As food moves through the supply chain from its raw form to the final product, value is added. The supply chain includes, transformers, vendors and customers. Having strict measures for food manufacturing and supply make it difficult for supply chain managers and makes cooperation between the customers, vendors and manufacturers more critical. This is the reason why it is important to understand the current trends and recommendable activities being applied by the companies to enhance this chain.
The end goal of supply chain management is allowing each member involved in it to achieve efficient management of the inventory as well as reach the goals of the customers. Sharing of information helps each member achieve success. This information includes data related to demand forecasts, safety stock quantities and anticipated lead times.
Demand forecasts are based on demand and usage patterns in the past. Future demand can be affected by changing situations like:
- Introduction of new products.
- Losing or gaining customers
- Short-term increase in demand through promotions
- Increased or decreased product popularity
Having an effective derived demand or a collaborative planning, forecasting and replenishment system can help achieve better estimates. It can be done through an automated data collection or by the following process:
- Identify a customer(s) who can predict the future, that is, what they can use or sell in the days to come.
- Collect demand forecasts about specific products from the customers
- Compare the predictions against their actual purchases on a monthly basis
- Help them improve their predictions by sharing the data with them
According to the trend, customers overestimate demand. Offering a discount based on accurate forecasts encourages better results.
The following elements should also be considered:
- Usage of patterns in the past.
- Events in the near future
- Increasing or decreasing product popularity trends
- Market and industry data from sources like sales or management
- Higher or lower seasonal usage or demand
Anticipated lead times is done for inventory replenishment. The following four elements are considered:
- Preparation time for sale of stock receipt
- Time taken to deliver to the warehouse
- Time needed to place an order
- Time taken for order processing and shipment.
The accuracy of anticipated lead times has to be established. One can use a report that contains the elements of a stock receipt:
- Is the lead time seven days late or early
- Is the lead time 50% higher than expected
- Is the lead time 50% lower than expected
Sharing this information with the sellers ensures that future replenishment orders are given in time. Involve the vendors in checking if the lead times are similar or were caused by one-time factors. If they are inconsistent, consider finding other reliable vendors.
Weighing of final products is done accurately before they are packaged by use of automated weighing and packaging scales.
There are reasons underlying this:
- Production becomes more dependable, scalable and reliable.
- Warehousing, shipping and delivery are made more convenient
- Tracking damaged or lost materials is easier
- Weighing and packaging processes are made more faster and simpler
- The costs of shipping and packaging expenses are minimized.
- Accurate product weight and size is maintained.
- Safety is improved and health risks are reduced significantly
- The final product packaging is consistent, more refined and uniform.
The companies that implement the best practices in their value chain have an upper hand in the industry. Customers’ preferences shift from quality to more convenient and those foods which have health benefits for them. Understanding the demand and producing to meet the user needs is what every practitioner in the sector should work towards.
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