It is well known with fresh food distributors that the goods they handle are fast moving. They need to be brought inand moved on out as quickly as possible due to the nature of the shelf life these products have. This, if not managed carefully, can lead to a level of waste created by the business, and as a result a loss of profit.
To address the problem, we must first know the extent of it. According to WRAP (Waste and Resources Action Program), an organisation that promotes positive economic and environmental action and growth, state that over 2 million tonnes of fresh produce are lost or wasted each year in the supply chain alone. It is estimated that the UK fresh produce industry could make savings of between £400 million and £500 million a year if action were to be taken to prevent this. According to the same study, the three most significant factors that cause waste are:
1) Products which do not reach their intended market - due to oversupply or changes in order specifications which mean that there is an unexpected surplus.
2) Loss of product because of poor supply chain management - This could include factors such as erroneous forecasting, or a poor level of communication with suppliers which leads to purchasing more than is needed, and his in turn produces waste. It is estimated that between 5% and 7.5% of total annual waste comes from this factor alone according to WRAP.
3) Damage through handling and storage - This comes from damaged goods to a lack of appropriate care at the storage facility before they are distributed out to customers.
These problems are an issue for both the business and the customer. The customer loses out on goods, and the business loses out on money by buying stock that it doesn’t need. Sometimes this may be unavoidable, due to last minute changes in the contract for example. On other occasions it may be down to the accuracy of a business forecasting and reporting. This can be achieved through the application of an ERP. Enterprise Resource Planning (ERP) is a form of business software that allows a complete overview of a business through the integration of modules for different elements of the business. In this way, businesses can have full transparency over their supply chain. There is software that is specifically engineered for the fresh food sector and is therefore optimised to manage the challenges that such a fast paced industry faces.
For the fresh food industry, speed and the ability to react quickly to changing order or situations will always be key to succeeding in such a fast paced industry. Integrated modules that can produce accurate reporting from a financial, customer service and supply chain perspective greatly improve the overall visibility of the buying cycle and in turn streamline internal process. By reducing errors, a business can save money through accurate orders and therefore not ending up with a surplus of goods. This is beneficial to a business, because they are only spending directly what they need as well as reducing any loss on goods which are not eventually moved on.
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