The Complete Guide to Food Supply Chain Management
What Is a Food Supply Chain?
The food supply chain comprises all the stages that food items go through before reaching the consumer. It encompasses all the processes that transform food from farm to fork, including manufacturing, administration, utilization, and discarding. Like any other supply chain, the food supply chain uses raw materials, packaging items, and transportation.
Some foods that are to be distributed fresh go right to the packaging stage, while others that need further processing take a different direction. But they all ultimately reach the consumer, which requires a proper system. All food supply chain stages are interdependent, making it essential to streamline the entire process to optimize costs and avoid inefficiencies.
All these subsystems work together to get the food from farm to fork all over the world. The whole process ensures that all kinds of food items are available wherever needed, safe and timely. So, food supply chain is essentially the story of how your food reaches you.
How Does a Food Supply Chain Work?
Any food & beverage you can think of—ice cream, vegetables, chocolate, beer—goes through various food logistics and supply chain stages to reach you. Below are the five generic stages of any food supply chain, including production, storage, food warehousing, and distribution:
Production: This is the beginning of the food supply chain, where the food is sourced from in its raw form. It is either grown on the farm or produced following the local and global food safety, appearance, and quality guidelines.
Handling & Storage: This is where the food is harvested and taken through other steps like washing, cleaning, and packing for storage. After this, while some food—such as raw potatoes—can directly be packed and transported, others are sent to the plant for further processing. Think of potato chips and fries. The handling and storage depend on the type, source, and destination of the food.
Processing & Packaging: At this step, the food products are processed from their raw form to the next level (for instance, potato chips or flavored yogurt) and checked for food safety standards. After this, they’re moved to the next stage—packaging. They are then packed up for the next step in the food supply chain.
Distribution & Retail: By this stage, the food is packed and ready to be shipped to its destination—markets or other segments of the food industry. The final food product mostly travels in a combination of transportation modes, including air or ocean. The distance your food travels to reach you is called a “food print.”
Consumption: This is the last stage of the food supply chain. It then reaches the end customer who consumes the food product.
A well-run supply chain decreases transit time, enhances customer service, and saves money.
What Is the Difference between a Regular Supply Chain and a Food Supply Chain?
Like a regular supply chain, the food supply chain also has similar stages—production, warehousing, and distribution. But there is one thing that sets the food supply chain apart—consumption. This brings in some significant differences that distinguish it from the regular supply chain, which are:
The Fresh Produce Perishability Factor: A food supply chain is more delicate and vulnerable than a regular supply chain since it carries perishable items. Thus, even slight delays matter a lot. For instance, a delay in delivering a shipment moving furniture would delay things, of course. But a delay in delivering a shipment carrying fresh fruit would mean the fruit not reaching in its original quality. Even too much temperature change, movement, or jerks during transportation could spoil some food items. This makes food supply chains more difficult to manage, especially since the buffers against demand variability are severely limited.
The Food Cold Chain: When it comes to managing frozen food logistics, it is even more complicated than fresh food logistics. Along with the regular perishability, frozen food also brings precise temperature requirements, making the supply chain hard to manage.
The Safety and Quality Factor: The food supply chain involves production, distribution, and consumption activities while keeping food safety and quality in check. One of the major differentiators of the food supply chain from other supply chains is the importance of food quality and food safety.
Global Operations are Even More Complex: As a food supply chain scales to a worldwide operation, the complexities compound. The varying food safety and quality compliances across countries force-shift the focus from usual supply chain operations to food safety compliance issues. This demands for every supply chain decision to depend on the ultimate goal—safety and quality.
What Is Food Supply Chain Management?
Like regular SCM (Supply Chain Management), food supply chain management typically involves managing people, assets, and information movement. However, a major difference is that food supply chain management is more complicated. That’s because timing plays a vital role since it affects food safety and quality. Moreover, keeping the supply chain low-cost with limited resources makes it trickier.
Irregularity and unreliability cause delays and higher costs and increase risk when dealing with food and beverage products. Several factors could lead to irregularity in a food supply chain management, such as transportation issues, delays due to bad routing decisions, unmet carrier or vendor SLAs (Service-level Agreement), and cold chain management problems. Most of these factors are interdependent and need end-to-end visibility to manage well. A well-managed food supply chain is essential to ensure compliance with food safety and quality regulations.
Improper food supply chain management could even destroy a company’s reputation. For instance, if there’s some food-borne illness due to a spoiled food item, the company would not just have to pay for the immediate consequences but also must do a lot of damage control, image repair, sometimes completely rebuild its brand, and even take care of lawsuits. Thus, each stakeholder in the food supply chain, from farmers to distributors, must efficiently contribute to food supply chain management.
The objectives of food supply chain management:
To ensure quality and safety compliances and SLAs are met locally and globally.
To minimize costs throughout the food supply chain by addressing supply chain and logistics issues in time.
To avoid delays and quality complaints by enhancing communication between production, processing, logistics, and other departments.
To optimize inventory levels.
To reduce transportation delays by better managing shipping, documentation, and customs clearance
In short, food Supply Chain Management is a systematic approach to improve the whole farm to fork process by managing productivity, food processing, quality, and raw material and inventory flow.
What Are the Challenges in Food Supply Chain Management?
A food supply chain has additional challenges along with the standard supply chain challenges. These challenges include something as simple as basic logistics issues that turn into more complicated ones, such as fragmented food supply chain issues, safety & quality issues, fraud and adulteration, and spoilage. It becomes even more challenging when dealing with fresh produce. It often travels long distances in various carriers to reach the consumer and still must retain its freshness. Even fundamental coordination issues could contribute to delays that translate into spoilage and other order fulfillment issues.
Here are some of the significant challenges most food supply chain professionals face:
Condition Excursions: During transportation & transshipment, most transport losses in a food cold chain and fresh food supply chain are primarily related to temperature and humidity excursions. Improper cooling, delayed cooling, or refrigeration equipment failure could contribute to these losses. While data is usually available, it is often delayed and scattered. Timely and integrated data can help spot and correct anomalies beforehand, preventing spoilage.
Damaged Packages: Excessive vibration and improper handling during transportation or even while loading and unloading cause significant damage to food packages. Improper handling and damage could even cause early spoilage in cold chain items like meat and ice cream and fresh produce items like fruits and vegetables. Damaged food packages could be one of the major causes of the high cost of food supply chain management.
Safety Issues: Food supply chains must abide by several food safety regulations. These include packaging & sanitation recommendations and transportation, warehouse, and refrigeration equipment regulations. Without abiding by these regulations, supply chain management cannot function. For instance, if your truck and container security fails to comply with ISO requirements, you wouldn’t only be facing operational difficulties but also financial and legal implications.
High Supply Chain Maintenance Costs: Although any supply chain faces this challenge, maintenance costs are higher for a food supply chain. These maintenance costs comprise expenses that ensure the right conditions, quality, packaging, and transportation. It amplifies when dealing with food cold chain and fresh produce supply chains since they carry condition-sensitive items.
Improper Flow of Information along the Food Supply Chain: With all the challenges of a regular supply chain and those of the food supply chain combined, information sharing becomes more important. With a lack of information sharing, all you get is inaccurate forecasts, inadequate capacity planning, uncertainty, and indecision. Given the condition sensitivity, a food supply chain wouldn’t take a minute to go haywire without timely decision-making. This happens because supply chain information often lies in the hands of various custodians, leading to surprises upon arrival or delayed shipments.
How Can One Address Food Supply Chain Challenges?
To manage and control a food supply chain, you need to ensure a transparent and unbroken chain of communication throughout the supply chain. A very recent example of one such fresh food supply chain would be Amazon Fresh and its revolution in food delivery services. They run a lean and well-controlled supply chain that ensures that food items are timely and fresh when delivered. Here are some ways one can meet food supply chain challenges:
Use Data to Run Faster, Flexible, and Precise Food Supply Chain Operations: Running a lean supply chain is a must for any industry, especially for fresh food products and food cold chain items. Many items (like fresh fruits or fresh milk) have a very short shelf life. Thus, just as slight changes in temperature or humidity could compromise the quality, the slightest reduction in transit time could also benefit considerably. You can improve actionability using predictive analytics, image recognition, timely alerts, process automation.
End-to-End Location and Condition Data: Information transparency isn’t helpful when the information isn’t used for better decision-making. For this, you need end-to-end real-time data on inventory location and package condition. Having a system in place would bring more transparency and allow food supply chain managers to have better control over the supply chain. Once the data is end-to-end, it would even work for intermodal/multimodal shipments, which is usually the case for global businesses.
Better Maintenance for Cost Reduction: Maintenance costs can increase owing to many factors—substandard packaging, mishandling during transportation, and lack of adherence to food safety regulations and quality standards. To minimize these costs, you can take steps such as adding more service locations, optimizing reusable packaging, monitoring the food supply chain in real time, improving on-time delivery, and performing careful quality checks. These measures would reduce the overall maintenance costs and the time and effort that goes into damage control, handling late deliveries, and managing damaged packages at arrival.
Enhanced Information Transparency:With more information transparency along the supply chain, reducing food loss attributable to transportation becomes easier. Along with transparency, there needs to be a continuous flow of data across the supply chain. This will make sure no anomaly in the food supply chain goes unaddressed. Imagine if you can get to know if the refrigerator’s temperature dropped by a degree before the chocolates traveling in it start melting. It would be easier to control this proactively by contacting the driver or carrier to check things and repair if possible.
To get the most out of any food supply chain management plan, food logistics professionals need to focus on significant efficiency drivers in the supply chain. These drivers include food wastage reduction, cost minimization, and safety & quality management. To achieve this, you need an end-to-end food supply chain visibility solution that provides dependable location tracking and food condition monitoring. Such a system would enable you to make better food supply chain decisions.
Why Is It Important to Have Visibility into Food Logistics?
Food supply chain management has always been complicated and even more so after restaurants and food businesses opened up worldwide. With new restrictions, more regulations, and stricter quality compliances, food logistics professionals struggle to continually up their supply chain management game. Increasing visibility and transparency will help F&B companies, fresh produce suppliers, and dairy businesses adapt to this disruption. By doing this, they will be better able to manage inefficiencies in food logistics. Lean food logistics and supply chain operations would also mean less food waste and addressing food safety matters in time.
Efficient data collection, more transparency and communication, better analytics, and continuous tracking can provide long-term visibility into the supply chain. Having constant data flow also ensures having historical analysis that helps in decision making. Once the supply chain has well-set policies to maintain visibility, it’s easier to gain insight into food logistics problems and optimize inventory.
Why Visibility Matters in Food Logistics
Visibility allows food & beverage companies to use supply chain information to have better control and timely deliveries. It gives consumers much more transparency on the safety and quality of the food. By utilizing real-time visibility, you can better monitor food quality, temperature, and humidity in transit and storage. All this ultimately helps prevent spoilage & delays and promptly addresses food logistics and supply chain problems before they arise.
Getting complete visibility allows the supply chain participants to focus more on audits and compliance than trivial issues. In a nutshell, visibility helps improve the entire food industry—from farm to fork.
In the absence of visibility, food logistics and supply chain would face the following risks:
The Risk of Non-Compliance: F&B manufacturers carry greater responsibility for liability. When dealing with food supply chains, manufacturers must trace ingredients, packaging items, and products across the supply chain. It is critical to have a single source of data at every point in the supply chain. This helps spot any breach in time and ensures compliance at any point in the supply chain.
The Risk of Spoiled Product Reaching the Shelf: There can be nothing graver than a situation where spoilt food reaches from your manufacturing unit to the consumer’s table. Europe alone records 500 such recalls each year, of which 130 are classified as severe, and 30% are due to allergen contamination. Imagine having sold one million chocolates before realizing the batch was spoiled and needs to be recalled. It is not just the logistics burden that product recall puts on the supply chain but also the massive responsibility of feeding people spoiled food. It can sometimes even attract lawsuits which makes an efficient spoilage monitoring system useful.
The Risk of Quality Compromise for Cost Containment: Market pressures and increasing consumer demand can force manufacturers to cut costs. This could end up adding to product quality and safety risks. The few ways to reduce costs in the F&B industry are sourcing low-cost ingredients, decreasing portion sizes, and outsourcing manufacturing. In the lack of visibility, manufacturers cannot conduct constant product reformulation, strict quality compliance, supplier due diligence, and carrier SLA management. It is hard to meet profitability targets while still producing good quality and safe food products without all this.
The Risk of Global Food Supply Chain Management: Globally growing supply chains have rendered data management even more complex. With increasing volume, velocity, variety, and speed of data generated, the space is ever-expanding. Having so many data points make it challenging to aggregate it all and make sense of it. Manually stitched data wouldn’t work in such a scenario since that would increase the risk of incomplete, inaccurate, and unreliable supply chain data. Global operations have multiple stakeholders involved. When they upload data to their individual systems, data integrity becomes a dream unless you have a system that can automatically integrate it all and analyze it. A powerful visibility platform is required for analyzing this data and providing predictive insight.
Which Is the Best Food Supply Chain Visibility Solution?
Although there are many ways to monitor regular supply chains, food and beverage supply chains need a more detailed visibility solution. Such a solution should provide end-to-end real-time cold chain monitoring—to take care of location and condition (temperature, humidity, etc.).
A food company would want the best possible end-consumer experience, for which it would need a reliable partner. But it is not easy to have a supply chain department so well-versed with visibility. That is where the technological experience of a visibility partner comes in handy. Roambee’s real-time cold chain monitoring solution brings to the table an innovative solution. This solution wouldn’t just highlight anomalies but also be a partner to improve food cold chain compliance.
Roambee’s solution uses a unique approach to address the issue of quality compliance and lack of actionability that most F&B companies face due to unreliable and delayed visibility data. This approach consists of an intelligent blend of IoT sensor data, a 24×7 supply chain control tower, integrated information from all the carriers involved, and of course, the most essential—data analytics on a single unified dashboard.
In short, the solution would help food supply chain professionals get verifiable real-time location & condition data. Intelligent data analytics would help make timely and better logistics decisions. The 24×7 control tower uses a combination of technology and intelligence for timely action.
Roambee’s solution identifies anomalies and collaborates with supply chain participants rather than just spotting anomalies like regular track and trace systems, making it an end-to-end solution. The solution would allow you to place devices anywhere in the vehicle—inside the truck, cabin, or packages. It also ensures that quality compliance requirements are met without fail. Roambee’s real-time food cold chain solution provides a combination of hardware, software, and data analytics, ensuring better visibility, reliability, and granular monitoring. The solution provides:
Real-time data at the vehicle, package, or item level.
Continuous condition monitoring data across the chain of custody.
Pre-emptive alerts for quick corrective action.
24×7 control tower support to ensure improved compliance.
Predictive analytics for smarter, simpler decision-making.
First-hand, live, and actionable compliance data.
Better logistics efficiency with integration into the existing system.
Device reverse logistics so you can focus on decision-making.
Roambee’s food cold chain monitoring solution ensures 80%+ cold chain compliance. It can help F&B companies get real-time visibility into their food supply chain without having to rely on transporters or 3PLs. This allows them to act proactively and meet food safety and quality compliances without glitches. Data analytics and predictive signals can help avert supply chain issues and take adequate and timely compliance measures.
What Are the Business Benefits of Having Food Supply Chain Visibility?
A food cold chain monitoring solution will essentially help you keep track of your food packages. It will allow you to correct any anomalies proactively, even predictively, with the real-time information it gives. But these are just the direct benefits of having a system in place. To address the complications of the food supply chain, you need a solution that doesn’t just track the location but also the condition.
A well-designed food supply chain monitoring solution like Roambee will provide reliable ETAs, accurate real-time data, and predictive analytics, enabling quick and better decisions. It would also help you use historical data trends and insights to predict excursions and reduce spoilage and damage risk in the food supply chain. Here are the most significant business benefits of having food supply chain visibility:
Spoilage Reduction: Food supply chains face spoilage issues both in storage and in transit. Real-time package/shipment monitoring can help identify issues like delays, equipment malfunctions, condition excursions, compliance deviations, and bad handling in time. This timely data helps initiate corrective actions early on in the supply chain and planning downstream stock. A solution like Roambee’s food cold chain monitoring that ensures 80%+cold chain compliance would help in this direction.
Fewer Package Damages: Damaged food packages is one of the biggest food supply chain issues, especially when dealing with fresh produce. Having real-time location and condition data at the package level can help reduce cases of mishandling during packaging, loading, unloading, and reloading. This ultimately helps save on the replacement costs, replenishment costs, restocking costs, administration costs, and many other hidden business costs like customer dissatisfaction and lost dealer loyalty.
Fewer Operational Risks: Having access to real-time data helps proactively avoid delays and resolve operational problems. The information also makes transport partner benchmarking and evaluation easier. It helps reduce maintenance and other supply chain costs. Combined and functioning well, this system can effectively reduce the chances of unexpected delays and overall operational risks. Food supply chain data analytics also help evaluate routes, lanes, and carrier performances over time for better decision-making.
Supply Chain Cost Reduction: With improved food supply chain efficiency, you can leverage the potential of IoT and data analytics to increase operational efficiency and reduce business costs. Real-time data helps you spot and address supply chain anomalies in real time. It ensures timely intervention, which enables an efficient supply chain while reducing food wastage.