5 Factors That influence Food Supply Chain Management

Food Supply Chain Management aims to ensure food quality, safety, and authenticity of food for both consumers and organizations. Certifications against food sustainability standards for production and verification of the product sourcing claims bring credibility to food products and ensure compliance in the global food market.
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Food supply chain management (FSCM) refers to, managing all activities in the supply chain, extending from raw material sourcing to the product reaching the hands of the customer. Tracing the products from the origin and tracking every stage of the food supply chain guarantees the best quality of the product. Implementing food supply chain management can reduce food safety incidents, target food recalls, eliminate food fraud and establish trust among consumers.

What is Food Supply Chain Management? 

The Council of Logistics Management defines Supply Chain Management as, “the process of planning, implementing and controlling the efficient and cost-effective flow of materials, in-process inventory, finished goods and related information from point-of-order to point-of-consumption, for the purpose of conforming to customer requirements”. 

A supply chain management (SCM) system is the need of the hour, with global markets evolving and the volume of trades increasing, an effective and efficient SCM would work wonders. SCM targets in providing optimization of all players in the supply chain, operating by combining resources to offer product satisfaction to the customer and to provide it economically at firm resources. 

The problem arises in developing a framework for managing parties in tandem with the most efficiency and effectiveness. Various designers, over the years, have developed and restructured, the characteristics of a good SCM as follows, 

  • Inclusiveness: The ability to cover all aspects of a supply chain from sourcing of the raw materials to the finished goods reaching the customer. 
  • Universality: The ability to adapt and compare operations among the various supply chain. 
  • Measurability: The outcome of a designed framework should be quantitative. 
  • Consistency: The design should cater to the needs of both the consumer and producer. 

Measurement of Performance of Supply Chain Management 

To know if an SCM plan is effective, it has to be performance measured. It is important to gauge the set plan of an SCM to restructure, upgrade or know its efficacy. The Supply Chain Council has developed guidance on the types of indicators wherein decision-makers can use to develop a balanced approach towards measuring the performance of an overall supply chain known as the SCOR Model. It is based on six management processes. 

Plan: Initial communication and bringing together the players of the supply chain happens in this step.Determining business rules by keeping demand and supply in mind. Planning rules from inventory, assets, transportation, financial and regulatory compliance. 

Source: Plan relating to the sourcing of raw material is created. It describes materials sourcing, supplier network, and agreements relating to transfer and payment for goods. 

Make: Mainly depends on the type of products made and the requirements of the consumer. Includes processing details, production, packing, tracking, and transportation. Defines, stock to be made or orders to be made, or engineered to order. 

Deliver: Inventory management, warehousing, and transportation come under this step. Finished products are received, billed, and transported to the final customer. Distribution and transportation management are key aspects of this step. 

Return: Involves post- delivery processes, if products are returned, either from the consumer or supplier, management regarding the receipt of the product, return inventory, regulatory requirements are to be determined. 

Enable: Process involves the running of a supply chain. Business rules, network management, contracts, risk, and regulatory compliance should be defined. 

As with every other SCM model, SCOR also focuses on the supply and demand of a product, understanding markets situation and customer requirements to fulfill each other’s needs. 

Factors that influence the Food supply chain management

Environmental Uncertainty

Any happening which alters or forces to alter supply chain management is termed as an uncertainty. Environmental uncertainties are those unpredictable events outside the organization which have an impact on performance in the supply chain. 

These changes in the environment may occur due to changes in customer preferences, technological upgrades, fluctuation in demand or supply, etc which might result in an organization underestimating and not making potential changes which might result in depletion of the overall effectiveness of a supply chain. Such changes require organizations to act quickly and accordingly. Uncertainty can occur at any stage of the supply chain, it can be due to the reliability of suppliers, competitors’ actions, and the quality of the product. 

Organizations are addressing the sources of uncertainty by formulating management strategies on how to tackle environmental changes and improve the performance of the supply chain. Firms should maintain flexibility over relationships and develop a proper response to such changes. 

Efficient inventory management 

With global markets in place, data is entered at each stage of the supply chain. Decision takers have an abundance of data at their disposal. It is necessary to optimally utilize such data to have proper inventory management. 

Inventory management has been a vital step in the formulation of an SCM. The use of machine learning, AI, big data have helped in maximizing efficiency over the years. A good inventory manager has to deal with warehouse management, loss due to expiry, over-ordering or short-ordering, and transportation management. These are a few facets of sound inventory management. 

  • Inventory Optimization: Balance is the key, storing of stock should be of the right amount, not under-ordering or over-ordering. Transparency in the supply chain helps in determining input raw materials and sales which helps in maintaining optimal inventory levels and having flexibility for change.        
  • Warehouse management: An oversight of customer needs can help in developing storage solutions, distribution, and fulfillment. Warehouse management facilitates inventory transparency and reduces losses. The time taken to transport products can be reduced by properly locating warehouses and meeting customer satisfaction. 
  • Transportation management: It acts as a link between warehouses and distribution centers. One-day delivery, on-time delivery models are attracting customers and deliverers should be proactive in their approach. Transparency in the supply chain help in tracking the flow of goods enabling one to act accordingly under any uncertainty. 

Developing models which forecast sales depending on market research, prediction, safety stock, etc would result in efficient inventory management. 

  • Electronic data capture  

The process of storing data in electronic form and exchanging it between trading partners is known as electronic data capture. It is such a language that coordinates businesses electronically. 

The recording of data electronically in a supply chain ensures safety, transparency, and tracking over the supply chain. It provides the link between players to examine activities of each other resulting in cost reduction, efficiency, smooth flow, accuracy, and security. 

Supply chain relationships 

With all aspects of developing an SCM in place, it is a necessity that all players in the supply chain are in tandem and on good terms. Relationship between stakeholders is vital in the development and smooth functioning of business operations. 

A collaborative system will build transparency and cater to innovation and growth. It is said that the most important person in the supply chain is the supplier; through whom innovation and development take place. It is not only the relationships between the stakeholders but also managing people inside the organization that is important.

These partnerships would help in optimizing a supply chain, developing transparency and trust, better planning, forecasting, and replenishment of products. 

Leveraging technology 

There have been a lot of technological advancements in the field of SCM ranging from the software which manages quality control to managing cash flow, inventory, security, and distribution. 

As the volume and cross-border trades increase, Blockchain technology has popularized its ability to smooth functioning along with providing traceability and security over the supply chain. Blockchain is a digital ledger that records data in a decentralized manner that is programmable, secure, unanimous, immutable and time-stamped. It provides end-to-end transparency and builds a resilient supply chain. 

All transactions are recorded and shared among the stakeholders in the supply chain. Since the transactions are time-stamped, and the data is immutable, a digital identity of the product is created. This gives credibility to the product. The farm to fork journey of the product can be viewed by the consumer through a QR code. 

Given such visibility and disclosure, consumer trust and brand recognition materialize. There is a realization of a secure, safe and transparent supply chain. 

Food Supply chain management satisfies the consumer demands on food safety and sustainability. It has to also address the socio-economic and environmental benefits too. Along with the five factors charted, it is a compilation of various aspects that affect the supply chain and the decisions that bring about the rise or fall of an organization. Traceability is an integral part of the food supply chain systems. Technology disruptions with blockchain have empowered traceability systems to counter not only food safety issues but address the sustainability and authenticity of claims of a product. 

Check how Blockchain technology is revolutionizing food supply chains 

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