Often, how food gets on our tables is taken for granted. We don’t think about all the different processes or tasks manufacturers go through to allow us to walk into a grocery store and buy what we want.
Today’s consumers place more demand on food processors than just making food available. They want new, innovative, healthy, cost-effective, and environmentally neutral products (e.g., organic, GMO, and antibiotic-free foods). These demands drive the food processing industry to adapt and implement changes to stay relevant and competitive.
If a food processor is not able to keep up with the ever-changing trends and demands, the business may lose market share and ultimately close. This is especially true for small and midsize businesses, as they are competing with large and multi-national food processing companies.
To be a relevant player in the field, you should consider the following things:
Big Data. Invest in an all-comprehensive ERP system that provides you with real-time, up-to-date data of what you are making and what is currently selling on store shelves. This system needs to include your operations, suppliers, and customers.
Consumer behavior analytics. A system that analyzes past, present, and future consumer shopping data and provides you with a reliable product demand and mix forecast.
Consumer trend analytics. A system that not only monitors in-store shopping behavior, but also listens to social media and geo-economics. This provides you with a forecast of what consumers want or need on the shelves in the near-term future.
Supply chain management
Developing a robust and flexible supply chain. Ensure your supply chain can withstand geopolitical issues, natural disasters, or one or two suppliers failing to deliver.
Sharing data and trends. Communicate with your suppliers and customers on trends and shifts in demand and forecast that you see from your market intelligence system. This will give the suppliers time to react, adapt, and adjust if needed.
A flexible inventory system. Use your intelligent market data to plan inventory levels to meet needs, not to stockpile. This is a key factor in reducing capital expenditures and investment.
A fail-safe delivery and distributing network. Companies like Walmart and Target have started to penalize suppliers for early and late deliveries. Use your real-time ERP data to ensure deliveries are on time.
Product traceability. Have a system that allows you to know where your products are, when they were made, and where the ingredients within the products came from. This will ensure you can effectively pull questionable product in the event of a quality or recall issue, providing your customers with protection and reducing the negative impact to your business. The key components of a successful product recall are accuracy, timeliness, and inclusiveness.
Efficient operating processes
Robust and solid manufacturing processes and systems. Make sure your processes are reliable, repeatable, and measurable. Document and implement best practices.
Understand what happened. Perform root cause analysis on all failures and deviations. Document any change and communicate your findings and solutions to your teams.
Have a skilled and knowledgeable workforce. Provide your employees with quality and technical training. Empower them to stop out-of-control processes and include them in root cause analyses and troubleshooting.
Manufacturing flexibility. When buying equipment, buy machinery that allows flexibility within operations. Think about what equipment will help you grow and handle the demands of tomorrow.
Implement lean manufacturing. Develop a culture of “change for the better.” Engage and empower your employees on the journey for continuous improvement.
Expand and grow
E-commerce. Explore whether you can expand your business into e-commerce. This will allow you to directly deliver to the end user, opening a whole new customer base for your business and your market intelligence tools.
Exporting. If you are only operating regionally or nationally, think bigger. Processed food items are well suited for worldwide distribution. There are many state and federal agencies that can help you explore markets outside the U.S.
New markets. Consider non-traditional markets. Many times, food processing companies work with grocery distributors. If you are in the market of packaging powdered food ingredients, you might be able to branch out into the market of providing powdered food supplements for athletes and hikers as well. Think outside the traditional box of your distribution system and customer base.
The methods for processing food might not have changed a great deal, but the challenges and opportunities within the industry have changed. Now is a great time to revisit your business model, benchmark it to others, and challenge the way you have managed your business in the past. The opportunities for improvement are endless.