4 Food Distribution Industry Challenges and How to Overcome Them

August 09, 2018 by Midlothian Economic Development

4-Food-Distribution-Industry-Challenges-and-How-to-Overcome-Them

There is one constant in the food distribution business: change. Food and beverage distributors are continually adjusting how they operate to meet customer expectations and compete.

Several decades ago, if consumers wanted to purchase groceries, they had to visit separate stores like a butcher for meat and a bakery for bread. Over the years, distribution networks have evolved with the introduction of automobiles, trains, and planes, making it possible for stores to supply all the products consumers need in one centralized location.

Food distribution processes and operations continue to evolve as the industry grows, consumer demand changes, and technology advances. Food distribution makes up more than 12% of GDP and 17% of national employment, and more than $372 billion in the U.S. each year.

With Americans spending more time working and less time cooking — and the rise of eCommerce transforming how people shop for products — there are a lot of opportunities for food and beverage distributors to innovate their business models and save consumers valuable time.

However, these industry disruptions also spur significant challenges for distributors, such as supply chain and inventory issues as well as delivery schedules and strict regulations. Below, we explore the major industry challenges faced by food distribution companies today:

1. Understanding & Meeting Demand

Perhaps one of the largest issues faced in the food distribution industry is that of supply and demand. Food and beverage trends seem to change more frequently than the weather. Consumers tastes, preferences, and interests can truly change on a dime. Avocado toast is out, kale is in. One day, consumers might be craving high-protein fare, another day it might be on-the-go nutritional snacks.

This issue, combined with potential surpluses or shortages from suppliers, is causing many food and beverage distributors to fall behind as major transformations take place in the industry.

Additionally, incomplete or inaccurate demand projections can spell disaster for a distributor. Companies need detailed reports that show exactly where demand is coming from, as well as demand data that is easily accessible across the organization. These detailed reports will enable supply chain partners, owners, and managers to make quicker, smarter decisions.

2. Transparency in the Supply Chain

There are several layers to the food distribution supply chain, and each layer is at risk of disruption. Distributors need visibility and transparency throughout the supply chain to mitigate the risk of unexpected problems. To accomplish this, companies need to ensure they are receiving immediate and accurate information from all of their suppliers.

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3. Recalls, Safety & Quality

Another major challenge for the industry is product recalls. Between 2012 and 2017, the number of FDA warning letters rose from 4,882 to 15,318; the majority of those letters were issued to food and beverage companies.

When a recall occurs due to a food safety issue, the consequences are widespread and lasting. With each incident, the pressure on food distribution companies increases as consumer confidence declines. Companies will find themselves with more significant problems if they do not address these issues quickly and efficiently.

If a recall occurs, companies should focus on transparency throughout the entire crisis procedure. It is essential for the distributor to take action and relay information through the supply chain as quickly as possible.

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4. Adhering to Delivery Schedules

Food distribution companies are continually seeking more effective ways to reduce fuel costs, drive down labor costs associated with loading and unloading product, and deliver inventory to end-retailers.

Tracking equipment and communication technology can help companies meet strict delivery deadlines and optimize their routes. Through new technologies, food and beverage distributors can be more responsive to vendor and supplier demands while streamlining processes and making quicker deliveries.

Finding the Recipe for Food Distribution Success

Food distribution businesses are faced with new challenges everyday, especially as the industry grows and competition ramps up. However, distributors can find the recipe for success with the right processes, workforce, planning, and technology in place. Visit our blog to learn more about how you can improve manufacturing operations.

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