If your company's supply chain management approach is lacking, it likely costs your business significant time and money. Instead of adding value, an error-laden supply chain drains opportunities and introduces risks that can harm consumers and damage brands. While it may seem like outside forces are beyond your team's control, there are plenty of steps your business can take to protect your supply chain.
Here are four universal food, supplement, and CPG supply chain problems and tips on how to avoid them.
1. Lack of Supply Chain Transparency
Consumers are increasingly demanding greater supply chain transparency from brands and retailers. They expect a complete line of sight from farm to fork, and details of the safety measures taken at every step along the way.
In a transparent supply chain, every stakeholder has access to detailed information on the origin and status of each raw material, item, ingredient, and product. Transparency underpins consumer trust — a vital element when the safety supply chains are under scrutiny.
Topics like sustainability, GMOs, food allergies, foodborne illnesses, and fair working conditions, are all essential issues manufacturers and brand owners need to manage carefully.
A recent Forbes article "Evolving The Supply Chain Into A New Information' Demand' Chain" states, "The next-generation supply chain must be fully digital. What were once rigid product supply chains might well transform into dynamic demand chains that deliver the transparency and resilience needed for both businesses and consumers who demand to retrieve relevant information from any point and time."
The article expands on this excerpt by emphasizing the need for companies to innovate to meet the demands of the fast-growing growing group of conscious consumers.
2. Not Choosing the Right Supply Chain Partners and Vendors
The increasingly global nature of today's supply chain means even the most stringent quality control measures might not be enough to protect an organization from supply chain risk. Nowhere is this truer than in the food, beverage, and supplement industries. For these businesses, the safety of products produced is dependent primarily on the quality of the items and ingredients suppliers provide.
Purchasing materials used to make your products must be carefully controlled by establishing close working relationships with your suppliers and managing them to high standards. Select suppliers only after appropriate assessments and approvals are complete. Supplier verification is a big part of FSMA and is an essential consideration for companies that want to remain compliant.
Long-term relationships between suppliers and buyers allow for the free flow of feedback and ideas. Over time, this can create a more streamlined, effective supply chain that positively impacts costs, quality, food safety, and customer service. New product development, ordering processes, and inventory control can become a beneficial joint venture, and result in a broad range of financial and operational benefits.
3. Not Fostering Communication
Collaboration is critical for driving innovation. In today's business environment, the most successful companies forge strong, collaborative ties internally and with customers, partners, suppliers, and other stakeholders. Supply chain management must be a multidisciplinary, cross-functional effort that requires engagement from a wide range of departments, including R&D, quality, regulatory compliance, procurement, and external suppliers and partners. It's the collaboration from a variety of disciplines that leads to success and makes innovation possible.
A recent article by the Grande Customer Ingredients Group discussed the importance of collaboration in the food supply chain:
"Resource sharing between organizations is critical in the ideation and innovation process. Generating innovation within the boundaries of a single department or company is no longer enough; it needs to also take place through collaboration with others in your supply chain."
4. Not Scorecarding Suppliers
Setting clear performance expectations upfront and closely monitoring supplier performance ensures suppliers meet legal and contractual arrangements per any agreed standard, specification, contract, or service schedule.
Each company has a unique formula for how to manage supplier performance. For example, a food manufacturer cares how quickly suppliers respond to purchase order acknowledgment (POA) requests and how well CoAs meet specifications. Additional performance metrics can include whether the product is received when promised, the condition at receiving, whether third-party and in-house testing validate or conflict with the supplier provided CoA, and if the product caused issues anywhere in the manufacturing process.
If you'd like more information about supplier scorecards, check out our Supplier Scorecarding Best Practices blog post.
Solving the Supply Chain Challenge
We hear from many companies that finding and qualifying suppliers, items, and ingredients is manual and disjointed. Networking at trade shows, online research, and trying to connect through emails and phone calls requires enormous time and effort. Suppliers are backlogged and slow to respond. Documents end up in files, and the data they contain can't be used for insight or easily accessed for an audit. With the information, you need scattered across multiple locations and no visibility into what the other members of your supply chain are doing, it can feel like you're spinning your wheels. All of this adds up to inefficiency and waste and grinds your new product development process to halt.
If you're a food, supplements, or CPG manufacturer looking to drive collaboration, supply chain transparency, and a more robust supplier program, TraceGains can help. Learn more about TraceGains Supplier Management.