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Supply Chain Metrics That Matter: A Focus on Food & Beverage Companies 2017

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Executive Overview
The Food and Beverage industry is a crowded market with many players. While the competition is intense, demand for healthy and fresh food products is high, and the industry is poised to grow in a volatile economy. During tough economic times, consumers will cut spending on products they do not need; however, they will not cut spending on food and beverages to the same extent.
The key to a competitive advantage is aligning and synchronizing the supply chain to manage material spend in the face of ever-changing demand. Few do this well. Consumers want local and fresh. They want brands they can trust. Traditional food manufacturing supply chains are in conflict, offering packaged foods with long shelf lives.
To try to drive excitement, companies invested in line extensions, a variety of different flavors, sizes, and variety packs, all causing supply chain difficulties for them. This complexity added cost, increased demand volatility, and created uncertainty. As a result, companies struggle to anticipate which flavor, or size, consumers will demand at a given time.
Consumers are fickle about what they eat. As a result, the Food and Beverage Industry arguably sees more consumer shift in demand than any other industry. Thus it becomes crucial that food and beverage companies implement outside-In processes. Becoming market-driven allows companies to better sense shifts in demand.
The Food and Beverage industry is also heavily regulated, due to it being a potential risk to so many consumers. The Food Safety Modernization Act dictates that companies must use approved suppliers and perform due diligence in monitoring supplier activity. Product fraud in the Global Food and Beverage industry has been extremely prevalent and presents a high-level risk to the company. Olive oil containing motor oil or corn oil, and alcoholic drinks containing ethanol are examples of fraudulent food products.
Traceability from supplier to consumer becomes ever more important for this industry to ensure product authenticity, as well as establishing trust with the consumer. Smart labeling and track-and-trace visibility are industry imperatives.

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