Supply Chain Brain originally published the following article by Jim Hardeman, CMX's chief marketing officer and chief product officer.
Global supply chain management was already a major factor for U.S. restaurant brands before 2020, a year like no other.
As businesses balanced the impact of COVID-19 on their operations, employees and customers, they also had to contend with unprecedented supply chain issues, including disruptions, interruptions and shortages. As a result, the ability to effectively navigate and manage a large network of global suppliers became much more complicated. Yet just like pre-pandemic times, supply chain management remains critical to the efficiency of restaurant operations, as well as to the quality and consistency of the customer experience.
Make no mistake: globalization has opened up many doors for brands, providing access to new markets and opportunities. But it has also exposed organizations to increased risk and new responsibilities, making success infinitely more challenging to achieve. From dealing with time zone differences and considerable physical distances to variations across language, culture, regulations and infrastructure, a global supply chain operation can be riddled with complexities.
During the pandemic, supply chain snafus have not only roiled the smallest mom and pop restaurants, but also the world’s largest brands. Take Starbucks Corp. Shortages have wreaked havoc on its cafes, with oat milk, cups, coffee syrups, cake pops and other items impacted. In response, Starbucks made changes to its menu and paused production on some lower-sale offerings, focusing instead on those with higher-volume sales.
Decisions like this can also impact brand loyalty: if a restaurant must cancel menu items because of an ingredient shortage, the change can affect its reputation and may even drive away loyal diners. Combine this with another giant hurdle restaurant brands are facing —the specter of labor shortages — which vary from state to state and ebb and flow as the pandemic evolves, and it’s clear why the past nearly two years have transformed food and beverage businesses like never before.
The volatility that has come with the pandemic has made many companies turn to a multi-sourced approach to supply chain strategy, but when more parties are involved, it becomes much harder to identify, quantify, prioritize and mitigate risk for better decision making.
That’s why now more than ever, when it comes to global supply chains, a digital-first approach is needed. Real-time visibility is one of the biggest advantages that digital brings to the table: it paves the way to valuable insights into your end-to-end supply chain. This in turn drives better decision making and proactive quality management — the keys to modern supply chain quality and risk management.
Data insights are also essential to maintaining product consistency and safety across all brand locations, and are the foundational underpinning of a quality dining experience, which is directly tied to customer retention. In short, real-time visibility can make or break your entire restaurant business today.
In the rapid-paced, hyper-competitive world of food and beverage, juggling the various demands of global supply chain management to satisfy ever-changing customer expectations is no simple task. Following are four digital-first best practices for overcoming challenges
Keep supplier scorecards. Managing a network of suppliers that may be located on multiple continents involves a good deal of vetting, as well as effective onboarding of new partners. Because most brands have in-country partners, it’s important to maintain supplier records on a regular basis, as well as quality and compliance data, along with continual measurement of performance through scorecards.
Monitor end-to-end data. In order to ascertain product quality, safety and compliance, continuous monitoring of data points from both internal and external sources is imperative. A modern supply chain operation should be able to extend the reach of its technology to partners and suppliers, making end-to-end visibility possible.
Practice product lifecycle management. PLM is the process of managing a product throughout each stage of its development. It can and should be employed on a global scale, both internally and with R&D and suppliers, to ensure the consistency, safety and quality of products.
Resolve quality incidents. The efficient and expedient resolution of product quality incidents and product recalls may be two of the most complicated components of a global supply chain involving a network of suppliers. However, it also confirms why diligent data collection and analysis are so important. The historical documentation of product withdrawals and recalls can reveal patterns and potential issues with certain suppliers or processes that can then be quickly rectified, saving brands time and money while putting customers’ health and safety first.
The goal of ensuring safe, high-quality finished products while maintaining consistency and compliance becomes exponentially trickier as your business ventures beyond its original borders. From sourcing the various inputs to packaging, transporting, storing, selling and servicing products across multiple locations, the larger the business, the more vigilant your oversight needs to be.
In spite of the challenges, there is a proven path to success. The key is to not make global supply chain management a guessing game. The risk is too great. Use real-time data insights to scale end-to-end visibility and more informed decision making.
Ultimately, going digital will allow you to drive improvements in quality, consistency, safety, guest experience and more.
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