The food and beverage industry is a critical component of our daily lives, with millions of people relying on it for sustenance. However, as it continues to grow and evolve, it faces several challenges, including food safety, waste, and shrinkage. The good news is that technological advancements are transforming the industry for the better. In this blog post, we will discuss the challenges the industry faces, and how smart technology and supply chain visibility are improving the food and beverage industry.

The food and beverage industry and the cold chain

In the modern age, people are no longer consuming the food they own grow or hunt for but are leaning on food that can be purchased. And if that’s not enough, more and more are no longer cooking their food but rely on takeouts and restaurants. In fact, Americans spend more than half (54%) of their food dollars on items away from home. This puts the responsibility for people's health in the hands of the sellers.

At the same time, consumers today expect a wider range of products to be available wherever and in the freshest form possible. Such expectations brought the need for the cold chain, referring to the supply chain of items that require a low temperature to ensure quality and safety.

The cold chain is crucial, especially for transporting sensitive products such as dairy, fresh meat, and seafood. The food we consume passes through a long journey from the farm to the fork, where many errors can occur, innocently or due to lack of attention.

So, the issues of food safety, purity, and waste have all garnered significant attention recently, creating immense pressure on companies to manage and tackle the industry’s challenges effectively.

Challenges the food and beverage industry faces

There are several challenges, with the main ones being shrinkage, food waste, and safety.

Shrinkage

Just like in the retail sector, shrinkage is a prevalent problem in which errors and theft are the primary causes. The product passes through numerous hands before reaching its ultimate destination, providing many opportunities for loss. The yearly loss can be significant, making it a major issue not only because of the financial loss but also because the business may not be aware of the shortage and thus unable to restock. As a result, out-of-stock situations can occur, resulting in lost sales for the company.

Food waste

Another common challenge the industry faces is food waste with commercial food waste making up about 61% of all food waste in the US with Blind operations being one of the most common causes of food waste. Misplaced inventory, incorrect warehousing, and inefficient inventory management can cause so many items to go bad before being used or sold. Unfortunately, so much good food is being wasted due to preventable human errors.

Food safety

When it comes to food and beverage, selling damaged products is not only a negative customer experience but a life-threatening situation. Therefore, businesses can’t be easy minded about it. The industry faces significant challenges in ensuring food safety due to the need for precise measures throughout the entire supply chain.

To solve the food and beverage industry's pain points, many businesses have started implementing technologies to better manage their supply chains. This has proven to be beneficial to all types of businesses in the food and beverage industry, such as manufacturing, grocery stores, fast food chains, restaurants, and more.

How technology is transforming the food and beverage industry

Reduce shrinkage

By utilizing smart sensors to tag items and tracking them in real time, businesses can significantly decrease their shrinkage by 50%. Firstly, by having such a system employees know they cannot steal items without being caught. But mostly because each item gets its own unique code allowing for accurate tracking of its departure and arrival. With this information, lost items can be minimized, and errors in the supply chain can be identified by analyzing the data in real time. For instance, if the number of items leaving the distribution center is higher than those arriving at their destination, the system can flag a potential issue during transit.

Improve sales

By having full visibility into their inventory, businesses can ensure they are always prepared to make a sale whenever a customer comes to buy. With more accurate and efficient stock management, businesses can avoid turning away potential sales due to product shortages or running out of material. Additionally, with real-time data on their inventory levels and usage patterns, businesses can make informed decisions about their restocking needs and avoid overstocking or understocking, which can impact their profitability.

Better resource use and reduction of food waste

While many food and beverage companies follow the First In First Out (FIFO) method, it may not always be the most optimal practice. A better alternative is the First Expiry First Out (FEFO) method, which prioritizes products based on their expiration date or "Best before" date. This is because even though a product may have arrived earlier, it may have a longer expiration date compared to the next shipment that has a closer expiration date. In such cases, it would be more effective to sell the product that is expiring sooner, rather than strictly following the order in which it arrived. By prioritizing based on expiration dates, businesses can ensure their products remain fresh and minimize the risk of waste or expired products remaining in their inventory.

Using technology to track the inventory helps follow expiration dates automatically from the source until usage or sale at the final destination, preventing human error and reducing food waste. Moreover, using software that can notify pre-expiration helps businesses take the actions needed to save such items and avoid throwing them away.

Recall process

In the unfortunate event of a product recall due to an accident or safety concern, having inventory tagged and tracked can greatly ease the process and improve accuracy in identifying affected items. Businesses can quickly and precisely pinpoint the items (and their location) that may be potentially harmful for consumption, using unique Electronic Product Codes (EPCs) associated with each product. By doing so, they can take prompt action to stop the spread of affected products and reduce the risk of further harm. This not only ensures the safety of consumers but also helps minimize the financial impact of the recall by swiftly removing only the affected products from the supply chain.

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In conclusion, technology has improved the food and beverage industry by allowing to address its most common challenges. The use of smart sensors and real-time tracking have enabled businesses to reduce shrinkage and improve inventory management, leading to better sales and more informed restocking decisions. With better resource use and reduction of food waste, businesses can prioritize products based on their expiration dates, thereby ensuring products remain fresh, and the risk of waste is minimized. Overall, the use of technology has helped the industry improve its efficiency, increase profitability, and provide better service to customers.