Disruption as the new normal?
Marcel Koks, Industry and Solution Strategy Director for Food and Beverage at Infor, looks at how food manufacturers can use technology to boost supply chain resilience in the face of ongoing disruption.
COVID-19 pushed the food supply chain to its very limits, with some even going so far as to say it was responsible for breaking it completely. What we have is a perfect storm of challenges for the global food industry. A dire shortage of workers and skills, in combination with sea containers stuck in harbours and spiralling transportation costs, not to mention the rising price of raw ingredients, has meant that many food manufacturers are struggling to meet demand while staying profitable.
Existing weaknesses in the global food supply chain have been exacerbated, and food businesses across the world are digging deep, doing everything they can to stand firm against all odds. But what can food manufacturers themselves do to boost their resilience against such challenging conditions?
Covid-related pressures certainly do not seem to be going away any time soon, with more food manufacturers realising that they might have to start getting used to disruption as the ‘new normal’.
The Centre for Food Policy describes the food system as “the interconnected system of everything and everybody that influences, and is influenced by, the activities involved in bringing food from farm to fork and beyond”. Right in the middle of this complex system lie food manufacturers and processors, exposed to weaknesses and challenges at both ends of the wider supply chain. Already under pressure from seemingly ever-changing customer expectations and supplier challenges, the global pandemic served to expose and exacerbate pre-existing supply chain weaknesses, leading many food manufacturers to rapidly reassess just how resilient their supply chains actually are.
Ultimately, getting the right product to the right customer at the right time is still the overarching challenge, but with the added pressures of longer lead times and increased costs. What many businesses identified was a need for more flexibility and agility right across the supply chain, establishing more joined-up working, comprehensive visibility and a renewed focus on creating more intelligent supply chains able to adapt quickly and effectively to changing demands. At the same time, the ability to identify potential bottlenecks and inefficiencies before they have a detrimental impact is paramount — taking steps now to create more resilient supply chains.
With disruption quickly becoming the new normal, how can food businesses strengthen these weaknesses, creating more resilient supply chains that are able to scale and flex in-line with ever-shifting demands and challenges?
The go-to term for the last few years, ‘digital transformation’, is often heralded as the panacea for all business ills, including supply chain issues. But, for food manufacturers in particular, for which ever-shrinking margins are always a concern, full-scale root-and-branch digitally transformed supply chains aren’t always a viable option, particularly if it’s a case of change for change’s sake. Instead, by breaking larger projects down into more manageable initiatives, it’s possible to yield tangible benefits, helping to build a case for further change elsewhere in the organisation.
Maximise organisational visibility
High on the list of priorities has to be ensuring optimum levels of visibility and transparency across the organisation, making the most of the information available from the wider supply chain to optimise operations. The only way to do this is by standardising and uniting business systems right across the business. This was the case with Kalsec Inc., a leading global producer of natural taste and sensory solutions, food protection, colour solutions and advanced hop solutions for the food and beverage industry. With eight locations around the world, selling to customers in over 80 countries and sourcing from approximately 40 countries, its supply chains are sprawling and complex. Kalsec also has to contend with the management of thousands of ingredients, manufacturing formulations and products. But, with disjointed systems in place in different regions, getting a real-time view of global operations was challenging to say the least.
“We implemented Infor’s M3 enterprise resource planning (ERP) system and Infor’s product lifecycle management (PLM) system for process (Optiva) across our global sites to not only connect all regions but to also gain a single source of truth for our core business processes,” explained Robert Wheeler, Kalsec’s Executive Vice President – Chief Supply Chain Officer. For example, the ERP system helps manage inventory at every location. Kalsec now has real-time visibility across its entire supply chain from pending receipts from suppliers all the way through to shipments to customers and everything in between.
“This technology is providing us with the insight we need to make rapid and informed decisions, which of course, is the key to building an agile business,” Wheeler said.
Additionally, it’s this level of oversight and visibility that helps businesses readily identify where inefficiencies and bottlenecks lie, enabling them to take the necessary action before these looming problems negatively affect operations.
The bringing together of disparate systems eliminates time-consuming manual processes too, streamlining operations and increasing operational efficiency. “We needed a system that could interface with other key applications used in the business to help us streamline processes and improve our response times to customers,” added Wheeler.
This was all delivered via fully integrated systems, doing away with the need for duplicate data entry, a process that’s both time-consuming and error prone. For core elements of any food business, such as ensuring regulatory and health and safety compliance, such efficiency is paramount, ensuring not only greater accuracy of information, but speeding up the administrative burden that is part-and-parcel of operating within the international food and beverage industry.
When it comes to fulfilling customer demand, the right ERP system can make all the difference too. Access to precise and timely stock and inventory levels and forecasts enables a food business to ensure orders are fulfilled, implementing contingency measures when necessary, if, for example, delays to ingredient deliveries are predicted. Also, purchasing decisions can be made based on accurate stock positions. It’s the transformation of information into insight that allows all this to happen, with businesses able to make sound decisions, safe in the knowledge that these decisions are grounded in accurate, timely and contextualised insight. This is what creates an agile business, boosting supply chain resilience thanks to the insight and foresight that the right systems can provide.
For example, Kalsec is able to take customer orders and pre-allocate them to manufacturing orders that haven’t even started yet. The business can then pair this information with lead time data (and other business data), which facilitates much more accurate predictions of when products will be shipped. “Our ERP solution has enabled better alignment of commercial activity with supply chain activity, providing Kalsec with an enhanced ability to anticipate and fulfil demand,” Wheeler explained. “It’s dynamically updating plans and sharing vital insights with our manufacturing and supply chain teams, and our partners.”
As disruption continues – with no sign yet of stopping – food businesses need to become accustomed to this new normal. Supply chains need to reflect this new reality, able to stand firm in the face of unexpected challenges. The only way they can do this is if those businesses at the heart of the supply chain boost their agility accordingly, using in-depth business insights to inform not only their own operations but the wider supply chain too.
By making the most of the information available, food manufacturers are in the ideal position to lead by example, helping to create agile, flexible and friction-less supply chains, ready for even the most unexpected of challenges.
About the author
Marcel Koks is a food and beverage industry expert with more than 20 years of experience in using, implementing and developing enterprise applications for resource planning (ERP) and supply chain management. Marcel has a proven track record consisting of many new customer wins, successful implementations and development of solution portfolios for numerous micro verticals within food and beverage industries. He currently works at Infor as the Industry & Solution Strategy Director for the food & beverage segment.