The food and beverage distribution industry has been in turmoil for the past few years. Mass consolidation at every level has made for a tougher market, with challenges on seemingly every front.
Understanding and Meeting Demand
Perhaps one of the largest issues faced in the food distribution industry is that of supply and demand. Food and beverage trends seem to change more frequently than the weather. Consumer tastes, preferences, and interests can truly change on a dime. Avocado toast is out, kale is in. One day, consumers might be craving high-protein fare, another day it might be on-the-go nutritional snacks.
This issue, combined with potential surpluses or shortages from suppliers, is causing many food and beverage distributors to fall behind as major transformations take place in the industry. Additionally, incomplete or inaccurate demand projections can spell disaster for a distributor. Companies need detailed reports that show exactly where demand is coming from, as well as demand data that is easily accessible across the organization. These detailed reports will enable supply chain partners, owners, and managers to make quicker, smarter decisions.
Controlling Inventory and Costs
The food and beverage industry is extremely time-sensitive: many products need to ship and be in store by a certain date or they’re useless. So distributors must have a highly visible and effective system to control and monitor inventory data in real-time. Automation can dramatically impact all phases of inventory management, including counting and monitoring of inventory items; recording and retrieval of item storage location; recording changes to inventory; and anticipating inventory needs, including inventory handling requirements.
This is true even of stand-alone systems that are not integrated with other areas of the business, but many analysts indicate that productivity and hence profitability gains that are garnered through use of automated systems can be further increased when a business integrates its inventory control systems with other systems such as accounting and sales to better control inventory levels. This type of system also helps managers make better purchasing decisions that’ll reduce inventory costs while also moving time-sensitive products quickly and effectively.
A warehouse management system (WMS) is software and processes that allow organizations to control and administer warehouse operations from the time goods or materials enter a warehouse until they move out. Operations in a warehouse include inventory management, picking processes and auditing.
For example, a WMS can provide visibility into an organization’s inventory at any time and location, whether in a facility or in transit. It can also manage supply chain operations from the manufacturer or wholesaler to the warehouse, then to a retailer or distribution center. A WMS is often used alongside or integrated with a transportation management system (TMS) or an inventory management system.
Managing Accounts Receivables More Effectively
During start-up and slow months, many distribution companies will often be pressured to hand out “deals” with better terms for buyers. This can impact cash flow severely and make distributors fall behind in paying sales reps or suppliers. So managing accounts receivables can quickly make the difference between staying afloat or sinking fast.
Create a solid credit policy will managing your accounts receivable without a credit policy, If you have a policy in place, it’s probably a good time to review it. Revise your credit policy to include instructions about qualifying a customer for an account. Your credit policy should also include information about how accounts are to be collected and when they should be declared bad debt. The policy should lay down the law about other aspects of accounts receivable: early payment discounts, late payment penalties, and even the text for reminder notifications.
Few companies invest heavily in the technology they use to manage accounts receivable. Many smaller businesses use the basic features of the accounting software they’ve adopted, such as QuickBooks or another program.
Not all technology is created equal, however. Upgrading your systems and programs could help you manage accounts receivable more effectively. Newer technologies allow you to do things like automate reminder messages to send out to your customers. They’ll also do a better job of tracking who has paid and who hasn’t.
Optimizing Delivery Schedules and Routes
To stay competitive and reduce waste, distributors within the food and beverage industry should be constantly seeking more effective means for delivering inventory to end-retailers and reducing expenditures on fuel costs, as well as labor costs involved in loading, unloading, and (depending on the distributor) merchandising.
One effective way to achieve scheduling and route optimization is to use modern communication technology and tracking equipment. New technologies enable distributors to be more responsive to supplier and vendor demands by streamlining interactions and enabling partners to make quick changes to their scheduled deliveries. Some distributors may even consider offering discounts reflective of inventory they’re trying to unload in a given area to further optimize delivery schedules.
Route Optimization takes the work of designing optimal delivery routes out of the hands of dispatchers, allowing them to spend their time on other important tasks. By intelligently factoring the capacity of available vehicles, the cost of drivers (whether by hour, mileage, etc.), customers’ locations and promised delivery time windows, the system helps companies manage their distribution in the way that’s most efficient and cost-effective.
Route Optimization software supports the use of an in-house fleet as well as third-party fleets, or a combination of the two. It involves the automatic or manual selection of certain preferences, such as the specific time period they want to optimize routes for. The system then distributes orders across the designated fleet(s) and calculates the best routes and vehicles for ensuring that deliveries reach customers on time
Creating More Collaborative Solutions
The food and beverage industry requires lots of input from a variety of players, while transparency and quick action are needed to succeed. Implementing effective software communication tools will enable a smoother transaction of products between manufacturers, warehouses, and retailers so that everyone within the supply chain is best able to meet customer demands on time.
Leading (or being a part of) a successful team is a demanding task. It is important to be able to quickly and easily have discussions to provide clarification and direction. Having the right info is crucial, of course, but having it at the right time is ideal, and these tools are here to help you get things done, through clear and timely team communication.
Today, so many communication apps are inexpensive (or free)—it’s a no-brainer for agencies, studios and startups who need to coordinate the efforts of fast-paced projects performed by distributed teams. In fact, many young companies rely heavily on work communication apps until they’re ready to scale and upgrade to more comprehensive project management software.
Communication tools are apps that act as a virtual, online meeting room for team members. They help your team have conversations, exchange vital project data, update others with progress, share files, and create work collaboratively.
Based on what is gathered in this report, businesses need to be able to develop the foresight to predict market trends. This is especially true for the food industry where products have a short shelf life. Therefore, communication is also crucial for food products to be quickly stored depending on their storing requirements. Such products must be swiftly retrieved and delivered to customers in the shortest time possible. Of course, these are made possible with the aid of a well-structured WMS, with a well optimized delivery schedule and distribution route.
Over the years, warehouse integration and food distribution are becoming increasing competitive due to globalization of markets and rapid changes in consumer demands. Many businesses are under pressure to adopt new means of improving efficiency via technological advances, while others try to optimize their processes do as to reduce their overall operating costs.
In the pursuit of technology and driving down costs, business however ought to keep in mind that there should be a balance between efficiency and costs. For example, investing in new technology should not ultimately increase the business’ operating costs, and vice versa. Such is the key of overcoming the challenges of warehouse integration and food distribution.
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Kenny Johnston. (2019). “Account Receivable Management”. Retrieved from https://www.billgosling.com/blog/how-to-manage-account-receivable-more-efficiently, accessed 13/09/2019.
Leong King Fatt Cyrus, DLSM. (2019). “Integrated Logistics Practices for the Food Industry”. Retrieved from SIPMM: https://sipmm.edu.sg/integrated-logistics-pratices-food-industry/, accessed 13/09/2019.
Midlothian Economic Development. (2018). “4 Food Distribution Industry Challenges and How to Overcome Them”. Retrieved from https://info.midlothian-tx.org/blog/4-food-distribution-industry-challenges-and-how-to-overcome-them, accessed 12/09/2019
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