In Strategic Sourcing, Food and Beverage Has a Lot to Chew on - Part 2

More concrete suggestions for how to use your strategic sourcing platform to generate real business value this year.

Wednesday, September 9, 2015
BY: Ole Nielsen, Chairman and Founder

As we discussed in Part 1 the Food and Beverage industry had good reason to be one of the early adopters of technology-enabled strategic sourcing due to its ability to make very real impacts on the organizations.  Today, we provide the rest of the recommendations on how you can generate real value in your company’s supply chain:

4. Public Pressure Towards Sustainability

  • Challenge:  It seems every day brings a new newspaper headline on the topic of sustainability (Expert insights into COP21).  Customers have been voting with their dollars, devoting an ever-increasing share of purchases to companies that follow sustainable practices in their supply chains.
  • Best Practice:  While you might have the very best of intentions when it comes to sustainability, it can be difficult to communicate this to your supply base both before and after you’ve made an award.  In addition, your sustainability practices and expectations are changing with blinding speed as the market changes.  The RFP your buyer ran two years ago probably doesn’t have your most current information.  And your current suppliers don’t wake up in the morning wondering whether you’ve instituting a new policy that will change   By enforcing use of approved templates through an eRFX solution, you can make sure that all bidders are receiving the most current, accurate information.  Setting expectations early and measuring compliance down the road is key to success here.

5. Regulatory Compliance

  • Challenge:  Small changes in regulations can create big headaches for you.  For example, the US has different food labeling standards by state (GMA Calls On U.S. House to Pass Safe and Accurate Food Labeling Act) which means you could conceivably need to manage fifty different food label and ingredient programs.  Pair this with your tens of thousands of suppliers (see above) and there’s no way you’ll be able to manage that from a spreadsheet.
  • Best Practice:  A strong supply base management platform will allow you to track in a single repository all your supplier profiles, certifications, ingredient lists and contact information.  If a state makes a change that impacts your operations, you’ll be able to quickly identify and contact the suppliers involved and communicate to them what needs to happen.  Best of all, the system will track the responses and submissions for you so that you don’t need to remember who’s complied and who hasn’t. 

6. Collaboration on New Products

  • Challenge:  The Food & Beverage industry has been characterized in recent years by tepid growth with most growth projections in the low single digits (Food manufacturing industry set for 3–4% growth).  To combat this, companies are constantly focused on bringing new products to market that will enable them to capture market share and incremental sales.  However, it’s nearly impossible (and certainly inadvisable) to develop new products without the involvement of your suppliers.  They need to be involved early and often to get the best result. 
  • Best Practice:  Some of the best ideas are going to come from your suppliers.  However, there are two key challenges associated with capturing the best ideas from your suppliers.  First, we hear frequently that much of the meeting time that a salesperson gets with a buyer is spent on administrative tasks (e.g. information updates, certifications) that could be better managed through a comprehensive supply base information management platform.  Second, suppliers need to truly understand your product development process and how they can best contribute.  Make sure you’re effectively communicating this process through your platform (From Concept to Consumer: Food Product Development) and incorporating them where most appropriate through a structured project management platform.  In this way, they can better understand when they’re “on point”, what’s expected, and when it’s due.  This will also allow you to see where the new product process stands and where you might have problems down the line.

For more information on how Scanmarket can help your food and beverage company meet its goals, contact us at