The 4 drivers of consolidated supply chains

Posted by Matt Stillwell on Apr 3, 2017 6:20:11 AM

The 4 drivers of consolidated supply chains

Your business thrives on the fast turnaround of complex and rapidly changing orders for a huge variety of customers, produce types and packaging requirements.

But competition is fierce, with growers, traders and retailers throughout your supply chain all looking for points of differentiation. 

Success increasingly depends on greater connectivity between buyers and suppliers, enabling you to share data and make joint decisions in real time.

A shorter and more efficient supply chain can provide opportunities to gain competitive advantage and become more responsive to customers. It can increase speed and accuracy throughout the sorting, packing and distribution process, improving product quality, increasing product supply, expanding diversity and lowering costs.

In this article we look at the trend towards consolidated supply chains, describing what is happening and why, as well as the changes you should anticipate.

To find out more about the top trends impacting repackers, download our new guide: Repackers face the big squeeze: Increase the profitability of your operations while responding to customer demand.

So what’s happening?

There’s been a rise in organized and vertically integrated supply chains, underpinned by strong communication and controls throughout the chain.

Supermarkets are looking for ways to guarantee 365 day availability by integrating their supply chain with preferred suppliers, or dealing directly with the source. They are concentrating upstream at the procurement and transportation elements closer to the fields where produce is grown, and even opening their own sorting and packing operations to hasten the procurement process.

Growers are forming cooperatives to build scale and professionalism, solve challenges together and better meet the demands of retailers.

Why is it happening?

There are 4 big drivers of vertical integration in the fresh produce sector: 

  1. Food safety is a priority for both consumers and buyers and extends right through the supply chain at every step. Retailers are expanding their test regimes to ensure consumer safety and food trust.

  1. Corporate social responsibility (CSR) is increasing in importance for retailers as consumers increasingly make their purchase decisions based on CSR. It includes initiatives to assess and take responsibility for labor conditions, production methods and environmental impacts.

  1. 365 day availability of quality products on retail shelves is now taken for granted. Retailers are looking for ways to move product faster through their own distribution networks. The more of the supply chain they control, the easier and faster it becomes to guarantee availability.

  1. Cost out (while capturing all margins) is a huge benefit of supply chain consolidation and integration. The last step (or ‘last mile’) is the most expensive leg of the supply chain, and savvy retailers are increasingly shipping direct to the consumer. Rather than keeping goods in stock, they are passing customer orders on to the manufacturer, other retailers or wholesalers, who then send the goods direct to the customer. ‘Click and collect’ is another growing trend that uses the existing infrastructure in place at retailer distribution centers and stores.

What’s the impact on you?

To protect and grow your business, you’ll need to find ways to work in partnership with customers and produce suppliers to vertically integrate your supply chain.

Consolidation doesn’t have to be a complex process. With the right tools, processes and partners, you can meet retailer needs for guaranteed price, timely delivery, year-round availability, uniform quality and trustworthiness, as well as generate new market insights.

The end result is a strong, efficient and robust supply chain that enables you to meet consumer demand, reach new segments and differentiate brands.

To find out more about how you can make your supply chain shorter and more efficient, download our free new guide: Repackers face the big squeeze: Increase the profitability of your operations while responding to customer demand.It describes the big trends changing the fresh food industry, as well as examples of companies that are successfully evolving their business models.

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Topics: Automation, Sorting Technology

Matt Stillwell

Written by Matt Stillwell

Digital Marketing Manager - TOMRA Food