Food & Beverage Supply Chain & Inventory Management

by | Dec 16, 2021 | NetSuite | 0 comments

Introduction

While every business in the physical goods space faces challenges when it comes to inventory management and supply chains, problems are exceptionally tough for the food & beverage industry. There are many complexities that naturally come along with the industry, and new hurdles appearing as businesses expand into global sales and e-commerce. This article explores many of the complexities regarding food and beverage supply chain management and inventory management, and how many of these headaches can be mitigated or even eliminated by deploying NetSuite into your technology stack.

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Complexities of the Industry

Sourcing

Food & beverage supply chain management is notoriously difficult. There are ingredients that can only be obtained from certain parts in the world, factory parts that can’t come into contact with certain allergens, cold shipping requirements, food allergens, organic/non-GMO certifications, and international shipping issues all acting as hurdles that must be cleared just to get the product to your warehouse.

There’s also been a surge in demand for organic, sustainable, and fresh ingredients in recent years. Producers must have crystal clear visibility into the sourcing of their ingredients to ensure they’re adhering by these standards.

Warehouse Management

Preparing pallets, scheduling pickups, and dealing with distribution partners like Sysco or UNFI adds even more complexity on the inventory and warehouse management side of things. Then you have expiration dates, cold storage requirements, and lot tracking to manage on top of everything else.

Changes in Consumer Preferences

The constantly changing demand for certain ingredients and flavors leads to the tweaking of the supply chain even for well-established products. Making a simple switch like replacing sugar with a substitute sweetener to keep up with changes in consumer preference can alter your sourcing, pricing, labels, ROI and more. This leads to an increasingly complex library of SKUs, flavors, and variations that must be closely managed and tracked.

Demand Fluctuations

Demand forecasting and management is particularly tough in this sector. There’s seasonal demand for certain items like soups or red wine in winter months, or cold cut meats and beer in the warmer months. If you’re running low on one product towards the end of its seasonality, you’re stuck with choosing between placing a new factory run order and risking excess demand/waste, or trying to ration out the product for the remainder of the season. Again, expiration dates and climate controlled storage requirements exacerbate this issue. Because of this, manufacturers and distributors often need accurate demand forecasts not just for the month, but often for an entire season.

Regulations

It seems there’s a near endless list of regulations and compliance standards that must be adhered to. Certifications that require factory audits, nutritional reporting requirements, allergen disclosures and more are constantly keeping manufacturers and distributors on their toes. Failure to comply can result in everything from a tarnished brand reputation to costly lawsuits. You don’t want to trust this process to disorganized spreadsheets. Instead, businesses need automations and alerts to make sure they never miss a beat.

The Role of Technology for Food & Beverage

While the complexity of food & beverage supply chains may seem daunting, it provides a wealth of opportunity to the companies that successfully manage it. When food and beverage firms invest in the technological infrastructure to seamlessly manage their supply chains and inventory, they get a leg up on the competition that’s still managing with spreadsheets and manual data entry.

However, the tech stack has to be appropriately configured to avoid digging yourself into an even deeper hole. Many food and beverage manufacturers and distributors utilize a number of point solutions that focus on single aspects of their business. That is, they invest in an accounting software like QuickBooks, then try tacking on a CRM system like Salesforce, inventory management software, HR software, etc. This results in a messy cluster of point systems, whose sum of monthly fees add up to more than the costs of an ERP system like NetSuite. Not to mention, these systems require complex integrations of APIs and middleware to link everything together, less your business succumb to duplicate data entry and increased manual efforts which is a losing strategy.

NetSuite: The Ideal ERP for Food & Beverage

NetSuite has proven time and time again that it can manage the difficulties faced by businesses in the F&B industry. Apart from the countless features that allow businesses to seamlessly manage their supply chains, inventory, HR, CRM, marketing, sales and more, NetSuite is extremely customizable and can be perfectly tailored to fit your unique business. Here are some of the key features that can help your food & beverage manufacturing or distribution business thrive.

NetSuite Features: Food & Beverage Supply Chain Management

Lot Tracking

While there are strict standards for lot traceability and food safety, NetSuite allows food & beverage manufacturers to trace the entire process from ingredient sourcing to the finished product. Having this type of visibility helps businesses remain compliant with tough regulations, decrease manual labor, and improve customer satisfaction.

Procurement Analytics

NetSuite’s robust supply chain management system has a suite of features to improve your production, procurement, and inbound logistics. You can efficiently schedule production runs and changeovers to reduce factory costs, and ensure that food allergens, GMO attributes, and other key aspects are managed accordingly. Status of deliveries can be viewed in real-time by the back office and warehouse for easy coordination, and the delivery schedule can be easily handled even when dealing with dozens of deliveries per week.

Supply Chain Analytics

NetSuite comes with a “Supply Chain Control Tower” giving you 360-degree visibility and control over your SCM. The control tower lets you easily view inventory on hand, lead times, demand planning, service levels and more utilizing historical data, intelligent analytics, and cutting-edge planning strategies. This feature spans across all subsidiaries and companies across the globe, serving as a one stop shop for globalized businesses.

Engineering Change Order (ECO) Management

We mentioned the difficulties food & beverage companies face in the constant changing of their supply chain and involved ingredients. NetSuite allows for Engineering Change Order (ECO) management so businesses can adapt their products on the fly without any real negative effects to the procurement and supply chain processes. Boost your revenue and market share by staying on top of the ever-increasing number of trends.

Automation

Lastly, NetSuite allows businesses to streamline, or even automate, huge portions of the procurement process. You can easily manage a large swath of vendors, manage communications, enforce approvals, automate transactions based on timeframes or inventory levels, improve lot tracking, simplify payments and a whole lot more.

NetSuite Features: Food & Beverage Inventory Management

Inventory & Shipment Tracking

Once you’re finally in possession of your consumable product, you’re tasked with the inventory management. NetSuite provides a seamless way of tracking what inventory is currently on hand, what’s expected to ship out soon, and what is soon to be received. When the warehouse updates inventory or marks an order as shipped, customer service, accounting, and operations can instantly view the updates from anywhere in the world.

Multi-Entity & Global Operations Management

Things become further complicated if you have multiple locations, or the warehouse is in another location from the back office. Many systems only provide inventory management for single locations, or require separate databases tied together with middleware to accomplish this. For businesses that have operations across the country, or even the globe, they need a centralized system to manage all of these locations seamlessly. NetSuite natively allows you to accomplish this, and even allows for multi-currency management.

If there’s a delay in reporting from the warehouse, or a mismatch in data due to manual data entry or error prone spreadsheets, you run the risk of having too much or too little supply, missing expiration dates, failing to fulfill orders to key purchasers and more.

Demand Planning

Many firms in the industry struggle with accurate demand planning. While this type of forecasting is difficult for most businesses, it’s exponentially difficult for the food & beverage industry due to the presence of expiration dates and the unpredictability of distribution partners.

When non-perishable goods businesses purchase too much inventory, they are stuck paying for the storage space the inventory is kept on. With perishable goods, you run the risk of having to discard entire lots, or run extremely discounted promotions in order to move the product before its expiration. Either option is extremely costly, and further enforces the need for meticulous inventory planning in the industry.

Because the food & beverage industry involves a very high quantity of sales, distribution partners ranging from small local distributors to international giants like Sysco serve as key parts of the business landscape. These partners may purchase mass quantities of one or more of your products for an extended period of time, then halt or ramp up demand on the turn of a dime. This can drastically affect the inventory on hand or work-in-progress that you’ll need to accommodate these fluctuations. Further, it has a ripple effect that extends all the way up the supply chain to the ingredient sources.

Having a system that can help you not only forecast these changes based on seasonality, trends, and historical data, but can also help you adapt your supply chain in a moment’s notice is the key to remaining profitable and on top of your industry.

Reporting

So what type of inventory visibility do you get with NetSuite? NetSuite comes with built-in reporting options to give you real-time visibility into the health of your inventory and sales metrics. Some pre-built reports include:

  • Shrinkage
  • Sales per hour
  • Same store sales
  • Inventory turnover
  • Product category reporting
  • Sell-through ratio
  • Stock to sales
  • Units per transaction
  • Weeks of supply
  • and many more

Plus, NetSuite has extremely robust customized reporting options, allowing you to craft custom dashboards and saved reports to provide instant visibility into practically any other metric you’re keen to track.

NetSuite’s many functionalities for food & beverage inventory management focus on a recurring theme: maintaining the difficult balance of having the right amount of inventory at the right time. When businesses can run leaner inventory practices, they decrease storage costs, decrease waste, better respond to fluctuations in demand, avoid stock-outs, prevent excess working capital being tied up in inventory, better manage shipment lead times, and reduce pilferage.

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Where Does Food & Beverage Inventory Management & Supply Chain Management Go From Here?

With the current hurdles in the industry, it’s not enough to have siloed software dedicated to just a single aspect of your business. Having separate CRM, inventory management, supply chain, and warehouse management systems creates the need for complex integrations which are prone to failure, delays in data synchronization, increased costs and added complexity. In order to truly gain a competitive advantage, food and beverage manufacturers, distributors, and wholesalers are seeking out single systems to manage every aspect of their business. Utilizing NetSuite for example, managing the food and beverage supply chain (and every other aspect of your business) becomes increasingly simple.

With a robust cloud-based ERP system like NetSuite in place, firms can manage everything from the sourcing of their ingredients overseas, to the coordinating of outbound logistics with their distribution partners. While there’s plenty of 3PLs and software that can already help you accomplish this feat, the key value proposition of NetSuite stems from the native integration between the logistical side of your business and the back office operations. Afterall, a well maintained supply chain is useless if you don’t have the marketing, CRM, accounting, and sales to support it. By using a centralized cloud solution, you’ll gain instant visibility into inventory, warehouse, supply chain, accounting, finance, human resources and more, no matter where your employees are located.

Conclusion

As food & beverage supply chains continue to globalize, demand for new ingredients increases, and appetites shift towards organic, gluten-free, and non-GMO diets, food and beverage manufacturers are experiencing an “adapt-or-die” landscape. Thankfully, robust cloud-based ERP systems like NetSuite can help businesses navigate these challenges, and get through them more profitable and more competitive than ever before.

If your food & beverage business isn’t utilizing technology to its fullest extent, you risk losing out the competition that is. By implementing and optimizing NetSuite, you’ll be able to increase profit margins, better manage inventory and supply chains, seamlessly run your back office and financials, and edge out the competition.

To learn more about why NetSuite is the ideal ERP for food & beverage, check out our NetSuite for Food & Beverage webpage or contact us today.

Speak with one of our Netsuite Experts today.

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