Most people don't consider how the delicious and juicy steak they are about to eat arrived on their dinner plates. If they had to imagine everything from the cow to the slaughterhouse to the packing facility, it would probably ruin their appetites.
Very few individuals ponder the many steps that it took for the waiter to bring that food item to the table because they probably don't understand it themselves.
The supply chain is an enormous and complicated process that requires partners from every part of the globe to cooperate, ensure food safety standards, and enforce best practices to promote agricultural economics.
Every grocer or restaurant is responsible for some aspect of food management. Researching the suppliers, organizing delivery, and calculating food costs are all components of the supply chain process.
This value chain requires knowledge-sharing, understanding, and proper communication. It also helps if everyone understands how the entire system works so they know how to perform their roles effectively.
Here is a comprehensive guide to the food supply chain and food processing.
What is the Food Supply Chain?
A food supply chain encompasses all of the processes that recount how food grown on a farm arrives at the dinner table. This includes the manufacturing, administration, utilization, and discarding of food items.
Throughout this undertaking, a food item is moved from manufacturer to consumer while the money used by customers to pay for the item is dispensed to the individuals who work at different stages of the chain.
Every part of this operation requires man-made resources or raw materials to function. Because each stage of the supply chain affects every other stage, it's essential to streamline the entire process to prevent high costs or inefficiencies.
The 5 stages of the food supply chain include-
- Farm - This is where the ingredients, meat, fruits vegetables, food, beverages originate and are purchased from (either animals or plants).
- Processing - At this stage, plants, and animals are converted into edible form.
- Distributing - Once the food is edible, it is transported and distributed to the necessary retailer/supplier. Distributors sell items, manage inventories, reduce costs, and do other actions to add value to the food item.
- Retailer - This is the process used to deliver the products to the consumers. It encompasses everything from obtaining the distributed items to selling them.
- Consumer - The consumer purchases the food item from the retailer.
For example, the COVID crisis has increased some COVID food costs due to safety concerns and stringent security measures required for workers at the farming, processing, distribution, and retailing stages of the supply chain.
Due to globalization, a food supply chain can affect participants and consumers throughout the world. Governments have a responsibility to optimize and streamline food supply chains to maintain food safety and low costs for both the retailer and consumer. This is especially true for developing countries during the COVID outbreak.
The Importance of the Food Supply Chain
The goal of the grocery stores/ restaurant industries is to achieve quality food at a low price from the supplier so they can still make a profit and offer competitive prices to the consumer.
This increases customer satisfaction, builds brand loyalty, optimizes the supply chain, and keeps everyone satisfied. Monitoring each stage of the supply chain is essential for the supermarket and restaurant industries to reach these objectives.
Problems arise when food loss and wastage occur during some part of the supply chain process. Unfortunately, experts assess that roughly 30% of produced food is wasted. This negatively impacts food security, the economy, and sustainability.
Food loss and waste can decrease the availability of food in the market, resulting in raised prices and decreased access to items for low-income individuals.
Furthermore, if the quality of food worsens to the point where food needs to be sold at a lower cost or thrown away, it can impact the well-being and livelihood of farmers and producers.
Using food management to organize and oversee all of the areas of the supply chain can help to mitigate against food loss and waste. Food management involves the oversight of the supply chain to ensure the quality, taste, and safety of all items sold.
The purpose is to make certain that any goods sold to retailers meet the necessary regulations set by health regulators and government officials.
Food inspectors are responsible for managing and pinpointing contamination that can result in food loss, higher prices, and food insecurity. If proper food management processes are not put into place, all stages of the supply chain can suffer as a result.
Problems in the Food Supply Chain
The food supply chain process is evolving as technology changes and consumer/government demand for safe and fresh food increases. These developments have led to new struggles for manufacturers, farmers, distributors, and grocers/restaurants.
For example, the pandemic increased customer demand (panic buying) and forced restaurants to close which caused distributors and suppliers to have excess inventory.
Some processing plants had no choice but to shut down because their workers tested positive for COVID, leading to increased inefficiencies and costs.
This resulted in massive waste and loss across all areas of the supply chain and the grocery store/restaurant. Though the system has recovered as the global population/governments have adjusted, the underlying problem has become more apparent- a lack of visibility into supply and demand.
An increase in visibility for everyone across the supply chain can help improve collaboration, information-sharing, and ensure quick adaptability to a disruption. The lack of visibility and information-sharing has led to other problems, including-
1. Consumer Demand for Traceability
Traceability is the consumer's desire to have visibility into the supply chain process and food safety/nutrition information.
One survey found that consumers are more loyal to transparent brands than non-transparent ones. People want to know what's in their food, who makes it, what the safety precautions are, and how fresh it is.
Companies that recognize the importance of this new demand can benefit financially by guaranteeing the traceability of their products. Unfortunately, simultaneously ensuring the highest food standards and traceability comes at a higher cost for restaurants/grocers.
However, the payoff may be worth it as this segment of food conscious consumers seem to only be increasing as time goes on.
2. Fragmented Supply Chain
It's difficult for grocers/restaurants to provide traceability to consumers when there's a lack of communication between participants of the supply chain. Even the simplest items employ a large number of workers around the world who have no understanding of the other's activities.
Stakeholders who run the supply chain should prioritize and solve the fragmented nature of the process to improve traceability and ensure food safety. Doing so would also allow producers to gain a full understanding of their food items and take full ownership of it.
3. Increased Regulations
Regulations can protect food chain workers and ensure quality fresh produce, but they also cause a lot of problems. With an increase in regulations, shipments can be delayed as inspectors take more time to perform their jobs and ensure compliance.
This, ironically, impacts freshness and safety, the very elements the regulations were trying to protect.
Other regulations such as the ELD mandate requires carriers to install a device that logs each driver's hours every day. Some companies have simply cut back on their drivers' hours to comply with labor codes and the mandate.
The cost of installing the ELD system is so high that some smaller carriers are shutting down operations. It has also increased shipping rates and caused a delay in deliveries.
All of this negatively impacts the supply chain and raises prices for both the grocer/restaurant and consumer. Growers, manufacturers, shippers, and carriers will have to work together to streamline the process and solve these bottlenecks caused by the increase in regulations if they want to maintain operations.
4. Food Fraud
Unfortunately, several fraudulent companies manufacture counterfeit items and use shipments as a cover to send illegal contraband. Though this is a bigger problem in Europe, it has affected other areas of the global supply chain.
The United States government has even enacted a division of the FDA that investigates food fraud and counterfeit importers who attempt to operate within the country. As food fraud increases, regulations do as well. Unfortunately, this leads to the various bottlenecks and problems discussed above.
5. Lack of Honesty
A rise in dishonest supply chain participants is a natural result of the globalization of food supply processes. There are many different organizations all over the world with more leeway to commit fraud and cover up mistakes. Unfortunately, a lack of honesty can result in food poisoning, a ruined reputation, or even death.
Continual communication logs help to document different components of food safety in different locations. Those organizations who utilize these logs can help prevent many of the cover-ups and lackadaisical attitudes that create major problems. These logs are also useful for companies to prove compliance and protect their reputations.
What is Food Supply Chain Management?
Proper food supply chain management ensures compliance with regulations and promotes food safety for consumers. A poorly managed supply chain causes higher prices, lower quality items, and even food poisoning.
A company's reputation can be destroyed if only one aspect of the supply chain fails. For example, Chipotle had to rebuild its brand after an E. coli breakout caused several individuals to go to the hospital.
For these reasons, it's in the best interest of everyone from farmers to distributors to manage the food chain efficiently.
Here are the best practices for improving the food supply chain process-
1. Research and Review Suppliers, Distributors, and Carriers
It's essential to know exactly who is carrying the food items, where they are stored in facilities, and how they are transported. Stakeholders should investigate the quality of safety enforcement at each of these facilities/transporter vehicles. Discover how often and what kind of testing these suppliers/distributors/carriers perform to ensure quality is up to par.
2. Perform Regular Audits
Establish policies that ensure regular audits at the company's facilities and the carrier's/ supplier's warehouses. Stakeholders can use these records to pinpoint inefficiencies and bottlenecks that are preventing a streamlined supply chain process. Over time, audits can be utilized to make improvements, ensure compliance, and improve the brand's reputation.
3. Label Accurately
Government legislation requires importers to divulge a litany of information to the FDA before they import any items. This includes code numbers, identifiers, and other data. A comprehensive tracing system is also required so food can be tracked along each step of the supply chain process. Proper labeling and oversight will ensure FDA compliance and help producers prevent disease or foodborne illnesses from spreading.
4. Use an Optimized Tracking System
Automatic identification systems allow stakeholders to oversee everything from farming to grocers making a sale to consumers. RFID transponders are useful to trace livestock, deliveries, purchases, and other aspects of the supply chain. These tracking solutions provide information to participants in the supply chain so they can identify spoiled food sources or deliver real-time data on food safety audits.
Some technologies even allow workers to perform temperature checks and environmental measurements on food data gathered from its original point (the farm) to make certain safety conditions weren't exceeded along the entire supply chain journey. This prevents any food spoilage/waste incidents and increases the company's reputation with consumers.
The Importance of Logistics in Food Supply Management
Logistics refers to the process of moving and coordinating materials, food items, and equipment from one place to another. Food industries strongly depend on the timely and smooth delivery of raw materials to be successful.
Because food item ingredients have a short life span and are produced in various regions across the country/world, optimized logistics is crucial to ensure effective food supply management. Moreover, efficient transport decreases or prevents the waste of time and materials, helping actors transport products on time to the right location.
Many stakeholders have realized they can partner with other companies that provide transportation and warehousing. Companies who use these services to outsource their logistics can streamline their supply chain processes and increase efficiency.
If a company puts a partnering organization in charge of shipping items to customers, the company will improve its reputation and brand by increasing the speed and quality of delivery services. By outsourcing logistics, businesses have removed a lot of extra work and responsibility so they can focus on other tasks.
Logistics has to be evolving at all times to meet consumer demands. As grocers/consumers/restaurants are increasingly impatient about receiving an order, it's more imperative now than ever to ensure a streamlined logistics system. A team of seasoned professionals needs to be quickly shipping, storing, and delivering products to consumers in a timely and efficient manner.
These services should be implemented in a way that adds value and ensures that food items are arriving at the correct place in a timely manner. If a shipment is late, it affects the next step of the supply chain, causes food spoilage, raises costs, and potentially ruins a company's reputation.
In conclusion, here are the key takeaways to remember about food supply chain management-
- The food supply chain refers to all of the processes that describe how an item(s) of food goes from the farm to the consumer's kitchen table. It encompasses the farm, processing, delivering, the retailer, et al.
- Because there are so many various internal and external factors that affect the supply chain, it's imperative to ensure good food management practices and streamline/optimize the entire food service process.
- Food agriculture, waste/loss affects sustainability, climate change, the economy, and hurts workers. It also can damage a company's reputation and raise prices for the grocer and consumer.
- Changes in technology and consumer demands have caused some problems in supply chain management that relate to a decrease in visibility. Other problems include increased USDA gov regulations, consumer demand for traceability, a fragmented supply chain, dishonest participants, and food fraud.
- Food chain management is essential to streamline the supply chain process and prevent food loss/waste. Best practices include to review suppliers/carriers/distributors, perform audits, label correctly, and use a tracking system.