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Supply Chain Management: The next frontier in the Food and Beverage industry
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Monday, 09 March, 2015, 08 : 00 AM [IST]
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Bino George
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fiogf49gjkf0d Have you ever wondered what goes behind preparing your favorite recipe at a restaurant or picking up a delicious sandwich from the local grocery store? There is actually a rigorous and streamlined process that goes behind the scene in procuring the right ingredients, receiving the right quantity order, ensuring quality checks and finally dispatching to outlets across multiple locations.
Globalization, rapid urbanization and changing lifestyle has ensured that consumers today are far more demanding for choices. This has put the spotlight on Food & Beverage (F&B) companies to constantly innovate to meet these growing demands and stay ahead of the competition.
Today, Food and Beverage companies are under immense pressure to introduce new products, alter their product mix, modify packaging and increase time to market. Additionally, with most of the food & beverage produce being perishable, today’s food producers have very limited room for errors. Consider this, a wrong delivery of shipment will eventually lead to loss of business and hamper growth. Ensuring that the right product is delivered at the right time and at the right place will eventually define the business’s success. Delivering faster turnarounds is the need of the hour and companies who adopt technology to equip them tide the constant market dynamics will hold the edge.
According to a CII report, Indian players are making use of newer technologies to increase production, meet international quality standards and thereby increase profitability. However, the technology penetration has been sporadic due to large scale and unorganized nature of the F&B industry. Technology today needs to become synonymous with all business functions across industries to drive velocity, value and functionality.
The adoption of technology not only helps bridge inter-dependent business units, but also makes the supply chain super-efficient. Behind every successful business model lies a systematic and reliable Supply Chain that helps companies react to changing market conditions and swiftly adapt accordingly. Without which, neither a restaurant nor a retailer would be able to deliver quality or quantity to its end consumer. An efficient supply chain provides a strong backbone for companies and converts the obstacles into growth opportunities.
Supply Chains provide VISBILITY. It helps not only in procurement and delivery but also in becoming more responsive to capitalize on new opportunities. Given the volatile nature of business, the entire process of production, procurement as well as distribution can be extremely complex. Hence customers need to be informed of timelines and maintaining high level visibility becomes critical to coordinate effectively on all supply chain events. This will further allow companies to leverage maximum output from their facilities, ensure smooth delivery of product, minimize wastage and keep the cost significantly down. The responsibility therefore lies on companies to understand the market conditions and build a strong backend supply chain. The key challenge is to get Real Time Company and market visibility that will align businesses to address these internal and external factors.
Food safety and security are some of the major concerns in this industry, to make products safer. Hence, it is imperative that organizations also make their suppliers’ products and goods equally compliance proof to ensure that the entire ecosystem is safe. With constant changes in regulations and standards, supply chain systems also need to evolve at a faster rate to adapt. Any issues with regards to non-compliance and Food safety regulations can severely hamper the company’s brand image. Thus ensuring compliance at each stage from production, processing, and distribution will equip organizations to stay competitive and grow faster.
Food and Beverage companies need to listen to what their customers’ demands are. These companies are under tremendous pressure to respond to customer demands comprising of product quality, pricing, altering product mix or introducing altogether new products. To meet this burgeoning requirement and stay nimble, companies are increasingly adopting Cloud based systems, which provides complete yet flexible solutions. Companies can scale their business operations on-demand with faster implementation time, lesser resources and lower investments.
Some of the benefits provided by Cloud systems in the food and beverage industry are:
- Gain Agility: With increasing complexity of the business environment, cloud based SCM can give real time data accessibility across location & platforms. This will make organizations stay lean and flexible while expanding business to new locations
- Cost efficient: As all the data will be processed from the cloud, companies can reduce the amount they spend on expensive IT infrastructure like servers & hardware. Organizations can enhance resource utilization and focus on key business areas.
- Secure and reliable: A well-managed supply chain system follows best-practices in application, network, physical, and operational security, to ensure data security in a secured environment
- Always stay current: Cloud based solutions provide the most recent features and functions. Organizations can always stay current with their technology innovation.
Additionally, hosting SCM on Cloud provides a breakthrough in today’s ‘always-on’ digital world. Companies can significantly transform their business impact and alter supply chains by incorporating mobility, data analytics and drive conversations on social media platforms. This is redefining the way traditional SCM was managed and organizations today are well equipped to address an increase in data volumes, cross platform conversations with stakeholders and enable key business decisions based on real time insights. For example: In the Quick Service Restaurant (QSR), which follows bulk orders, the demand is usually very high and companies are expected to deliver high quantities at short-intervals. In such a demanding and unpredictable scenario, the back-end process needs to be streamlined to deliver higher quantities at shorter intervals. A Cloud based supply chain management solution with mobility and social media integration will ensure faster time-to-market with limited resources.
Enterprise mobility and BYOD’s intersection with the Supply Chain System has brought about visibility, transparency and increased traceability; aspects which apply to supply chain management. Additionally, with employee’s bringing their own device and ease of accessing information from the company’s shared cloud system, the inventory cost incurred is nominal. Companies can leverage this and derive maximize profits in real time, collaborate more effectively with partners, customers and suppliers. Further, it helps to analyze their supply chain, operational excellence and devise a plan best suited to the company.
For the food and beverage industry, modifying and enhancing their technology Infrastructure is a major issue. The on premise technology environment can be extremely inflexible to fulfill demands of different business verticals. However, since changing the entire system is not feasible, new technology solutions like Cloud can play a critical role in bridging this gap. Though availability of technology solutions is not a concern, an appropriate technology partner can act as facilitator in shaping organizations IT infrastructure for future growth.
Despite all the benefits, companies do face challenges like rigid IT infrastructure, unforeseen market challenges, customer demands and compliance. F&B companies in India are fast realizing the importance of the supply chain. While the challenging business environment provides numerous new opportunities, organizations should develop advanced SCM to not only manage existing business but also tap newer markets. A state-of-the-art SCM should be at the heart of strategic focus for an organization and a seamless collaboration with all resources across all channels will deliver business value and growth.
(The author is head pre-sales, Infor India)
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