By Dhinesh Palaniappan, Vertical Head for Trading, Retail and Distribution, Product Development, Orion™ ERP at Azentio Software
Food distribution industry comprises of commodity traders, importers, food processors and distributors that source food products from producers, store it, and then distribute the products to manufacturers, grocery stores, restaurants, cafeterias, government aid programs and more. Food distribution also includes consumable items that help with food consumption such utensils and tableware.
In the global economy, distribution is part of the downstream process, including transportation, packaging, and delivery of goods. Today, the nature of the problem has changed and evolved in this global context. How do you get spices from India to the USA? How do you get coffee produced in Columbia to Europe? The answer is in the optimization of the food distribution system in terms of cost as well as robustness and reliability to effectively cater to customers with smart technology like an ERP (Enterprise Resource Planning) software.
Challenges prevailing in industry
SKU (stock- keeping unit) proliferation
In order to survive in the market, food and beverage companies have expanded their product lines to include more options as customers’ demands are increasing, resulting in a proliferation of SKUs. In some cases, facilities have increased from few hundred SKUs to a couple thousand, leaving little storage space. With some products moving faster or slower than others, efficient storage and retrieval becomes another challenge. Thus enterprises lose control over their entire distribution process from warehousing to the shipment phase, lacking traceability and no control over their inventory.
Food trends and demands change frequently. Incomplete or faulty demand projections can be a significant challenge. If business stakeholders don’t pay attention to demand, they could end up with a potential surplus or shortage in the warehouse. The losses incurred include the cost of the procurement, inventory, and wastage of perishables, all of which leads to a loss of market share.
Perishable foods items need to be delivered as quickly as possible to maintain product quality, freshness, and optimum shelf life. Many fresh food facilities aim to automate their operations but have been unable to because conventional automated systems run storage and order picking as separate functions. Unfortunately, this makes fulfilment too slow for fresh food logistics.
Increasing demand for food shipping traceability
Multiple consumer agencies have reported that the consumer is becoming increasingly aware of the dangers of food contamination throughout the food supply chain.
According to Occupational Safety and Health Administration (OSHA) and several food safety experts, most food-born illnesses either start or expand within the food supply chain. The need for retailers and suppliers to document the who’s, what’s, where’s, and when’s of every aspect of the food supply chain, not only for consumer safety and protecting their brands – but legal reasons as well, has created a growing need for more accurate traceability standards.
Latest trends & opportunities in the global F&B distribution industry
Here are a few trends that have attributed a new identity to this industrial vertical in terms of revenue, technology as well as scope.
Grab and Go
One of the biggest trends is the ability to “grab-and-go,” which according to recent studies has become almost more important than the product itself. Meal kits like those distributed by many new start-ups as well as hundreds of food delivery start-ups, have created a new landscape for the foodservice industry. This new environment is an even bigger opportunity for foodservice distributors.
Increased wealth and lifestyle change
Modern lifestyles and disposable incomes mean that we spend less time preparing food and more time in the active enjoyment of eating. We also tend to eat out more, choosing from a variety of restaurants and eating outlets. The food industry has been very creative in providing choices that cater to our preferences, to increase turnover and gain larger market share.
Global supply patterns
Consumers today expect a year-round supply of seasonal products. Many food distributors act as commodity brokers, negotiating annual supply contracts for major retail chains for a range of food products. Often, these are ‘own label products’ that are sourced from several different growers or food processors around the world to guarantee a year-round supply.
Frozen food preparation and warehouse management system
A large portion of the food industry is dedicated to storing and packaging frozen food products. Produce is delivered to a freezing unit, where it is quick-frozen to around -20ºC and stored in bulk containers. Over a span of a year, the frozen vegetables are prepared, processed and packaged. They are then re-stored or shipped to customer distribution centres or public warehouses specializing in chilled and frozen product distribution. Computer-controlled packaging lines and warehouse automation can improve efficiency and space utilization by as much as 40%, with considerable production and distribution cost savings.
Orion™ ERP for the food & beverage distribution industry
The Orion™ F&B Distribution Business Suite is an integrated IT solution addressing the dynamic needs of commodity traders, importers, food processors and distributors.
It caters to operations, such as food distribution, processing, warehouse management, customer service, collaborative forecasting, procurement, distribution, logistics, financials and business intelligence.
The ability to link clients to supplier contracts, to capture and analyse demand at the retail level, and to aggregate this information back to the regional and national level for production and replenishment, can improve the overall sales performance. Additionally, closer alignment of global supply contracts tied to forex contracts, guarantee margins and ensures that currency cash flows are aligned with purchasing commitments. It is designed to optimize business operations and analysis, helping you to maximize profits by focusing on the following elements:
- Increased customer Awareness and Personalized Service
- Food and Drug Administration (FDA) and the European Union (EU) Regulation and Compliance
- Asset control
- Optimized Warehouse Utilization
- Reduced Costs and Improved Productivity
- Optimized Supply Chain Collaboration
- Closed Loop Batch Control and ‘Best by Date’ Handling
- Automated Decision Support
- Improved Profits and Measurable ROI
The suite is built around advanced customer-oriented functionalities that focus on performance and service. Designed in cooperation with world-leading food producers and distributors, the solution meets such critical requirements as processing high order volumes; EDI, XML, or web services communications; and delivery of pallets or cartons in-sequence with extremely short lead-times.
The software ensures rapid identification of products with supporting specifications and pricing, online availability checking, original manufacturers’ recalls, and product sales restrictions – translating sales demands directly to suppliers’ products. All its applications are multi-lingual, multi-currency and multi-company.
Food distribution has been a serious focus for society since ancient times. How do you get food from its source to the people who need it, without losing food to spoilage or carelessness, has been a challenging task. Companies in the food and beverage distribution industry face new hurdles that tend to disrupt their operations. With the emergence of state-of-the-art technologies, several new trends as well as opportunities have flooded the food and beverage trading and distribution industry and are driving new lifestyles worldwide. To grow business, a cutting-edge technology is going to be the key need of the F&B distribution industry. Orion™ ERP is a time proven, comprehensive technical solution for the F&B distribution industry offering smart key solutions and in-demand industry features to capture greater market share as well as increase profit margin.
Orion™ has enabled over 15 food and beverage distributors across the Middle East, Africa, and Asia Pacific region for two decades.
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