It’s not a secret that supply chain challenges are still an issue for food distributors. We’re still feeling the long tail effects of the covid supply chain disruptions that began in 2020—meanwhile, customer demands are continuing to ratchet up while cost pressures and inventory shortages bear down from all sides.
Of course, it’s not all bad news. Yes, the supply chain challenges that are plaguing food distributors in 2023 are real, and they’re not going to vanish any time soon. But there’s also never been a better time to be a distributor from a technological perspective. New challenges are being tackled head on with smarter, faster, and more connected approaches every year—anything from AI to machine learning to robotics has the potential to uncover new efficiencies with the power to make food logistics smarter and easier across the board.
Perhaps that’s part of the reason that, in spite of the potential hurdles presented by the supply chain, a majority of food distributors have a positive outlook for 2023.
What Are the Top Food Supply Chain Challenges?
When consumers think of the food supply chain, they’re often thinking of disruptions far away or centralized in ports and warehouses—but, in reality, they can cover a wide range of logistics-related areas. Here are a few of those challenges and some best practices for overcoming them.
1. Finding and retaining talent
The driver shortages that make headlines from time to time never really abate, they just fade into the background. Anyone who’s tasked with getting food or beverages from point A to point B knows full well that there aren’t enough drivers or other delivery personnel around to get the job done reliably.
Of course, this is only exacerbated when drivers aren’t being put in a position to succeed. If they’re being asked to meet time windows that aren’t realistic given the constraints of their routes, or they have to stop what they’re doing to manually fill out forms in the middle of a delivery, they’ll be less productive and less satisfied with their jobs. That’s why prioritizing drivers’ needs at the level of planning and food distribution technology deployments can be so important.
What does this look like in practice? First of all, it starts with providing efficient delivery routes that are actually doable. From there, it’s a matter of giving drivers the tools they need to do their jobs well: easy barcode scanning, photo (and potentially signature) capturing for digital proof of delivery, automated notifications to customers when they’re on their way, and connectivity with the back-office in case issues arise. The same thing goes for sales and merchandising teams who are also getting in front of customers regularly.
2. Maximizing delivery capacity
It’s not uncommon to hear that food distributors simply don’t have delivery capacity to meet all the orders that come in. There’s a few reasons for that (see the driver shortage we talked about in the last section), but one of the primary ones comes down to difficulty in route optimization. When your routes are designed to maximize capacity while ensuring on-time deliveries to customers, you can more effectively ward off the issues that crop up when you can’t seem to meet customer demand with your existing capacity.
The phenomenon where you feel like you should be able to complete all your deliveries with the trucks and drivers that you have isn’t unique to food and beverage distribution—you see it in retail and other industries as well. The difference is that the fix for food distributors is more complex. To maximize delivery capacity in retail, you can simply leverage dynamic route optimization to maximize the number of stops you’re making per day. In businesses like food distribution that involve making recurring stops to some of the same delivery sites every week, purely dynamic routing doesn’t really work—after all, you don’t want to rebuild your routes from scratch every day when your top customers are expecting you to arrive consistently at the same time.
This doesn’t mean that there are no routing strategies that food distributors can use to stretch their capacity—on the contrary, by leveraging a blend of dynamic route optimization and static route planning, distributors can fit in more stops per route per day without risking chaos and confusion around the stops that are already set in stone. The key is to figure out how much flexibility you have around the orders you expect; many businesses find that just by adjusting delivery sequences while maintaining the same delivery windows that can get huge efficiency gains.
3. Disruptions and other supply chain challenges
These days, “always expect the unexpected” is a pretty good motto for distributors. This applies not just to things like driver and talent shortages and capacity crunches, but to last minute orders from clients, shortages from suppliers, and constantly-changing demands. You might find that your shipment of Tim’s potato chips is running late in the same week someone places an order for multiple cases of them; or a crate of tomatoes might be in danger of reaching its sell-by date because of a few last-minute cancellations.
Sure, there are some cures for inventory outages, such as avoiding sole-sourcing where possible. But when it comes right down to it, the only reasonable tactic is to build as much flexibility and adaptability into your processes as possible. This can seem like a daunting task when it comes to something as complex as food logistics, but it’s not a completely pie-in-the-sky goal. Here are a few ways that food distributors can be more flexible and adaptable to supply chain challenges like inventory shortages and last minute changes:
- Speed up your routing. Right now, rerouting requires a Herculean effort for most distributors, meaning that when conditions change at the last minute it’s incredibly challenging to update your plans. When you can create optimal routes more quickly and easily, you can handle challenges as they arise while maintaining some semblance of efficiency.
- Enable predictive capabilities. The reason these supply chain challenges are so thorny is that no one can predict the future—but you can at least make an educated guess. With AI-powered predictive capabilities, for instance, you can factor order probabilities, traffic patterns, and projected costs into your delivery plans to help you remain agile.
- Ensure real-time information. Lots of food and beverage distribution outfits rely on telematics for insight into how their deliveries are going—but, in point of fact, telematics data can leave out a lot of valuable information. If you have live data streams that include order and delivery statuses, proof of delivery, instant messages from drivers and customers, and more, you can empower the same level of adaptability in your execution as you have in your planning.
4. SKU proliferation
This isn’t necessarily a supply chain challenge in the sense of originating upstream with suppliers or further up on the logistics chain—but it presents issues for distributors all the same. Order mixes are rapidly changing across the industry, whether you’re delivering more and more varieties of fizzy water, expanding into plant-based meats, or offering more budget-friendly options of a particular good. And each additional SKU that has to get tracked increases complexity up and down the supply chain, from sourcing to warehousing to delivery.
From a delivery perspective, many of the techniques and optimizations we’ve been talking about will help simplify the complexity here. The more quickly you’re able to spin up new plans and adjust existing ones, the more effectively you can handle orders that might change a lot more from week to week than they did even a few years ago. By the same token, route optimization that actually accounts for the importance of regular recurring orders puts you in a position to handle more heterogeneous orders without losing out on efficiency. It’s all a matter of having the right tools for the job.
At the end of the day, we think that a lot of the positive outlook that food distributors are showing right now comes down to the fact that those tools do exist. That even as navigating the global food supply chain is getting more challenging, we’re collectively getting better at grappling with those challenges in a smart and efficient way. Doing just that is going to be critical to overcoming food supply chain challenges over the course of the year.