The supply chain crisis has hit all parts of the ecommerce industry, but the food and beverage supply chain faces some unique challenges. Like many brands, LIFEAID found itself in need of a fulfillment logistics partner that could store, pick, pack and ship its vitamin-based beverages, which they sell wholesale and direct to consumers.
Brands operating within the food and beverage supply chain face common inventory management challenges, including the need for particular packing and kitting requirements, lot tracking, and specialized warehouses. LIFEAID partnered with Flowspace for its vast, FDA-registered fulfillment network, which gave the brand access to certified warehouse locations that could best meet its specific consumer demand.
The company has experienced rapid growth since implementing new supply chain and fulfillment partners. With Flowspace, LIFEAID products are optimally distributed across the Flowspace network, enabling 1 and 2–day shipping throughout the US and resulting in lower supply chain costs for the company.
We’ve pulled together the top five challenges faced by the food and beverage industry, highlighting the solutions that can help brands prepare for and overcome the common issues.
Challenges
It’s not news that the past few years have been challenging for the supply chain, and the impacts have been felt across the ecommerce industry. Here are five challenges that are unique to the food and beverage supply chain.
SKU and Order Complexity
Today’s consumers are more discerning than ever about what they eat and drink. Think: a move away from traditional soda to sparkling water. A similar trend is seen in milk and beer, with consumers seeking out alternatives that tout additional health benefits. This means that food and beverage brands are expected to offer a wider variety of products than ever before. This also means tracking a large number of SKUs.
Brands need to ensure they have access to real-time insights and inventory tracking to stay up-to-date on inventory levels, account for excess stock and obsolete inventory during times of low demand, and know when to order more.
Lack of Communication Between Supply Chain Partners
The global supply chain crisis has taught us that when multiple partners in multiple countries are involved in the supply chain, one delay or missed deadline from a distributor can throw the whole system off and create major delays. The impact of these delays are even more disastrous for food and beverage companies that are dealing with products that can spoil.
The Potential for Food Fraud
If any ingredient in a product is outsourced, there’s the potential for fraud in the food and beverage supply chain. That doesn’t just mean substituting a different product, but also using undisclosed additives or enhancement, or contaminating food. Ensuring that there’s been no fraud at any point in the supply chain is important so brands aren’t selling authentic products to their customers.
The discovery of any foreign object or undeclared allergen (nuts, eggs, soy, etc.) can trigger a recall, the average cost of which is more than $10 million, according to a joint industry study by the Food Marketing Institute and the Grocery Manufacturers Association.
Growing Regulations
The food and beverage industry has more regulations to protect the public, but these regulations can often lead to increased costs for companies. For example, the ELD Mandate requires trucking companies to electronically log and monitor a truck driver’s daily hours. This has increased delays and shipping rates, which can impact fresh and perishable foods more than other products.
But there are also multiple state and federal laws requiring producers to provide a significant amount of information to the FDA prior to importation of food, including lot code numbers and other identifiers. The best way to avoid violating these laws is to maintain accurate labeling and lot tracking throughout every stage of the supply chain.
Delays and Shortages
Many companies have recently realized how reliant they are on raw materials and products imported from other countries. The global supply chain crisis has caused factory closures and shipping delays that impact product availability.
Even before the current supply chain issues, regular delays in shipping meant big trouble for food and beverage brands because perishable products generally have a shorter shelf life than other products. Any significant disruption or delay could mean products have less time to be sold or—in the worst case scenario—are expired by the time they reach the customer.
Solutions
While the food and beverage supply chain faces some unique challenges, there are ways to overcome these so brands can future-proof their operations for whatever might come. We’ve outlined the top five solutions to challenges in the food and beverage industry.
Move Products Closer to Consumers
Some brands store all their products in a singular warehouse and ship them to customers across the country from this one location. The farther a product has to travel, the more opportunity for delays and shipping issues that can mean that product arrives at the customer’s door in less-than-perfect condition. This is especially important for food and beverage products that can be fragile or perishable—or both.
Today, smart brands are using order management software and connected networks of fulfillment centers to ensure that goods are stored and fulfilled closer to end consumers. Flowspace has a distributed network of hundreds of fulfillment centers and uses its proprietary Network Optimization algorithm to optimize your fulfillment network and determine which configuration of those fulfillment centers will offer the most optimal efficiencies to a retailer based on its own data. What’s more, Flowspace also has one of the largest networks of FDA-registered warehouses in the country.
Predictive Analysis
Savvy brands are using data, analytics, and insights in many ways, from predicting demand to personalizing offers to increase sales. This kind of data can lead to the creation of efficiencies in the supply chain. Predictive analysis allows brands to explore consumer trends and better align their inventory forecasting. It helps to improve operational efficiency and reduce costs throughout the fulfillment process and the entire supply chain. It alerts you to fraud detection (which we know is incredibly important for the food and beverage supply chain) and outages that can disrupt an operation.
Compliant Product Labeling
It’s no secret that food and beverage brands are under more intense regulations when it comes to labeling. So how can brands stay ahead of the regulations without disrupting or delaying orders? Brands should create a database that includes the characteristics, documentation, and final product specifications for each SKU so correct information can be pulled and included in a systematic way.
End-to-End Real Time Visibility
Tracking inventory in real–time allows brands to stay ahead of changes in demand and ensure enough products are in stock to meet customer’s’ demands while not overstocking and risking expired inventory, but it’s also incredibly important for food safety.
The best practice is to verify exactly where products have been, including all storage facilities, trucks, and fulfillment centers along the entire supply chain.
The Flowspace platform gives brands access to real-time inventory levels across all fulfillment centers in the Flowspace network. With a predictive view of remaining stock, brands are empowered to stay ahead of low inventory and replenishments.
Flowspace also offers full lot tracking and reporting capabilities in line with FDA and ISO regulations and certifications. This provides brands with real-time visibility into where items are stored and allows for immediate reporting on per-lot location and activity.
Lot tracking is especially important for perishable items, or inventory with expiration or best-by dates. In the event of an audit or recall, lot tracking enables brands to respond rapidly. If a brand needs to prioritize the shipment of specific product batches, lot tracking makes that possible.
Efficient Recall Management
Unfortunately, recalls can be a regular reality for food and beverage companies, so brands need to have a plan in place to deal with them. The end-to-end visibility and real-time tracking we’ve already talked about can expedite the recall process.
To better manage outbreaks of foodborne illnesses, the FSMA requires producers to use a comprehensive product tracing system to track the movement of food products from the supplier to the point of sale. Flowspace’s solution gives brands access to real-time inventory levels and lot tracking and reporting capabilities.
Flowspace offers a full range of services so brands can avoid the top challenges of the food and beverage supply chain. Different from traditional 3PLs, Flowspace enables businesses with the supply chain management they need to gain a strategic advantage over their competition and ensure their supply chains are as safe and compliant as possible. Flowspace can also help answer all of your fulfillment-related questions, such as how to account for meltable inventory, how to streamline beauty supply chain operations, and what social commerce trends should brands be on the lookout for. Get in touch today for more information.
Written By:
Allison Champion
Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.
