{"id":7257,"date":"2024-05-31T11:16:00","date_gmt":"2024-05-31T16:16:00","guid":{"rendered":"https:\/\/www.mhisolutionsmag.com\/?p=7257"},"modified":"2024-05-31T10:12:46","modified_gmt":"2024-05-31T15:12:46","slug":"food-and-beverage-field-is-ready-to-adopt-a-growth-mindset","status":"publish","type":"post","link":"https:\/\/www.mhisolutionsmag.com\/index.php\/2024\/05\/31\/food-and-beverage-field-is-ready-to-adopt-a-growth-mindset\/","title":{"rendered":"Food and Beverage Field Is Ready to Adopt a Growth Mindset"},"content":{"rendered":"
\n
Industry Focus<\/strong><\/div>\n
<\/div>\n
\"food
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BY TOM GRESHAM<\/span><\/span><\/p>\n

T<\/span>he food and beverage industry is a complex one. In the words of Bobby J. Martens, associate professor of economics at Iowa State University, “Food is both global and uniquely local and personal.” It also carries with it distinctive demands that are fast evolving in a rapidly changing world, and the supply chain is at the center of those developments.<\/p>\n

“As the world grows, we are challenged with using global agricultural systems to produce ingredients and ultimately food, beverages and fuel to meet local and personal preferences,” Martens said. “To do this, supply chains need to be reimagined. We should not give up the amazingly efficient agricultural systems we have today in order to meet these fragmented markets. Instead, we should meet the needs of the fragmented markets by evolving our supply chains to be responsive, flexible, agile and efficient.”<\/p>\n

A Global Industry Swayed by Consumer Choices<\/h4>\n

Martens noted that three regions of the world produce a “massive amount of the agricultural output that feeds and fields the world\u2014directly or indirectly.” Those areas are the Midwest United States, Brazil\/Argentina and Russia\/Ukraine.<\/p>\n

“Most of the world\u2019s growing population lives relatively far from these three areas. So, logistics systems (both storage and transportation) are critically important to move the agricultural outputs from where they are grown to where they are needed for consumption, when they are needed and in the form they are needed (for example, proteins vs. grains),” Martens said. “This is even more important as we seem to be moving from a world of free trade to a bifurcated or divided world.”<\/p>\n

Martens said that mass commoditization describes much of the food production sector, but he sees opportunities surfacing to de-commoditize.<\/p>\n

“First, consumers are willing and able to make choices about what they eat, and these choices can create opportunities to serve in new and unique ways,” Martens said. “Verification and\/or certainty will be important in these supply chains, as consumers will need to trust that they are getting what they want. Consumer choices will likely continue to change agriculture and the food industry.”<\/p>\n

In addition to consumer choice, policy is a constant source of change for agriculture\u2014and therefore the food and beverage sectors, Martens said. The focus on carbon in public policy today is an example.<\/p>\n

“Carbon reduction has the potential to create value to farmers, food manufacturers and from a public good perspective. But, as with consumer choice and preference changes, we will need supply chains capable of efficiently and effectively moving physical products and also capturing information flows associated with product characteristics that are not physically testable\u2014for example, the carbon intensity of raising soybeans in Iowa.”<\/p>\n

Ultimately, a portion of the agricultural supply chains seem poised to be de-commoditized because of consumer preferences and public policy, Martens said.<\/p>\n

“These \u2018new\u2019 supply chains will create new opportunities and challenges,” Martens said. “However, the new opportunities will need to be large enough physically to re-commoditize (remain efficient). Supply chain flexibility and agility will be critical.”<\/p>\n

Packaging and Workforce<\/h4>\n

Food and beverage are linked closely, but Jason Denmon, vice president of sales for MHI member Symbotic, said they do have different characteristics from a supply chain standpoint, and both have distinctive challenges on a granular level, such as in the area of packaging.<\/p>\n

“Food has so much more variability in packaging,” Denmon said. “As you move into the beverage side, there\u2019s more consistency in that area\u2014whether you\u2019re in nonalcoholic or you\u2019re talking about wine, spirits and others, there\u2019s a lot more consistency on the packaging on the beverage side. However, in beverages, everything\u2019s liquid and everything\u2019s heavy.”<\/p>\n

As a whole, the food and beverage sector has many products that require transportation and storage in temperature-controlled environments, creating ongoing demands, while Denmon noted that distribution center labor costs have “skyrocketed” in recent years, spurred upward by the pandemic and then remaining elevated as conditions have improved.<\/p>\n

“I think wage pressure in the warehouse was substantially higher than the overall inflation numbers that we all see reported, and that\u2019s put a big cost on the suppliers and the supply chain,” Denmon said. “It\u2019s just a very physically demanding job, and it\u2019s difficult to staff these roles.”<\/p>\n

Denmon said automation has matured in the past five years, helping provide better tools for food and beverage material handling operations. He said consolidation on both the retailer and wholesaler sides is having an impact on the food and beverage sector\u2014and on their approach to automation.<\/p>\n

“As we continue to see that consolidation, I think it will continue to drive some of the decisions we see being made in the marketplace, and with those larger players, it will drive the opportunity to invest in more automation to achieve higher density and better efficiency in terms of the throughput,” Denmon said. “Those economies of scale come from that natural consolidation across many sectors in this business.”<\/p>\n

Views on SKUs<\/h4>\n

Denmon said the food and beverage industry has seen a “SKU proliferation” as brand owners and merchants give the consumer more and more choices.<\/p>\n

“That proliferation of SKUs is very difficult in most conventional warehouses today, and it\u2019s a real driver of challenges for the supply chains to be able to continue to provide that increasing opportunity for consumers to have more options,” Denmon said.<\/p>\n

Denmon said SKU proliferation is most pronounced in the fresh produce or refrigerated sections of businesses, and the cost of building refrigerated and frozen facilities is “much higher.” That compounds the challenge, he said.<\/p>\n

Click here to read the full feature.<\/strong><\/em><\/a><\/p>\n

ISTOCK.COM\/ROMASET<\/a><\/span><\/h6>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Industry Focus BY TOM GRESHAM The food and beverage industry is a complex one. In the words of Bobby J. Martens, associate professor of economics at Iowa State University, “Food is both global and uniquely local and personal.” It also carries with it distinctive demands that are fast evolving in a rapidly changing world, and …<\/p>\n","protected":false},"author":40,"featured_media":7258,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,10],"tags":[1559,1557,3622,1558,442,1902,1907,466],"class_list":["post-7257","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-features","category-industry-trends","tag-beverage-supply-chain","tag-food-and-beverage","tag-food-and-drink","tag-food-supply-chain","tag-mhi-solutions","tag-mhi-solutions-magazine","tag-mhisolutionsmag","tag-supply-chain"],"yoast_head":"\nFood and Beverage Field Is Ready to Adopt a Growth Mindset - MHI Solutions<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.mhisolutions-digital.com\/mhiq\/0324_volume_12__issue_3\/MobilePagedArticle.action?app=false&cmsId=4196778\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Food and Beverage Field Is Ready to Adopt a Growth Mindset - MHI Solutions\" \/>\n<meta property=\"og:description\" content=\"Industry Focus BY TOM GRESHAM The food and beverage industry is a complex one. 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