Overview of the UK Food Industry
In the food industry, the supply chain incorporates following key functions such as: production, processing, distribution, retailing and consumption process (Min, Zacharia and Smith, 2019). It also incorporates a demand forecasting function so that companies can estimate about current preference of the buyers in an effective way (Meindl and Chopra, 2015). Moreover, for this report the selected industry is the UK Food industry. As per the data published by the Food and Drink Federation (FDF), manufactured food and drinks contributed €29billion or 2.3% to the UK’s economy in the year 2018. This industry also employed 440,000 people across the UK (Fdf.org.uk, 2021). Although, COVID-19 resulted in the restriction of almost everything and thus COVID-19 had an adversely impacted food industry. Still now COVID-19 issue causes various uncertainties and disruptions in the food industry. As per the data published by the World Bank for the year 2022, maize and wheat prices are 26% and 23% higher than January 2021 (Worldbank.org, 2022). These average figures showcase that the food industry of the UK is still facing adverse challenges due to the impact from COVID-19. Apart from this, in this report, there will be discussion about the ways through which supply chain structure has been changed due to COVID-19, ways through which COVID-19 has managed to tackle inventory management, advanced technologies in the supply chain, etc.
Figure 1: Intracen.org, 2020
As per Meindl and Chopra, the definition of the supply chain can be divided into three major sections such as: supply chain management (SCM) as a philosophy, SCM as a set of activities and SCM as a part of management processes (Lysons and Farrington, 2010). Although, the definition of the SCM as a part of management processes will be appropriate to consider. There are following key processes which are related to supply chain in the food industry (out of 8 processes only those processes are selected which are relevant for SCM in the food and drink industry) such as: customer relationship management, demand management, order fulfillment and supplier management (Lysons and Farrington, 2010). On the other hand, procurement in the SCM incorporates discussion about sourcing, obtaining and paying for good and services. It can be said that procurement is the sum total of the entire efforts that goes into discovering and acquiring supplies to a specific sector or organization (Saberi, et. al., 2019). Apar from this, below figure 2 showcase about the status of the global supply chain.
Figure 2: Ft.com, 2020
Ernst & Young LLP (EY US) conducted a survey on 200 senior level supply chain executives in the last quarter of the year 2020 (Harapko, 2021). EY US conducted this survey with an objective to effectively analyse certain key findings related to impact of the COVID-19 in supply chain operations. This survey indicated that in the re-structuring of the supply chain functions re-skilling of supply chain workers will be going to play an important role. After COVID-19 is impacted, it is important to train team members from linear supply to perform more integrated supply chain network by connecting different team players (Fasan, et. al., 2021). In order to maintain the supply chain worker retention rate in the food industry, the industry should focus on offering training to the workers for handling advanced tools which can result in simplifying their operations in the effective way (Harapko, 2021). Moreover, below figure 3 showcase about the condition of COVID-19 on logistics market (pre COVID-19 as compare to post COVID). Below figure showcase about information from the year 2018 to 2021.
Supply Chain Processes in the Food Industry
Figure 3: marketsandmarkets.com, 2021
Another major restructuring in the supply chain functions incorporate that the companies should focus on the adaptation of the skills of the next generation such as: artificial intelligence, machine learning and other key technologies which can help in transforming the operations of the supply chain in the effective way. For example: the utilization of artificial intelligence will result in the automation of repetitive task in the SCM. Although, there are certain benefits of adopting automation in the supply chain such as: it can improve productivity, it can improve accuracy, integration with large suppliers can be formed, it can improve compliances, etc (Abdullah, Rahardja and Oganda, 2021). As, automation across the value chain can also transform logistics and supply chain operations in the effective way (Min, Zacharia and Smith, 2019). In the food sector, it is necessary that the companies should have real-time data related to the consumer’s current taste and preferences because it can lead to reduce wastage in the warehouses. For example: suppose Arla Foods conducted a demand analysed on the bases of the past purchasing history of the consumers by utilizing artificial intelligence (AI). After the demand analysis Arla Foods concluded that these years their demand will be decreased by 12% to 15%. Now, on the bases of this analysis the company decided to order 15% less raw material from the farmers for producing goods. So, in this example, it can be analysed that conducting demand analyses by taking use of AI data help the company to focus order less raw materials from the suppliers. This resultant in less wastage of excessive raw material in the warehouse (Koberg and Longoni, 2019). Below figure showcase about the warehouse automation:
Figure 4: sdcexec.com, 2020
Supply chain industry of food sector now started offering flexible working arrangements for their employees. There are certain jobs in the supply chain which can be completely or partially operated by the employees who are working from home or remotely. For example: manufacturing jobs, reverse logistics, operation jobs, etc. This new trend has started emerging in the supply chain operations after the intervention of the COVID-19. Here, it is important to understand that the company should focus on empowering their employees with the relevant practices which can be adopted while working from home (Modgil, et. al., 2021). As, in reality, it is a fact that employees who only conduct working from their home faces various issues related to work-life balance. Issues related to work-life balance eventually cause dis-satisfaction among them. Thus, it is suggested that an organization should also guide their employees about specific steps which can be adopted by them while working from home (Raj, et. al., 2022).
After the COVID-19, supply chain functions are required to reinforce their screening protocols so that proper hygiene levels can be maintained in the effective way. For example: after the COVID-19 outbreak, customers as well as companies are focusing towards adaptation of better hygiene levels. So, change of reinforcing screening is also changing the supply chain operations. For example: now companies are guiding their warehouse and logistics employees to pack goods with a direct human touch. This will help in maintaining better level of hygiene in an effective way (Ahmad, et. al., 2021). Although, companies which handle SCM operations adapt the different level of screening protocols by keeping in mind the interest of the general audiences. Although better screening protocols can help the company to protect their consumers as well as their own employees from getting infected. Now, it is suggested that companies should who are changing their screening protocol should promote among the audiences because it can positively impact to their sales and annual revenues. Apart from this, there are certain things which are also transformed after the intervention of the COVID-19. It is necessary that companies should make sure to train their employees on the following measures such as: gaining data insight, real-time inventory management, monitoring vendor performance, focusing on increasing transparency in the operations, etc (Alkahtani, et. al., 2021). Moreover, below figure 3 showcase about how COVID-19 had negatively impacted the 72% supply chain industry.
Impact of COVID-19 on Supply Chain Management
Figure 5: Harapako, 2021
In this section, there will be discussion about ways to tackle inventory management after the breakout of COVID-19:
1: Just-in-time (JIT): companies in the food industry can take use of the JIT system to effectively provide an exact quantities which are required to complete current production. For example: Walmart uses JIT method so that their supply chain and warehouse department can analyse about how much quantities they should order from their suppliers to effectively eliminate wastage (Greenspan, 2019). Walmart is also known in the market for incorporating cutting-edge technology applications in its inventory management. Here, it is important to understand that demand predictive analysis is the necessary function which need to perform in the JIT (Greenspan, 2019). The use of predictive analysis helps the supply chain department to analyse about estimated quantities. Apart from this, vendor managed inventory (VMI) method can also be used by the companies to manage their manufacture or supplier in the effective way (Praharsi, et. al., 2021).
Figure 6: Jenkins, 2020
2: Method for utilizing real-time data in inventory management: after the COVID-19 outbreak, it is clear in the supply chain network of food industry that real-time data information is the most critical element in the inventory management cycle. For example: suppose, Iglo Group decided to change their supply chain functions after COVID-19 outbreak so the company decided to implement following key elements such as: forecasting data and automatic ordering functions. In this case, Iglo Group can focus towards utilizing perpetual inventory management software to ensure that they supply chain department is getting real-time information. Later on, on the bases of their real-time data the company can order certain stocks from their suppliers. Real-time data information is also linked with performing different analytics functions to make sure that data is accurate and supply chain reliable on the given data or information (Farooq, et. al., 2021).
3: Material requirement planning (MRP) method: it is an inventory control method which the manufacturer orders the inventory after considering the sales forecast method. As, MRP system integrated data from different sources which can help the supply chain to reach on the conclusion about how much stock or inventory they should order? In the MRP inventory system, a sales forecast is the important part in the MRP method. Apart from this, there are three important parts of the MRP inventory method such as: ensuring raw material which are available for production, maintaining the lowest possible material and planning of purchase initiatives in the effective way. Although, it is important to understand that MRP is different from ERP. In the ERP systems, it helps to plan and automate variety of back-office functions related to supply chain and MRP system focuses on material management functions (Hosseini and Ivanov, 2021).
4: Open-to-buy (OTB) inventory management: OTB inventory management techniques can be used for future inventory orders to manage ongoing inventory for all the future inventory orders from suppliers. OTB enables the supply chain department to analyse how much inventory they should purchase while maintaining a positive cash flow. There are certain elements link with the OTB formula such as: planned beginning of month inventory, planned sales, planned markdowns and a forecast of balance inventory (Hu, et. al., 2021).
Advanced Technologies in the Supply Chain
Global SCM is moving towards incorporating the use of advance technologies such as: AI, machine learning, etc. The reason behind the adaptation of these technologies are as follows: tightening data security, predictive modeling, providing supply chain visibility, automating inventory management, improvement of customer service, etc. AI and ML incorporate the potential to create semi-automated and fully-automated practices. For example: Currently Amazon.Inc uses AI and ML based operations in their supply chain network to automate different functions related to ware house and logistics (Kähkönen, et. al., 2021).
Supply chain managers of MNCs and large-scale companies are focusing towards utilizing predictive analysis as well as demand analysing software so that they can analyse statistics about upcoming demand from the market. For example: there are following SCM forecasting methods that can be used to predict about upcoming demand such as: exponential smoothing, auto-regressive moving average, multiple aggregation prediction algorithm, etc. For example: Woolworths Group conduct the predictive analysis by incorporating advanced data and visual analytics techniques across multiple key functions (supply chain is also included among these areas) (Brien, 2019). As per the reports, retail giant Woolworths selected the software name as “Tableau” to commence the process of visual analytics tools. According to the Woolworth Group General Manager. Doung Frank, the use of data analytics and Tableau forms help the company to conduct ongoing insight-drive decision making in the effective way (Brien, 2019). Moreover, below is the algorithmic forecast model related to the supply chain.
Figure 7: Banker, 2019
Cloud computing system helps the supply chain managers in the food industry to smoothly conduct hybrid SCM model. For example: suppose Findus Group take use of the SCM decided to implement cloud computing system. After implementing cloud computing technology in the system, it can be expected that Findus Group will able to closely track their entire product lifecycle and the company will also able to govern all of their suppliers with the help of a specific centralized system database. Apart from this, it is important to understand that traditional supply chain management software is highly transactional and they cannot offer real-time data accuracy to the users. Moreover, in the global supply chain industry the companies are now aiming towards the incorporation of cloud-based computing network due to various associated benefits. Such as: cloud-based services effectively keep the chain connected, enabling a more strategic approach for each inventory deployment, it helps in monitoring delivery networks, etc (Farooq, et. al., 2021). Now, here an argument can arise that whether cloud-based computing solution can be implemented by the large-scale companies only or it can be implemented by SMEs also. The answer is that cloud-based supply chain network can be adopted in SME’s as well in large-scale companies. However, it is important to understand that when large-scale companies implement supply chain in their operations then they are able to get various additional benefits such as: high speed deployment, data security, collaboration, unlimited storage capacity, etc. Here, the reason behind the gaining additional benefits is that large scale organizations are able to implement huge capital as well as they are capable in allocating a specific team for handling cloud-based supply chain operations (Hosseini and Ivanov, 2021).
Flexitime Working
Block-chain-based technology can be used to form a smart contract in the supply chain of food industry. Although, block-chain technology can effectively distributed ledger technology and it will also create transparency in the supply chain operations. For example: suppose Amazon decided to transform their supply chain-based operations into block-chain based technology. So, in such a case, Amazon will able to experience an immutable record of different transactions and this technology will also track the provenance of trust in shared supplier information. Thus, it will resultant into two primary beneficial points such as: it will create more transparency in the operations and transactions created on the block-chain cannot be erased (Alkahtani, et. al., 2021). On the bases of these arguments, it can be evaluated that block-chain based technology has the huge potential in the supply chain operations. However, currently global technological giants are not even fully utilizing artificial intelligence-based and machine learning-based technologies in their supply chain. As of now, companies should first focus on implementing AI based operations as well as machine learning-based operations to empower their supply chain units.
From the above context, it can be evaluated that companies in the food industry are adopting different practices to effectively transform their supply chain-based operations. In reality, suppose if any organization decided to change their supply chain operations by implementing artificial intelligence, machine learning and cloud-computing functions. Before implementing these practices, a company should not forget to take use of a specific leadership style to govern the operations (Praharsi, et. al., 2021). For example: in the above context, organizations can take use of the autocratic leadership style in the effective way. The reason behind suggesting the autocratic leadership style is that it will enable the leaders to take their own decisions without much interference of the team members. Although, if an organization implements AI based functions in their operation, then it will be a new approach for the employees as well as for the employer. So, in such cases, it is more appropriate to take a use of autocratic leadership style instead of utilizing any other leadership style to govern the operations (Ahmad, et. al., 2021).
Apart from this, the trend for work from home or remote working is increased in the supply chain and logistics. It is suggested that the companies should focus towards the mental health of the employees. HRM department should guide employees about ways through which they handle their logistics operations and ways through which they secure their work-life balance. Many employees worldwide are facing the issues related to work from home because it is creating an immense issue in their work-life balance (Hosseini and Ivanov, 2021). So, it is recommended that when companies are allocating work from home to their supply chain and logistics employees then the management should also guide employees about relevant practices related for maintaining proper work-life balance. The primary reason behind suggesting this recommendation is that if employees will able to create proper work-life balance then it will lead to mental satisfaction. So, the idea behind this recommendation is to only make sure that employees are able to work more pro-actively and to generate higher productivity level (Alkahtani, et. al., 2021).
Conclusion
Conclusion
COVID-19 pandemic has created influence on the supply chain departments of the food industry to implement following key measures such as: re-skilling of the supply chain workers, utilization of machine learning/artificial intelligence, restricting non-essential travel of the employees and offering flexible working options to them, etc. For example: after COVID-19 outbreak, the companies are required to offer training to their existing supply chain workforce about ways to use artificial intelligence or other advance technologies to commence supply chain practices. Apart from this, it is also concluded that there are certain inventory management techniques which can be used in the supply chain after COVID-19 situation. Such as: utilization of just-in-time technique, method for utilizing real-time data, material requirement planning (MRP) method and open-to-buy inventory management.
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