Roundtable talk: Food industry supply chain challenges
Australia is a significant player in the global food industry. The CSIRO estimates the Australian industry feeds 60 to 75 million people, at home and abroad. However, the supply chains from producers to consumers are long and complex, and the Australian food industry is vulnerable to many potential supply chain disruptions. To build robust supply chains it is essential to identify, understand and, where possible, anticipate these disruptions, which can have environmental, economic, social, governance or geopolitical origins.
Of course, the major players in Australia’s food and beverage sector are highly competitive, but all face the same challenges. Coming together and sharing those challenges can be very helpful, and even lead to shared solutions to common problems.
A recent roundtable lunch discussion among C-suite executives from major brands in the F&B industry across ANZ revealed some important insights for any business looking to stay competitive in the industry and survive ongoing disruption.
The discussion, organised by global enterprise and digital services company Fortude, covered a range of hard-hitting topics, including the impacts of inflation on cost structures; supply chain complexities; recruiting and retaining workers; and, more broadly; the challenges of setting and meeting environmental social and governance (ESG) goals around supply chains.
Some of the most important learnings from the event included:
Collaboration is key to increased efficiency
The potential for competitors to collaborate and increase efficiency in shared supply chains was well demonstrated by one National Supply Network Manager of a major dairy and food corporation. Realising that many of their competitors were using the same transport company to collect milk from dairy farmers, this company put in place a single arrangement to serve them all, reducing costs, increasing efficiency and giving greater certainty to the transport contractor.
Another Global Head of Supply Chain said their company was constantly looking to find opportunities for collaborations that would reduce cost, improve predictability and enable growth.
Experts agree that high levels of collaboration will be necessary in the post-COVID climate, even between companies that had previously considered themselves competitors. Dr Hermione Parsons, director of the Centre for Supply Chain and Logistics at Deakin University remarked that “COVID-19 taught us some very painful but important lessons about the vulnerabilities in our food supply chains and our dependence on global trade, reminding us of the need for more resilient, agile, purpose-driven supply chains”. Her remarks were prompted by the dramatic reduction in international air travel, which had hit Australian food exporters hard. Local F&B producers had long relied on using heavily-discounted cargo space available in outgoing passenger flights – and when this collapsed, so to did their high-value exports.
Ensuring traceability and building resilient supply chains
The challenges imposed by complex supply chains were raised several times, as were the challenges of ensuring traceability across supply chains, especially those that cross national boundaries. One procurement manager said they had onshored many supply activities and products to build resilience into their supply chain
Supply chain participants are also increasingly looking to exploit blockchain technologies to develop end-to-end traceability. One example is a collaboration between Coopers Brewery, Grain Producers South Australia and agritech startup Trust Provenance. Trust Provenance’s blockchain-based software captures data from points on the barley’s journey and links into Cooper’s software to provide total traceability from paddock to beverage.
ESG is a must, not a maybe
Another common theme centred on ESG goals. Several participants made it clear that these were not optional: major clients — especially multinationals that need to meet national and international standards for their carbon footprint — demand them.
Stories also emerged for some remarkable, and innovative sustainability initiatives, like the company using the larvae of soldier flies to convert its waste product into pet food.
It was also shown that carbon footprint reduction and increased business efficiency go hand-in-hand. One supply chain director said remodelling their distribution and optimising their warehouse layout had increased efficiencies and reduced both costs and carbon footprint.
However, as one Head of Supply Chain Finance pointed out, sustainability and carbon footprint goals can be difficult to achieve in the food industry where supply planning has long cycles and where key factors — the quality and quantity of harvests —are subject to the whims of mother nature.
Roundtables present an invaluable opportunity for C-suite leaders to educate and inform each other in today’s volatile economic climate
Supply chains have faced significant challenges in recent years. First came COVID-19, and then the war in Ukraine. The impacts of climate change — fire, flood and drought — will impact food production for the foreseeable future. Disruption will be a constant, and risk to the food supply is a risk to us all.
However risk creates opportunity, and Australia is well-equipped to seize this opportunity. Australia is well-endowed with natural resources, and talent. By co-operating and collaborating and taking a well-planned scientific approach to the challenges we face we can identify our unique advantages and opportunities and make our food production and distribution systems more supportive of health, more equitable and more sustainable.
In this current climate where disruption is never too far around the corner, Australian food and beverage companies must be more willing than ever to work together and overcome shared problems.
This roundtable discussion was held in partnership with Infor – a global leader in business cloud software products for companies in industry specific markets.
The Food and Beverage industry is one of the key sectors for which Infor provides tailormade solutions. Its F&B ERP provides greater traceability across supply chains helping iron out inefficiencies and wastage, ensures food safety standards are met, while enabling a better understanding of customer requirements.