Supply Chain of Food Industry Essay Example

monitor the condition of each pallet.

II. In this research paper, we will discuss the complexities and unique factors of the food market that require a suitable supply chain process. We will also examine the challenges faced by food industries and the impact of health concerns on the industry. Additionally, we will explore how forecasting plays a crucial role in managing food safety and quality.

The research paper discusses various aspects of demand forecasting, stock inventory, traceability, and cold chain management in the food industry. It highlights the challenges faced by companies in forecasting product demand and storing perishable items at the optimal temperature. The paper emphasizes the importance of traceability in the supply chain to provide customers with information about products and track their origin. Additionally, it examines the concept of cold chain management for foods that require specific temperature control.

The food market is a vast and intricate industry globally since it caters to the essential need of every individual for daily sustenance. Consequently, numerous industries find it appealing as a potential market. Nevertheless, only a handful manage to thrive and reap rewards from this sector due to the multitude of challenges it poses. The primary obstacle revolves around health concerns, specifically in light of the various food safety scandals that have emerged in recent times.

According to a study conducted by Herman O. in 2009 (source: sciencedirect.com), the outbreak of the H5N1 Avian Flu in 2003 resulted in a significant decrease in exports of uncooked poultry meat. This disease originated from East and South Asia. Similarly, in 2009, the (H1N1) new influenza initially affected Mexico but quickly spread worldwide. Within just nine months, over 200 countries

were affected.

The main concept presented here is that globalization and the movement of people have led to a global food safety issue. This has resulted in increased skepticism among consumers, prompting the food industry to address concerns and provide reassurance regarding product quality. In Europe, for instance, 42% of the population holds the belief that their consumed food may pose health risks. Consequently, consumer demand now includes a necessity for more information on food origins; merely high prices no longer suffice as an indication of superior quality. Presently, factors like origin, environmentally-friendly production methods, and hygienic standards are also taken into consideration by consumers. Additionally, government agencies closely monitor the food market and enforce stringent regulations on companies to ensure proper tracing and tracking procedures are implemented in order to prevent potential health issues.

All these conditions, such as food safety and traceability, serve as trade barriers that hinder market access (Food safety and traceability, 2009; logisticsit. com). The supply chain in the food industry comes with its own set of challenges. Supply chain managers in this industry must adhere to specific conditions in order to prevent health issues and ensure that customers have access to all the necessary information to feel reassured (Food safety and traceability, 2009; logisticsit. com). A key aspect in the food industry's supply chain is forecasting, which plays a crucial role in meeting the demand for fresh products in a market where seasonality is significant (Food safety and traceability, 2009; logisticsit. com).

Supply chain managers need reliable forecasts to be responsive, but forecasting demand is getting harder due to globalization. Today, people worldwide consume products from various regions, posing a challenge for

the food industry's supply chain. They must forecast not only local but also global demand and decide when and where to ship products. Their goal is to ensure timely delivery of the right quantity, avoiding sales loss. The food industry prioritizes sales forecasting due to its perishable nature and the necessity of maintaining high quality (Journal of food engineering 75 (2006), www.).

According to ciencedirect. com, the sale of products is time-limited as it depends on changing consumer demand. Tesco, a British Grocer, developed software to analyze shopping patterns based on weather conditions. This software has been utilized in twelve British regions for three years and has allowed Tesco to predict a 50% increase in lettuce demand if the temperature rises by eighteen degrees.

According to The New York Times, temperature drops result in a significant increase in demand for soup or winter vegetables, which can help reduce costs and prevent food waste. Research suggests that linear and nonlinear models yield different sales forecasting results, with nonlinear methods often proving superior. This has been demonstrated by various studies conducted on a milk production plant. The approach involves closely analyzing factors that impact milk sales, including trends, promotions, and media coverage of competitors' actions.

According to the Journal of Food Engineering (2006), an accurate sales forecasting model and a flexible production system resulted in a 7% decrease in costs at a milk production plant. This demonstrates that forecasting methods are continually improving, allowing companies to utilize both historical data and additional components to enhance the accuracy of their forecasts. The stock inventory method differs depending on the type of product, with canned food having a longer shelf life compared

to fresh vegetables.    

An accurate sales forecasting is crucial in the food industry as it aids in minimizing safety stocks, as stated earlier. While it is challenging to store fresh goods for an extended period to maintain a safety stock, it is feasible with canned food. Therefore, the inventory management system in the food industry is associated with the perishability of products ("The inventory method for the food industry," www.ehow.com).

One effective method to ensure perishable products do not spoil is the FIFO method, which stands for "First in, First out". It is important to sell products with the nearest expiration date before those with a later expiration date. This information can be found on the delivered perishable product itself ("How to manage food inventory", www. how. com). Fortunately, the turnover of food stock is faster than other items as people buy food multiple times a week. This rapid turnover helps reduce the risk of spoiled products, which can result in financial loss for retailers and others in the food industry. Each unsold perishable product represents a temporary unrealized profit ("The inventory method for the food industry", www.

According to ehow.com, the rapid turnover of food products is both an advantage and a risk for manufacturers. The inventory constantly fluctuates due to the continuous delivery and shipment of goods throughout the day.

Having a real-time data warehouse management system is essential for manufacturers to avoid shortages and disruptions in their schedules, which can have a significant impact on profits. By having complete visibility into the inventory system at any time of day, manufacturers can monitor the location and shelf life of perishable products, ensuring they are used

before spoiling ("Inventory Control", Columbus IT).

The Importance of Traceability in Ingredient Suppliers within the Food Industry

According to professionals in the food industry, traceability is not only newsworthy but also a worthwhile investment. Traceability refers to the ability to track and supervise the production, processing, and distribution of food, feed, food-producing animals, or substances intended or expected for use in food or feed.

The concept involves linking the flow of information in the supply chain with the movement of traceable items. Partners in the supply chain must be able to determine how goods arrived at their location. Traceability is worth investing in as it enhances supply management. A traceability system is crucial for optimizing production, assembly, warehousing, and distribution. Additionally, radio-frequency identification systems are now more cost-effective and provide more accurate data and inventory control compared to older devices.

Furthermore, traceability is crucial in ensuring food safety and quality control. In the event of a health concern, traceability systems play a vital role in identifying the origin of the problem and minimizing the production and distribution of harmful or subpar products. The detailed information provided by a traceability system includes the production time, production location, assembly line, and sequence. This specific data assists processors in accurately pinpointing the problem to the exact minute of production and determining if other products from the same batch are also faulty.

The presence of a traceability system helps to decrease the chances of negative publicity and product recalls. This increases consumer trust and confidence in the products they purchase.

According to a source from gov/AmberWaves, traceability in the supply chain involves the collection, recording, and sharing of data. This data can be categorized

into two types: mandatory and optional. Mandatory data consists of essential information that all partners must collect, record, and share. This includes details like lot number, product description, receipt date, ship date, and unit of measure. Optional data refers to additional information that is beneficial but not necessary for establishing traceability. (Source: "Food safety and traceability," Tata consultancy services, March 2009).

Cold Chain Management

Today, in the global food market, products are shipped from one part of the world to another. It is crucial for fresh and perishable products to arrive in good condition and remain fresh throughout the entire shipping process. To prevent spoilage, maintaining the correct temperature for the products is the only solution. However, it is essential for supply chain partners to ensure that they do not break the cold chain during the process. Studies have shown that one third of all fresh fruits and vegetables are discarded due to exposure to excessive temperatures during transportation from farm to consumer ("Hartford Encourages Its Food-Industry Clients to Deploy RFID Temperature Tags"; RFIDjournal.com).

The transportation of temperature sensitive products along a supply chain through thermal and refrigerated packaging methods and the logistical planning to protect the integrity of these shipments is known as the cold chain (source: "The cold chain and its logistics", Dr. Rodrigue and Dr. Notteboom). Fresh food is commonly transported using refrigerated containers, also referred to as reefers, which are containers specifically designed to control and maintain a specific temperature for the transportation of specific products (source: "The cold chain and its logistics", Dr. Rodrigue and Dr. Notteboom).

Rodrigue and Dr. Notteboom propose that cold chain management can be categorized into various

steps, crucial for the successful transportation of fresh food. One of these steps is the shipment preparation phase. This involves evaluating the specific requirements of the product being transported, such as the necessary temperature, destination, as well as the weather conditions in those particular regions.

| Modal choice| The method of transportation for the shipment, taking into consideration factors such as distance, size, weight, and time restrictions.|
Custom procedures| Procedures specifically tailored for cold chain products, which are time-sensitive and typically subject to inspection.|
The "last mile"| The final stage of the shipment where it is delivered to its destination and transferred into storage facilities.|
Integrity and quality assurance| After the delivery, it is important to record any temperature anomalies and information from temperature recording devices to ensure trust and accountability.|
To optimize temperature control during the shipment and supply chain process, a RFID system can be utilized. This system allows partners to track the conditions their products were exposed to while on pallets. Intelleflex's RFID system, for example, provides the condition of each individual pallet to prevent the loss of fresh food due to excessive temperatures ("Hartford Encourages Its Food-Industry Clients to Deploy RFID Temperature Tags"; RFIDjournal.)

com).

Discussion

After reviewing multiple articles on supply chain management in the food industry, it becomes evident that supply chain management varies based on the market and the products being transported. This third party focuses on the unique aspects of supply chain management in the food industry as compared to general supply chain management. III.

Sales forecasting and the importance of accuracy

• It is crucial to have accurate sales forecasting regardless of the market, as it helps avoid waste and reduce safety
  

stock. In the food industry, accurate forecasting is even more vital because perishable products have limited storage time.

Inventory in the food industry

• Different types of supply chain inventory include cycle inventory, safety stock inventory, and anticipation inventory. However, managing safety stock is challenging in the food industry due to perishability constraints. This emphasizes the importance of accurate sales forecasting.

However, weather forecasting tools can help anticipate inventory needs in industries such as food. For example, when temperatures are expected to drop, increasing the amount of winter soups can be advantageous. The food industry typically uses the FIFO method (First in, first out) to manage inventory. This involves prioritizing products with closer expiration dates over those with later dates. Consequently, items with shorter shelf lives are considered more important. The FIFO method contrasts with the ABC inventory control system, which categorizes products based on their percentage of annual dollar value.

The use of RFID

Traceability in the food industry is crucial for reducing health issues and providing customers with desired information, which enhances reassurance. While traceability is primarily achieved through the exchange of information among partners within the supply chain process, RFID systems offer precise tracking of defective products. By implementing RFID, companies can ensure security and gain a competitive

advantage. Improving security and quality is the primary motivation for food companies to invest in RFID systems. Additionally, RFID can aid in managing a cold chain for farmers, retailers, producers, and other supply chain partners.

Indeed, fresh products must be stored and shipped in the right conditions, including the right temperatures. There are now RFID temperature tags that can provide the condition of each individual pallet to reduce the loss of fresh food due to excessive temperatures. These RFID temperature tags indicate the real-time temperature of a specific pallet.

Transportation of Fresh Products

The mode of transportation used in the food industry depends on both the distance and expiration date of the products being shipped. For products that need to be sent to another part of the world with a short shelf life, it is better to use air carriers.

This type of transportation is commonly used in the food industry due to global market globalization. As people now consume fresh goods from various countries, it is necessary to utilize water carriers for transporting products with later expiration dates across continents. Reefers, which are refrigerated containers, are employed for shipping fresh products, ensuring they are kept at the appropriate temperature during transportation. These reefers enable the shipper to have temperature control over the container.

A reefer is a versatile type of refrigerated container that can be a van, a small truck, a semi, or a standard container. This means that it can be utilized for shipments of varying distances, whether they are local, regional, or international. Additionally, a reefer is suitable for inter-modal transportation.