Implementing Centre of Expertise (CoE) for Food Supply Chain

Written by David Wong Khai Leong, ADPSM

Implementing Centre of Expertise (CoE) for Food Supply Chain

Written by David Wong Khai Leong, ADPSM

by David Wong Khai Leong, ADPSM

In today’s digital age, globalization offers numerous opportunities. The supply chain process has to be of greater efficiency, with better analytics and insights. This is where aCentre of Expertise (CoE) becomes crucial for any business. This is the next step towards Supply Chain Excellence, with higher professional capabilities in the Food Industry, as shown in the diagram below.

Diagram

Diagram created by David Wong Khai Leong (2019)

Centre of Expertise (CoE)

A Centre of Expertise (CoE) is a centralized location that manages supply chain operation with the guidance of the local and regional governance standard and requirement. Understanding local Tariff, Local Labour condition and Political environment in a location where business is being conducted with Supply Chain processes. To help deliver the best practices necessary for the industry it is implementing, so that it will maximize inventories distribution to prevent man-hour lost on lead time, procurement functions based on operational requirement and customer needs within the crucial business activity timeline. It is also a continuous investment in research and expertise, to create partnerships with national and international business association to develop solution and facilitation that engages in programmes by adapting them to the specific needs of the countries of operation. This benefits the customer, consumer and company in the long run.

Curation of Policies and Records

The collection of local Policies, Procedures, Processes, and Records will then meet the requirement of the Operation, while it is still continuously improving the system to provide a solution. Another crucial factor is to gather data generated by analyzing current events and purchasing a pattern to better determine the needs of the consumer. This important information will then improve the Supply Chain Operation that will increase efficiencies and drive growth, to also facilitate and improve distribution capability by utilizing the full potential of the limited resources, thus maintaining resource sustainability within the company operating strength, which will also positively impact R.O.A. (Return on Asset). This is one of the main reasons for implementing the Centre of Expertise (CoE).

With the advancement of Digital Technology, 5G Network, emerging Internet Protocol (Version 9) with better connectivity. Food Industry is moving towards a more technologically platform with the latest Internets of Things to be connected immediately to assist and understand the business needs, and it can visualize and view things from the consumer or customer perspective and trends. This with the predictive data analysis module, will anticipate consumer request and able to place arenewest products on “Speed-to-Market” initiative too. And with the Discounted Cash Flow Analysis, it will have a positive impact for the company to gain Supply Chain Surplus. As ERP, Inventory and Point of Sales (POS) solutions improve over time, it can expect that more businesses to adopt criteria similar strategy to manage Total Cost Ownership (TCO) that will minimize wastage, operation downtime and opportunities cost it may involve. This will allow company to focus on their core competency, which will lead to greater customer satisfaction over the quality received and benefit.

Procurement Excellence

The critical importance of Procurement functions is to ensure supply assurance with continuity. There is a need to move to a model where was taken company can train each specialist into Category expert. This is where Category Managers and Executive elevated from their current work processes to further extend to have a full understanding of their categories inventory, including historical purchases, contractual terms, sourcing capabilities as well as industry knowledge. They will also be involved in Inventory Management programme, Budget Planning, Catalogue Management, Forecasting, Cost Allocation, Strategic Sourcing, Contracting and Supplier Relationship Management (SRM).

Supply Demand Synchronization

Just like in other industry, a trusted relationship with suppliers is very important as they are our strategic partners that will bring value to both internal and external customer. This Strategic partnership with key suppliers that have collaboratively well, will drive more efficiency and cost competitiveness ahead of any competitor. With line of sight is in place and when Demand forecast expected from company, this will activate Supply Demand Synchronize function which will enable the supplier to have their resources plan and readily available accordingly when requested, with qualified resources and unique pricing model accustom to the company requirement. Another important part of the Supply relationship management is to categorize into segment where different suppliers is incorporated into different segment, to identifying opportunities to develop productive and service agreement, implementing agreements, measuring performance and generating supplier reports.

Data Analytics of the Marketplace

The need to regularly engage and evolve with consumer needs is crucial as the consumer are changing gradually quicker when the trend and interest changes. In order to be successful, companies have to adapt and make a Sourcing and add value to consumer in the Food industry. Given the new data management solution, it will enable the company to effectively manage its data purchases and reduces duplicative and maverick purchases. There will be valuable insights from the data analysis of not just purchase pattern, but also the trends in the marketplace. Another important element when sourcing for a product or services, is to review its requirement, function and design before deciding if it is to be “Made or Buy” or to supply a “Speed-to-market” products or services basis on the needs of the business model.

Warehouse Management & Inventory Control

Food Hubs with warehouse automation can be established to provide an avenue of opportunities for distribution from farmer to wholesaler, food processors, Food retailers (Grocery Minimart, Restaurants) Small and middle-size enterprise can tap to expand to a larger volume through aggregation.

Inventory traceability in Food Industry Supply Chain is critical, placing a perpetual inventory system is essential. With the Centre of Expertise in place, it will play an important role of getting the right supplies to the right location seamlessly where freshness couples with food expiry time-line and food safety is of great importance.

As more technologies and effective processes become commercialized, companies are understanding the environmental impact as well as the cost savings opportunities and long-term gains. Company placing effort and are now more cautious when comes to Designing packaging that must be more sustainable and environmentally-friendly. A circular economy further aids in the efficient use of resources and the re-purposing of products throughout the supply chain.

The Logistics Function of Distribution

The importance of logistics now becomes another equally critical criteria for the supply chain flow, the location of Logistic services preferably a Logistic Hub with well-govern policies and regulation, in a fair trade-practice with an effective local government is mostly sought of. The stability of political and labour union in that chosen location will bring about supply chain efficiency and security, whereby reallocation of product can be trans-ship and transit smoothly especially cold-storage food products from a host location to another customer location locally, regionally or globally that equipped with appropriate storage facilities. With the scale of economy in place, it will ultimately reduce the final cost of the food product, generate better revenue progressively.

Risk Management through HACCP

HACCP refer to the Hazard Analysis Critical Control Points, and is essential to Food Safety. It also ensures Reliability and Assurance in the Food Industry Standard.

The HACCP system is required for handling food product and require food manufacturer to actively adhere to its 7 principles on food safety as follows:

1. Conduct a Potential Hazard Analysis
2. Identify the Critical Control Points
3. Create Preventive Measures using Critical Limits
4. Monitor Critical Control Points
5. Establish Correction Action
6. Verification
7. Record-Keeping

Conclusion

Centre of Expertise is an Essential Business Strategy towards the next millennium of Supply Chain. Businesses must understand its importance and its roles that will contribute to the overall performance of an Enterprise. There is a need to redefine and refine the business process flow, that will be critical for survivability in today Globalization Business model. With continuous advances of Technologies in the digital revolution and creative disruption in Industry 4.0 and beyond, Centre of Expertise can leverage on it and progresses into the next phrase of Industrial Standard and Requirement.


References

Economic Development Board. (2017). “A Hotbed for Cold Chain Logistics”. Retrieved from https://www.edb.gov.sg/en/news-and-resources/insights/innovation/singapore–a-hotbed-for-cold-chain-logistics.html, accessed on 28/02/2019.

Ivy Ng Lian Leck, DPSM. (2018). “Six Key Strategies to Avoid Procurement Fraud”. Retrieved from SIPMM: https://sipmm.edu.sg/six-key-strategies-avoid-procurement-fraud, accessed on 28/02/2019.

Jamal Bin Idi Ahmad, DLSM. (2018). “Essential Techniques for integrating warehousing with Transportation”. Retrieved from SIPMM: https://sipmm.edu.sg/essential-techniques-integrating-warehousing-transportation, accessed on 28/02/2019.

Michelle Lee Ean Wei, DLSM. (2018). “Digital Technology for Cold Chain Distribution”. Retrieved from SIPMM: https://sipmm.edu.sg/digital-technology-cold-chain-distribution, accessed on 28/02/2019.

Wong Kok Fu, DLSM. (2018). “Data Warehousing for Integrated Logistics”. Retrieved from SIPMM: https://sipmm.edu.sg/data-warehousing-integrated-logistics,accessed on 28/02/2019.

Wong Kwee Meng. (2016). “The Supply Chain Quest for Excellence”. Retrieved from http://supplychainasia.org/the-supply-chain-quest-for-excellence, accessed on 28/02/2019

About the Author: David Wong has substantive experiences in the professional field of procurement and supply chain, specifically in the Food industry. He is a member of Singapore Institute of Purchasing and Materials Management (SIPMM). David holds the Diploma in Procurement and Supply Management (DPSM) from SIPMM. He completed a leadership course, the Advanced Diploma in Procurement and Supply Management (ADPSM), on April 2019 at SIPMM Institute.

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