Analyst Insight: With fierce global competition and changing regulations in the food and beverage industry, the speed at which enterprises can react and adapt is imperative to their success. Digital solutions that provide supply-chain visibility from field to factory, distributor and customer have disruptive potential. These solutions generate a tremendous amount of data that can be harvested and used to optimize processes, identify risks, and improve quality in real time.
Digital supply networks connect food and beverage manufacturers to their trading partners, giving visibility into the extended supply chain. The capability provides critical real-time customer demand, inventory management, and logistics data that enable front-line managers to effectively respond to changes in market conditions.
Improved supply-chain visibility, coupled with a digital quality-management solution, allows food and beverage manufacturers to quickly identify supply-chain quality issues and risks. These solutions seamlessly connect and analyze all supplier quality-management processes and test results, ingredient specifications, and certificate of analysis (COA) data. They also simplify the handling of non-conformances and supplier corrective action requests, and connect these activities with audit management. No longer does a manufacturer have to unnecessarily put inbound ingredients on a quality hold, secure in the knowledge that every inbound lot meets specifications. With the ability to efficiently schedule inbound ingredients, the manufacturer can better plan production activities based on market demand.
Supply-chain quality-management solutions can also help enterprises to quickly adapt to new compliance regulations. Food and Drug Administration regulations continue to increase quality requirements for fast and accurate traceability of ingredients and finished goods. Even small producers need to conform to real-time digital processes to track ingredients, labeling claims, expiration dates, nutritional content, and allergens. The supplier’s COA can be a key document for managing compliance. Having an easily accessible electronic COA, in addition to the supplier’s electronic specification signoff, simplifies ongoing compliance. The eCOA can provide the documentation that keeps companies in compliance with industry regulations.
The food and beverage industry can further benefit from the use of cold-chain internet of things (IoT) sensors and GPS signals to monitor the inbound and outbound movement of product. The data can be used to protect perishable and limited shelf-life products. A digitally connected network of carriers, forwarders, terminal operators and warehouse providers can work collaboratively to generate digital shipment data, regardless of region, mode, or capabilities, with the goal of meeting global inbound and outbound delivery needs.
Digital solutions provide consumer-facing value as well. Consumers are demanding increasingly transparent information about their purchases. Whether driven by greater social consciousness or medical conditions, they need to know all of the ingredients in the foods they purchase. This level of market-driven transparency is unprecedented, and requires digital systems to track the necessary information.
Consumer-facing corporate applications, therefore, need to have access to the entire supplier list and ingredient COA for each produced batch, so as to verify to the consumer that all products meet expectations. By combining ingredient quality data with other production information, derived from internal operations as well as from third parties, companies gain all of the required tools to be able to assess and manage risk, meet regulations, and grow the business.
In the next five to 10 years, visibility and transparency will be key to the success of food and beverage companies. Digitizing the supply chain provides significant operational benefits, enabling supply chains to become more adaptable to market conditions, satisfy the market’s need for transparency, and simplifying regulatory compliance. Connected and automated supply chains enable producers to focus on larger issues, such as improving competitiveness, enhancing the customer experience, and driving profitability.
Dan Creinin is Key Account Executive with Elemica.