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Spend Matters – Fresh food supply chain: Special procurement challenges require special approach

Food is a universal commodity, and most people take the fresh food supply chain for granted. 

At our Annual Conference, Premier Confex,  in Melbourne on October 12-13 Jarad Nass, Group GM, Woolworths at Work will explore the new frontier for business groceries and supplies. 

This short session on day one of the conference explains how Woolworths at Work has been built to enable smart buying of everyday needs for modern organisations. 

Shoppers walk into a favourite grocery store, never thinking about how that produce made the trip from field to grocery cart. In reality, the fresh food supply chain is vastly complex. Anything that’s perishable comes with a ticking clock the minute the supply chain starts.

Elaine Morris Roberts from Spend Matters reports on the state of today’s supply chain, and what buyers and suppliers might see in the future.

“These supply chains are unique and require capabilities beyond what is found in traditional supply chain solutions,” said Kevin Brooks, Chief Marketing Officer at Procurant, a supply chain collaboration platform for retailers and food service operators.

Brooks recently joined Pierre Mitchell, Chief Research Officer at Spend Matters on a podcast to discuss the state of today’s supply chain, and what buyers and suppliers might see in the future.

What makes this supply chain different

The fresh food industry encompasses everything from farm operations and harvesting produce to transportation, food safety, packaging and retail or restaurant sale. The specific supply chain has all manner of peculiarities which move it beyond adherence to the basics of aligning supply with demand.

There is a velocity that has to be maintained to keep fresh foods like produce moving quickly and in the right direction, which no other category requires — not even frozen foods! And to make things more hectic, pricing is variable, creating pricing challenges on both the buying and selling sides.

There is also an unusually long tail in the industry due to the many types of produce from a variety of small, independent producers that the industry hosts. Buyers and other participants interact with a supply market that is diverse and highly fragmented, creating variability and sensitivity to speed.

“Supply chain management solutions must provide resiliency and agility so users can manage everything that can happen inbound from farm to store to table,” he added. “There can’t be a rigid workflow, and solutions need to be designed for flexibility and collaboration.”

Collaboration through technology

While collaboration across the supply chain will improve outcomes, the initial hurdle is that it is not as digitized or sophisticated as a more traditional retail supply chain.

“That comes, in part, from the lower margins in the space, which translates into comparatively less investment in technologies that are not directly related to producing or moving products. On most farms, and in typical fresh food packaging facilities, there are no sophisticated ERP or predictive intelligence systems like you might find in other retail categories,” Brooks said. “There are some good warehouse management and transportation systems,” he added, “but without systemic digitization and technology, the supply chain will not see big changes.”

At the production level, there can be many changes throughout the process, so systems need to provide core collaboration and shared data, and changes need to be made quickly due to the perishable nature of the products.

“Digitizing the entire supply chain is a complex challenge,” Brooks said. “Progress is happening, but slowly. Procurement teams are faced with so many demands and have so many variables to manage. The technology they need has to be flexible and able to address the entirety of their portfolios.” 

What works on the ground (no pun intended)

“At many fresh food retailers, workers are rotated in and out of departments or categories. That can be problematic with the produce category, and buyers tend to become highly specialized. So, there has been little demand for the category intelligence found in mainstream sourcing tools,” Brooks said. “Instead, there is more ‘tribal knowledge’ and intense focus on execution.

“At Procurant, we make it easy for buyers and suppliers of all experience levels to collaborate,” he added. “If you can make it just as easy for two guys in North Carolina growing mushrooms as it is for large, big-branded items, then you’ve accomplished something. That makes the process easier for the buyer and keeps the continuity of supply.”

Procurant is taking a holistic, networked approach specifically designed for the suppliers and businesses that might not have the same level of sophistication found in other industries. It is also focusing on food safety in food service and food preparation environments with mobile task management tools and remote monitoring and sensors. Reducing waste is another priority, which requires looking at everything from demand to temperature controls to transportation load management. Reducing waste increases margins.

“The bottom line,” Brooks said, “is that no one in the supply chain has time to be messing around with integrations and understanding the difference between EDI and API. They just need technology that works. It’s about simplicity and mobility, which seems obvious, but truly embracing a mobile approach in a procurement network is not something that’s that common in the food space. We’re working to change that.”

To learn more about what else is possible in today’s fresh food procurement space, listen to the entire podcast.

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