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In the food industry, there is nothing quite so harrying and so fraught with risks as in the challenge of delivering fresh food to the marketplace. Think about it: bread, vegetables, fruit, meat and meat products, fish, and prepared meals are all products with extremely short shelf lives. The supply and the quality on the purchasing side can vary. And even if demand does adhere to relatively predictable patterns, it can also be quite fickle in response to such factors as the weather, seasonal preferences and the effectiveness of promotions. A hearty winter stew during a week of unseasonably mild winter weather? Demand will undoubtedly fail to meat sales projections. A promotion around meat products for the barbecue during a torrid summer heat wave? You can’t stock enough product to meet customer demand. Good projections may be crucial, but they must be coupled with an ongoing focus on maintaining an extremely effective capability to react. In my view, for the food industry, the challenge of fresh food production is akin to the challenge that Formula 1 teams must meet to remain competitive.
Today for tomorrow – or even today for today. That’s what is involved in fresh food production. And it begins right at the start of the process. With supplies kept as low as possible, because of the short shelf life. Where the right number of people on the production line needs to be precisely planned in advance. And where the machines need to be functioning properly. Maintenance must be planned and carried out with the efficiency of a pit stop. After all, the smallest glitch can have a huge impact on delivery performance at the end of the line.
Supplies, people, and machines (resources) serve as the foundation for the reliability of the production process. But the most crucial factor in ensuring daily production of fresh food is an optimally structured supply chain, based on the most accurate demand forecasting possible. The more accurate the forecasting, the better the performance and the lower the costs. You can then determine with great precision the supplies and capacity you will require. To extend the Formula 1 metaphor, the more reliable the car, the more likely you can achieve fast lap times and success on the track.
So if you have your resources and your forecasting in order, then you should be able to meet the predicted demand. But still, the unpredictability of a dynamic market in fresh products can play havoc with the best-laid plans. You’re never dealing with stable production levels, and you’ll trip yourself up if you are willing to settle for daily production controls. Because all of the sudden, demand can dramatically rise or fall. However good the current or historic sales data upon which you base your demand profiles and forecasts may be.
In the production of fresh food, you must therefore remain intensely focused on the present. You survey the future, but you need to be at least as alert to all the developments and signals that will determine demand just one day or even one hour ahead. The closer you are to the customer, the more accurately you can anticipate and react. Accordingly, it is absolutely essential to respond to those developments appropriately. Likewise, precise communication is crucially important: when the demand rises or falls, planning needs to be revised and production adjusted. And then it’s your responsibility as operations and supply chain manager to communicate the right information and the right consequences to the right people and the right points along the production process. And if you make the wrong decision or there’s a lack of clarity, you get disorder or panic. Then the process spins out of control.
So what’s required is both a reliable and efficient race car and some pretty high-level driving skills. Giving the machine a just little extra gas, or tapping the brakes at just the right moment. And then shifting gears in an instant, adjusting the course and full speed ahead. To round the curve as tightly and efficiently as you possibly can. Those managers who are able to continuously maintain their focus are performing like the very best athletes. In comparison, any other sport they attempt will seem like child’s play to them.
Ronald Visser
Partner @ARV Group