Food and Beverage Industry Turns to Technology Amid Challenging Market Dynamics
It’s been said that Ginger Rogers was more talented than Fred Astaire because she did everything her dance partner did but backwards and in high heels. In a sense, food and beverage (F&B) manufacturers and distributors can make a similar claim when compared with companies that sell other kinds of products: In several key areas, they face a much higher degree of difficulty.
F&B companies must move raw materials and products in much the same way as other companies, but they also must deal with stringent food safety regulations, cold and wet working conditions, preserving the cold chain on frozen and refrigerated goods, fast-moving consumer staples that expire quickly and low profit margins.
In June, Allied Market Research published a report estimating the global cold-chain tracking and monitoring market to be worth $4.6 billion in 2020, with that figure expected to climb to $15.2 billion by 2030. That huge expense reflects just one of the challenges facing the companies that keep America well fed.
Kevin Ledversis, vice president of sales for MHI member Newcastle Systems, said the labor shortage affecting most businesses is more acute for F&B companies because of the difficult working conditions, and that’s forcing them to adopt automated solutions more quickly. His company manufactures powered industrial carts and mobile workstations that aim to make warehouse employees more productive.
“If you stick somebody in a zero-degree environment all day, that’s a hard job,” he said. “That’s why efficiency is so important. They’re trying to get as much as they can out of the people they have because the labor situation is so unpredictable right now. I’ve been at warehouses where a third of their workforce didn’t show up that day, and you can’t really operate a business that way.”
In response to the challenging business environment, F&B companies are changing their operations in numerous ways. Here’s a snapshot of four industry trends from supply chain experts helping F&B companies boost their throughput.
Going big, and going small
F&B companies want to place inventory as close to consumers as possible to speed up order fulfillment, which is leading to an increase in the number of micro-fulfillment centers and dark stores in use, according to Glenn Lundgren, regional sales director for the central United States at MHI member JLT Mobile Computers. The company makes durable vehicle-mounted computers, tablets and handheld devices for the industrial space.
Micro-fulfillment centers in high-population areas allow retailers to address seasonal product demands more efficiently and to restock the 20% of products that account for about 80% of sales more quickly and reliably, Lundgren said.
At the same time, however, F&B companies recognize that size matters, especially in light of increasing order volume and plans for future growth, he said. He pointed to the April announcement that Smithfield Foods was partnering with Lineage Logistics to build an enormous, automated distribution center (DC) in Olathe, Kansas.
The DC will span almost 20 million cubic feet and will automate 97% of product movement throughout the facility, the companies said. It will have 18 automated cranes to move inventory and will feature one of the largest temperature-controlled layer-picking systems in the world. Layer pickers disassemble and reassemble pallets of goods, a process traditionally performed manually.
“Micro-fulfillment centers are getting a lot of use on the retail front, but from the production side, I think you’re seeing that bigger is better,” Lundgren said. “That new plant will have more than 62,000 pallet positions, so get your mind around that. I mean, it’s huge.”