In the food and beverage industry, managing every stage of production, from the storage of raw materials to processing, packaging, storing and shipping the final product, is even more difficult when you factor in variables such as freshness, batch control, and allergen or organic requirements.
On top of that, the supply chain for food and beverage manufacturers is complex and delivering on time is absolutely critical. Growers, harvesters, processors, subcontractors, as well as those packaging, transporting, holding and selling the product add time to the delivery calendar. Ingredients can be sourced from local, national and even global suppliers. Some also work with brokers and agents to source raw materials. And at each of these organizations, additional certifications or validations may be required.
Without a reliable and integrated Distribution Requirements Planning process – or determining what you need and when to meet your customers’ needs – you risk inconsistent product quality, production delays, food waste or shrinkage and the inability to adapt quickly to unexpected disruptions.
The pandemic showed the extreme of what can happen when supply and demand don’t align: empty grocery store shelves and vendors with too much product. Another recent event – the widespread power outages in Texas – also had a great impact on the supply chain, this time affecting the supply rather than the demand and shutting down plants across the region.
Building a more resilient supply chain means you’ll be more adaptable and ready to take on unexpected changes. Meeting demand for product and delivering the quality the consumer expects is the result of an effective Distribution Requirements Planning process. The goal:
- Optimize workflow to get your products from point A to point B efficiently and on time.
- Gain confidence in setting accurate delivery dates so your customers and partners can meet their own demands.
- Minimize shortages or overstock because you know what’s in your warehouse and where it is destined at any given time.
- Reduce transportation costs by optimizing Inbound and outbound shipments, allowing for efficient staff scheduling, and proper load building.
This level of planning depends on accurate sales forecasts, as well as visibility into the transport of ingredients that go into your products. All of this is made more complex in food and beverage because manufacturers in this industry have to manage multiple variables at once: expiration dates; freshness and quality of raw materials; temperature of all the materials and products; batch control; and even the weather, which affects timely transportation.
The costs of not managing your supply chain effectively from start to end are steep. If you don’t fulfill according to your obligations, you risk delayed deliveries and reduced customer satisfaction. It also opens you up to safety or compliance risks due to lack of total visibility of the supply chain. In addition to the costs associated with inefficiencies and recalls due to safety issues, food spoilage adds billions of dollars in costs each year. Food waste is estimated at roughly 30% annually, according to the U.S. Department of Agriculture. This waste in the food supply chain resulted in a loss of $161 billion in 2010.
How Technology Helps
It’s far too difficult to keep track of these nuances in a spreadsheet. And anything in the supply chain that requires someone to stop and think adds time and the possibility of mistakes being made.
With the right technology, a manufacturer can effectively:
Optimize the useful life of ingredients. Minimize the time raw materials spend in the supply chain. By conducting inventory management and shelf-life tracking through Microsoft Dynamics 365, you’ll be alerted to rotate inventory, so you never miss an expiration date. Storage requirements are also critical, not just in your own facility but along the supply chain, including climate-controlled, refrigerated, humidity-controlled or frozen environments.
Prepare for unexpected scenarios. Hurricanes and inclement weather or a vendor going out of business are all situations that could have a severe impact on your supply chain. A master planning solution can help you model scenarios and responses to minimize potential downtime in the case of an unexpected event.
Ensure on-time delivery. With improved AI-enriched demand forecasts – fueled by supply chain, sales and marketing pipeline data – you can minimize the accumulation of unwanted inventory and avoid supply disruptions. That means lower costs while delivering better customer service. Advanced Warehouse and Transportation modules allow for handling and shipping your products with the greatest efficiency while providing total visibility to where shipments are at each step of the delivery process.
Track and manage multiple vendors. Food and beverage manufacturers also often work with multiple vendors at once for a single product. A solution such as Microsoft Dynamics 365 Supply Chain Management can help you communicate with your vendors with vendor portals, vendor collaboration or EDI. Work with your vendors to plan supply and production, ensuring the right resources are in the right place when needed. Features include a global view of inventory position across locations, and near-real-time on-hand inventory tracking.
Maximize capacity utilization. With the right planning and scheduling tools, you can allocate and get the most from your resources, such as workers, machines, work centers, plants and more to reduce downtime and speed delivery.
Microsoft Dynamics 365 Supply Chain Management can support the most sophisticated supply chain by using multiple criteria, such as product tracking, storage space and quality control. Master planning with Dynamics 365 Supply Chain Management allows you to determine and balance the future need for raw materials and capacity to meet company goals. Microsoft D365 offers a complete ERP solution to manage all aspects of your food business.
