“There’s a great deal at stake for underperforming, logistics-wise, for food and beverage companies,” said Andrew Lynch, president and co-founder of Zipline Logistics, during the How Food and Beverage Brands Can Win at Retail Fulfillment session, during Specialty Food Live!, Wednesday.
Retail trends that started during the pandemic, like increasing e-commerce adoption or omnichannel strategies, will continue to up the ante as retailers and distributors balance having the right products and getting them into consumers' hands as soon as possible, said Lynch.
Even larger, resilient CPG companies suffered during the pandemic, he said, emphasizing the importance of creating an efficient, organized supply chain. However, smaller “up and coming” brands are gaining market share and by aligning and organizing their supply chains, can achieve great success, said Lynch.
He offered five best practices that food and beverage companies can apply to improve their supply chains.
1. Get clear on chargebacks and out-of-stocks. Make sure to allocate chargebacks and out-of-stocks to your logistics budget, not just your income budget, said Lynch. And think twice about trying to save on rates; you’ll spend more in chargebacks than you’ll ever save on rates, he said. Lynch also recommends understanding the impact of scoring programs and any potential penalties on your supply chain costs.
2. Think beyond customer pick-up. “The brands that emerged unscathed from the pandemic and recent natural disasters all had one thing in common,” noted Lynch. “And that was control and visibility into their supply chains.” Customer pick-up can be an alluring option, but it doesn’t allow brands to be in control over production or inventory management.
3. Perform a network analysis. Lynch suggested using a data-driven approach to logistics. Leverage data analytics and geographic pricing trends to properly set up warehouse location, product mix, and inventory density. Lynch also suggested understanding the customer’s preferred carrier and how they fit within your network and your customer's network.
4. Understand retail compliance. Retailers use scorecards to understand, measure, and improve supplier performance, so it’s important to have some knowledge of their system. “Retailers are busier than ever, they have no time for anything less than perfect deliveries,” said Lynch. Many retailers have steep monetary penalties for missing appointments, and even customer pick-up arrangements don’t shield you from them.
5. Create a logistics strategy that works. CPG brands are learning quickly that supply chain performance can be leveraged to gain shelf space. Lynch recommended prioritizing freight with urgent delivery deadlines and organizing your supply chain to better align different functions within an operation.
Related: Retail Panelists Open to New Products With Diverse Ownership; Specialty SKU Cutbacks Seen Easing in 2021.
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