumble world of F&B.
Bill Tomasi is Global Director of Product Management at IBS, a world leader in distribution resource management software, providing ERP and WMS business applications for the wholesale, distribution and manufacturer/distributor markets. For more information about IBS, or to contact Mr. Tomasi, email firstname.lastname@example.org.