News Snippets, Strategy

Healthier Food Supply Chains Require Flexibility, not predictability

By Bhavik Vashi, Area Vice President, Asia, Anaplan

From mask to computer chip shortages – and more recently disrupted food supply in Asia – it seems supply chain delays are expected to continue well into 2022 and beyond.

Hitting consumers directly in their taste buds, a shortage of potatoes has been one of the latest setbacks to Asia’s food and beverage (F&B) businesses this year, with major food chains like McDonald’s Japan announcing earlier this year that its fries will only be sold in the smallest package size. Similarly, earlier this year KFC Singapore replaced its French Fries – a long-standing menu staple with a “potato waffle hash” substitute.  These challenges are further amplified by a 40-year high spike in inflation of the US dollar which is increasing costs to the general consumer.

These issues have shown that global supply chains remain vulnerable despite the heightened focus on innovating the ecosystem through digitization. A range of macroeconomic factors, primarily led by the ongoing armed conflict in Ukraine has severely affected international wheat, fertilizer, and sunflower oil exports, disrupting the most carefully planned supply strategies. The fallout of the conflict has even made its way to Southeast Asia with Malaysia imposing a temporary ban on the export of chickens due to a severe poultry shortage, prioritizing its citizens. This shortage is ultimately caused by the surge in chicken feed prices, which Ukraine is a major exporter.  The effect has immediately impacted Singapore which is dependent on Malaysia for the import of fresh chicken – and forced many Singaporean F&B owners to close their businesses. Such random shocks and impacts on everyday lives have seen increasing regularity despite the efforts of governments and corporations, and predicting the next disruption will be increasingly difficult.

Diversification could increase complexity – but doesn’t have to

To strengthen supply chains, many businesses have looked at diversifying suppliers to avoid over-reliance on a single market or source. However, a pre-pandemic survey by Anaplan revealed that 46 percent of companies struggled with visibility with their supply chain partners and 76 percent had trouble integrating their systems with the various suppliers. This led to more administrative work to balance the supply and demand.

Strategies to diversify the supply chain could help alleviate the ongoing supply issues and increase overall business resiliency. But they could also lead to increased costs, complexities, and regulatory requirements if not handled properly. Therefore, there must be a set of people, processes, and technology for F&B businesses and associated stakeholders to enable supply chain networks to collaborate effectively and cost-efficiently.

Forecasting needs to evolve and become dynamic

In today’s digital and globalized economy, companies can no longer afford to be comfortable sticking to planning and forecasting manually on spreadsheets or other legacy planning tools. Even before the current pressures surfaced, limitations of legacy planning platforms were already showing cracks. They were challenged by evolving market factors like changing customer trends and volatile oil prices. Those cracks have become crevices when you factor in public health and geopolitical uncertainties.  All modern industries rely on interconnected value chains and thus need to adopt a more intelligent and integrated approach to gain a better overview of volatility.

In these rapidly shifting environments, supply chain practitioners can no longer hope to have total control through a birds-eye approach to the entire business. Instead, collaboration with internal stakeholders and external business partners during forecasting is vital, allowing access to the same, real-time data that is shared. Though unforeseen factors like rapid changes in consumer preferences and sudden political instability are beyond the control of the business, a collaborative approach could help mitigate the impact and help stakeholders make the best decision to continue driving the business forward.

The way forward

As the impact of the pandemic slowly slides into the background of decision-making, other trends will not.  For example, an increased focus on combating climate change, an increasingly unstable geopolitical landscape, and shifts in various governments’ monetary policies are ongoing concerns that will continue to impact the global supply chain.

If anything, the past two years have shown that businesses that waited for major shocks to pivot their strategy had already lost the opportunity to be nimble enough to gain a competitive advantage. Conversely, the businesses we saw display agility to weather challenges and embraced coordinated, cloud-based planning and analysis to gain the early foresight needed for timely responses.

Confident decisions and a clear path through stormy seas come to the F&B business leaders who invest in and adopt digital planning platforms to better manage their supply chain and supporting ecosystems.

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