Making Food & Beverage Supply Chains Pay

Making Food & Beverage Supply Chains Pay

Bottom Line: High performance, integrated food & beverage supply chains are the lifeblood of successful manufacturers in the industry, enabling them to flex in response to customer demand. 

When production lines are running smoothly, product quality is up, and customer delivery dates are being met it’s a sure sign the supply chain management, inventory, and warehouse management systems supporting the shop floor are tightly integrated. By using supply chain systems to unify inventory and warehouse management, more food & beverage manufacturers can deliver real-time responses to their customers, through any channel, anytime.

It’s Time to Start Managing Food & Beverage Supply Chains For the Future, Not The Past

Supply chains integrated with inventory and warehouse management systems have the data and insights they need to deliver the speed and scale necessary for keeping up with customers’ requirements today. Supply chain management systems are commonly defined as the integration of suppliers, production locations, warehouses, distribution centers, and retail locations. One of the most important benefits supply chain management systems for food & beverage manufacturers is the ability to provide the right mix and type of product to the right distribution, retail and selling location at the right time.

What Matters Most In A Food & Beverage Supply Chain Management System

The most important features of supply chain management systems have include demand management, distributed order management (DOM), order fulfillment, manufacturing workflow, and optimization management, in addition to supporting customizable workflows for the entire new product development and introduction (NPDI) process. Supply chain management often takes on the role of a platform in high-velocity manufacturing businesses, unifying supplier qualification, quality and Supplier Relationship Management with advanced forecasting, Sales and Operations Planning (S&OP), and returns management. Supply chain management systems begin to take on a platform-like role due to their ability to create greater levels of internal and external collaboration, reduce lead times, and enable real-time feedback on customer demand and forecasts.

Six Factors Driving Greater Integration of Supply Chains, Inventory and Warehouse Management

The following are the main reasons why having supply chains integrated with inventory and warehouse management are essential for competing in today’s turbulent economic environment:

  • Digital and physical supply chains are revolutionizing industries faster than anyone predicted – The most powerful force driving more unified supply chain execution strategies, digital and physical supply chains are quickly redefining industry dynamics across nearly every manufacturing and service sector today. Amazon Prime is representative of the types of business model revolutionizing entire industries, including retail, forcing the convergence of digital and physical supply chains. Amazon prime succeeds due to the tight integration of supply chain, inventory and warehouse management systems.
  • Multidimensional, globally-based supply chain networks are proliferating faster than supply chain management systems alone can keep pace with, making inventory and warehouse management essential for future growth – Dr. Jeffrey Dyer and Dr. Ken taro Nobeoka collaborated on an extensive study of the Toyota Production System that generated a wealth of insight into how supply chain networks mature over time.  One of the most noteworthy findings was that the more multidimensional a global supply network becomes, the more dependent all participants become on real-time data and knowledge (Dyer, Nobeoka, 2000).

Source: Dyer, J. H., & Nobeoka, K. (2000). Creating and Managing A High-Performance Knowledge-Sharing Network: The Toyota Case. Strategic Management Journal, 21(3), 345.

  • Legacy supply chain management systems are delivering only a fraction of useful data and are often a challenge to integrate with, often ending up isolated from inventory and warehouse management systems – New business models are being created based on the opportunities digital and physical supply chain convergence is enabling today. Examples of this include more streamlined Configure-Price-Quote (CPQ), product configuration, mass customization, product, and services co-creation business models that attract entirely new customers for new products.
  • Redefining Inventory Management to enable greater supply chain execution and speed than ever before, driven by quickly converging digital and physical supply chains – In the past Inventory Management systems concentrated on the planning, organizing, optimizing and managing of inventories across a company’s base of distribution, warehouse and storage locations. Inventory Management systems today can support multiple types of product and service taxonomies or approaches to organizing components.
  • Inventory Management is also being redefined by the converging of digital and physical supply chains, creating entirely new business models. These new business models are forcing inventory management systems to become more agile, flexible, and responsive in structure and scope. Inventory Management in the past concentrated on the tracking, managing and forecasting materials usage. Today, Inventory Management needs to be directly integrated into both the supply chain and warehouse management systems so companies can excel at meeting and exceeding customer expectations.
  • Warehouse Management Systems) are expanding to support end-to-end supply chain performance and faster customer responsiveness– In the past WMS systems were defined narrowly, only encompassing the managing of storage locations and five main functions. These five functions include the receiving of goods, their identification, preparation of record, storing, and packing.

Reference:

Dyer, J. H., & Nobeoka, K. (2000). Creating and Managing A High-Performance Knowledge-Sharing Network: The Toyota Case. Strategic Management Journal, 21(3), 345.

How to increase quality in your food & beverage supply chain
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This article was written by
Louis Columbus

Louis is currently serving as Principal, IQMS. Previous positions include Director Product Management at Ingram Cloud, Vice President Marketing at iBASEt, Plex Systems, Senior Analyst at AMR Research (now Gartner), marketing and business development at SaaS start-ups. Mr. Columbus’ academic background includes an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. Louis also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning and market research. Mr. Columbus currently is a member of the faculty at Webster University and has taught California State University, Fullerton: University of California, Irvine & Marymount University.