Oct. 19, 2010
By Steven LaVoie
As I begin this column on foodservice supply chain trends for 2011, I'm reminded of another turbulent and exciting time for the foodservice marketplace, the dot com heyday of just a dozen years ago. Everyone and their brother came out with a new foodservice technology company. Many of those companies came in with a bang, and millions of dollars in seed funding, and then folded because they lacked foodservice experience and understanding of the longstanding relationships in the industry.
No sooner did the dot com bubble burst, than logistics companies hit the foodservice marketplace, causing major upheaval among current trading partners by promising restaurant chains access to untold savings hidden throughout the supply chain. Many plucked off low-hanging fruit, showing easy wins that weren't sustainable in the long run once manufacturers started quoting more competitive freight rates. The surviving logistics providers are those that demonstrated quality, savings, and more and more, increased customer visibility to the strings being pulled behind the curtain.
Out of both of these perfect storms arose a series of genuine, verifiable improvements in the foodservice supply chain, and they are the harbinger of supply chain trends going forward for 2011 as foodservice trading partners drive their own efficiencies and seek new opportunities for gaining and retaining customers, including:
Advancing sophistication of logistics management
Going forward, on the logistics side of the business, the foodservice industry will continue to be challenged by driver shortages, and drops in fleet sizes due to aging and uncertainty about the economy and fuel costs. All point to rising freight costs. The winning logistics providers of tomorrow's tightened market will be those who excel at balancing the need for excellence in execution with excellence in saving our customers money, and above all, partnering closely with customers to identify strategic ways to drive out unnecessary cost. Anyone can hike up fees and provide blue ribbon service. We believe true logistics partners must excel at scrutinizing opportunities for new cost savings, while adhering to rigid quality expectations and performance measurement.
As always, skilled logistics providers need to fully leverage their network and buying power to reduce customer costs and continuously improve service. New to this process now and going forward into 2011 will be each logistics providers' heightened ability to provide full visibility of product flow to help improve inventory and demand planning initiatives, from manufacturer to store. Successful logistics providers in 2011 will also need to be well-skilled in constructing more efficient supply chain network landscapes (DC, vendor locations, transportation costs, etc). You can’t optimize if you aren’t aware of your opportunities.
Looking forward, logistics providers will also need to be a lot better informed, to understand and integrate evolving supply chain needs like shortened and more complex product life cycles and increased inventory turns, increased focus on demand planning vs. plant production planning, and new laws and regulations that carriers have to adhere to in order to reduce carbon footprints.
Last, logistics companies will need to provide extreme transparency to their customers, for historical review, current status and future planning purposes. Opening the door to load planning, carrier performance and savings generated not only breeds trust, it also provides invaluable opportunities to strategize with customers about how to maximize every opportunity.
Track and Trace Product
Foodservice is experiencing a tidal wave of scrutiny, both from consumers and the government, on food safety and traceability. The issue is extremely complicated because it involves the entire supply chain from manufacturers into the back of the restaurant. Arrowstream’s approach is to fully capture lot numbers, serial numbers, GTINs, production date, expiration date, etc., and immediately pair it with master information in our central data repository to present a complete product picture, both for food safety and for marketing purposes.
The new inventory management system we are launching at ArrowStream this fall will capture live information at the back of the chain store, and link it to ArrowStream’s central data repository. This single platform for data flow and execution addresses track and trace with one source for complete and accurate data capture and maintenance.
Value Added Technology-related Services
With complete and accurate data now readily available, instead of being just out of reach as a future promise, exciting opportunities are opened up to the foodservice industry in 2011 including:
- Much more robust and accurate forecasting and planning for LTOs and menu changes
- The availability of deeper product information (e.g. marketing and nutritionals) and more photos (both for marketing and purchasing check and balance purposes)
- Improved contract management and price auditing
- Companies like ArrowStream will also continue to mine order entry information to feed into inventory management and production planning systems, for continuous improvements in forecasting and replenishment.
Last, looking ahead to the next year, it is absolutely imperative that all technology and logistics providers, and our collective customers, measure the value and impact they create in terms of supply chain efficiencies and opportunity creation.
Setting up, using, and communicating results gathered from measurement tools to all stakeholders are vital to your long term success.
In closing, our view at ArrowStream is that supply chain efficiency is not just a myth anymore, it is a reality, and it's yours for the taking.
Steven LaVoie is the founder, CEO and chairman of ArrowStream. For more information, please visit www.arrowstream.com or call 312-267-4320.