8 min read
Why do you need supply chain transparency in the food and beverage industry?
Food supply chains are increasingly becoming complex and dynamic to serve ever-evolving consumer needs. On the other hand, F&B manufacturers are heavily dependent on their supply chain whereas one supplier may source from one or few other suppliers in the local or global market and at the end of the day you are not having only that supplier. This complexity in the supply chain itself demands focusing on food transparency more than ever before. And some other reasons why it urges for supply chain transparency are; to adhere to government regulations, to ensure they participate in animal welfare and environment, meeting quality standards and to provide the customer with product information; making them feel safe.
Importantly, it is required for F&B manufacturers to be transparent about their initiative as today’s consumer needs to feel safe, feel not trapped and receive more value for the price they pay. It has come to light that more consumers are increasingly interested and demanding transparency now! For instance, researchers at the MIT Sloan School of Management have found that consumers may be willing to pay 2% to 10% more for products from companies that provide greater supply chain transparency.
Here are a few main benefits of gaining full supply chain transparency.
1. Meeting customer requirements for transparency
In today’s world, rational & conscious customers research many times before they buy a certain product. Especially when it comes to food items that have a direct impact on their health, customers tend to avoid impulse purchasing and go with trustworthy products. So, F&B manufacturers need to earn the trust of the customer by nailing what they can do to register as a trustworthy brand in the customers’ minds. The simplest and the ultimate way of building trust for a brand is by becoming transparent to their customers.
Today’s customers are aware of their right to know and therefore expect brands to be transparent about quality, ingredients, nutritional facts, benefits, side effects, warnings and so on. Not only that but also the customers are now concerned about social welfare, animal welfare, environmental sustainability and they appreciate ethical brands. Also, organic products, locally grown products are some of the wide spreading purchasing trends and today’s customers want to know about the origin of the products and their journey from farm to table.
Accordingly, this shows how important it is to become transparent to attract a loyal customer base.
2. Identifying and responding to food safety issues
Foodborne illnesses are a major concern to many F&B companies due to the serious financial risks involved in handling such situations as well as their impact on public health. Food standards compliances are increasing and becoming more stringent day by day expecting companies to be more proactive in their food safety measures. Therefore, manufacturers need to take all measures to put in place a proper track & tracing of all products that they release to the market as well as items in the factory in the form of raw materials, work in progress, finished goods as well as goods in transit. Also, when a food safety issue arises manufacturers should be able to trace batches, shipments and identify them correctly in minutes to take corrective measures fast. This is a very challenging process especially due to the multi-level complexity of the supply chain as a result of material sourcing from multiple vendors, locations and suppliers in other countries etc.
Accordingly, food manufacturers should be able to trace down all tiny details of a product to ingredients, suppliers and so on to understand what has gone wrong and take corrective actions to avoid it in future as well as product information in front of the court of law and customer negative word of mouth (WOM) and complaints. This reflects why the food supply chain should be transparent to identify and take corrective measures for safety issues.
However, today, technology has paved its way to provide the tools to recognize origins of ingredients quickly and accurately, so containment of adverse quality events can be coordinated and executed quickly across the supply chain.
3.Reducing food loss and waste
It has been identified that one third of the food produced for human consumption is never consumed and they are lost/wasted during the supply chain. One of the main reasons for food waste is due to food safety, fit for consumption and not receiving market for it. Also, food items’ appearance, dropped quality, excess supply compared to demand, and poor management of seasonal production fluctuation are some of the reasons why food and beverage do not get purchased or drop off from the supply chain itself. Also, food wastage can occur across the supply chain during different stages such as; in the farm, factory, transportation, warehouse, retail store or at the end-consumer kitchen during meal preparation or at the table!
So, it is important for F&B manufacturers to identify why, when and where foods waste within the supply chain and take corrective measures. For that it demands for a greater level of food supply chain transparency in order to reduce wastage and increase efficiency.
Accordingly, it’s important to have transparency in the food and beverage supply chain and it ultimately helps in satisfying customer, company, societal needs for sustainability, social & animal welfare and environmental protection while maximizing company profits through efficiency.
Setting up processes and workflows with the aim of achieving full transparency, understanding F&B businesses critical requirements to meet customer demand for information transparency, identifying & responding to food safety issues and reducing food wastage is important. This demands for an ERP solution that enables you to achieve your transparency goals according to your exact industry requirements.
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