Table of Contents
1 Executive summary
2 Redefining healthy choices:
Market trends
3 Sourcing ingredients: Think local,
plan global
4 Forecasting shelf life for daily
and long-term production
4 Planning and scheduling a
fresher product
5 Achieving the right inventory mix
6 Ensuring transparency in
food production
7 Building a better warehouse
7 Going the last mile with direct
store delivery
8 Delivering fresher foods with
software that won’t expire
Executive summary
Fresh foods imply many things: healthier choices, higher-quality
ingredients, and careful preparation. For food manufacturers, fresh
foods present something far more challenging: a short shelf life.
Worse yet is the highly volatile inventory with overages in some
supplies, shortfalls in others, and a greater potential for selling unsafe
food products. Despite these challenges, producing fresh foods need
not be impractical. The real challenge for the food and beverage
industry is to produce fresher foods with shorter shelf lives, without
incurring unnecessary or impractical costs.
In this day and age of fresher foods and cleaner labels, you can no
longer rely on enterprise resource planning (ERP) or supply chain
management (SCM) systems that have passed their shelf life.
Today’s manufacturing environment requires more real-time data and
business intelligence (BI) integrated into a solution that encompasses
the nuances of food and beverage manufacturing. Taking advantage
of these tools can improve your business processes, while also
meeting consumer demand for healthier, fresher products—all without
a negative impact on your bottom line.
The primary segments of the food and beverage industry that are
affected by the challenges of fresh foods as detailed in this
paper include:
• Dairy (milk, yogurt, and cheese)
• Bakery, snacks, and confectionery
• Beverages (beer, soft drinks, and juice)
• Prepared and chilled food
• Fresh meat, poultry, and aquaculture products
White Paper
Meeting today’s fresh food challenges
Increased demand requires manufacturers to reassess
their business systems
2 Infor
Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Redefining healthy choices: Market trends
The freshness of today’s food products is as much an issue with changing consumer
perceptions of fresh foods as it is with the manufacturer’s ability to control shelf life. More than
ever before, today’s consumers are anxious about how their food is produced, and whether
the ingredients are fresh and safe1. As consumers make healthier lifestyle choices, they want
fresher and less-processed foods and beverages.
For the home chef, the Hartman Group asserts that, “cooking is fast becoming a form of
glamorized entertainment, creating considerable opportunities for retailers, food service,
and CPG manufacturers to meet the growing demand for fresher and less-processed foods
and beverages.”2
Fresh food (and with it healthy food) is glamorized by the theatrics of cooking as seen in
television programs like Top Chef, on blogs and social media websites like Foodspotting and
Pinterest, and in traditional food media, like magazines and cookbooks. But while consumers
want fresh foods, that doesn’t mean they necessarily want to be cooking all their meals from
scratch. They also want their choices to be convenient.
Fresh food, therefore, has grown to include refrigerated “ready meals” made with fresh
ingredients, to smoothies and yogurts made with fresh dairy or bagged fruit and vegetable
products. This change not only impacts traditional grocers, but it also redefines the concept of
the convenience store.
Convenience stores such as the Austin, TX-based Whip-In have begun selling microbrew
beers on tap, and stocking their shelves with organic dairy products and grass-fed beef.
Others offer offer fresh food items like Sheetz’ signature Made To Order® items that include
Angus beef burgers, premium grilled chicken sandwiches, and freshly made salads. Vending
machines are also getting into the game: Seattle’s Best Rubi Kiosks bring the innovation of
movie rental services like Redbox to the sale of coffee.3
The demand for fresh foods exists. Now, it is up to retailers and manufacturers to make the
changes to meet this demand. Retailers are reconfiguring their stores to better accommodate
fresh foods by adding more space for prepackaged meals and fresh bakery products.
Food manufacturers are developing new products to take advantage of these market trends;
but they also need to ensure that their business systems have the agility to plan daily
production, look to long-term sourcing and forecasting needs, and manage the daily activities
of warehouse and production facilities.
1 Deloitte, The Food Value Chain: A Challenge for the Next Century, 2013, p. 8.
2 The Hartman Group, Ideas in Food 2013: A Cultural Perspective, 2013, p. 5.
3 The Hartman Group, p. 19.
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Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Sourcing ingredients: Think local, plan global
Sourcing hyper-local ingredients has become a key differentiator for the restaurant industry,
with chefs preparing smaller courses that feature a variety of flavors and seasonal ingredients.
Increasingly, the home cook shares this sensibility. Adding to this trend is the popularity of
greenmarkets in major urban centers like New York City’s Union Square or San Francisco’s
Ferry Plaza. But not every consumer has convenient access to farm-fresh foods.
For food manufacturers who distribute their product to grocery stores or convenience stores,
the pressure is on to satisfy an item’s shelf life—especially if its shelf life is less than a calendar
quarter. In addition to planning the day’s production orders, food manufacturers need to plan
long-term by sourcing ingredients and packaging materials, as well as the production capacity
to meet continuing demand.
This situation creates an additional level of impracticality to the procurement of these
ingredients for manufacturers4. At the same time, farmers face long-production cycles and the
inability to make agile responses to market movements, which can result in a “volatility of
input costs and selling prices, coupled with the unpredictability of weather and yields,”5
affecting the bottom line for food manufacturers and creating seasonal volatility in supply.
Figure 1: The real challenge for the food and beverage industry is to produce fresher foods with shorter shelf
lives, without incurring unnecessary or impractical costs throughout the entire supply chain.
When faced with these challenges, food manufacturers need to be wary of the consumer
demand for hyper-local ingredients. Consumers want to feel that their foods are produced
ethically, safely, and with freshness at the top of mind. Yet, many industry watchers, including
Keith Nunes at Food Business News, suggest: “Consumers are not demanding to know
exactly where their food originates. They are more interested in knowing how it is grown,
sourced, and processed, and they expect the information to be readily available.”6
To succeed, fresh food manufacturers also need to forecast for daily and long-term
production, so that they have the proper ingredients along with the packaging and labeling
materials in stock to ensure that their production facilities have the personnel and capacity to
meet their goals.
4 FoodManufacturer.co.uk, Food Manufacturer State of the Industry Survey 2013, 2013, p. 2
5 Deloitte, p. 4.
6 Keith Nunes, “Be wary of consumer demand for locally sourced products,” Food Business News, Jan 17, 2012.
Procurement Manufacturing Warehousing Fulfillment
Variable quality/
quantity
Forecasting,
traceability
Flawless
FIFO
Short lead
times
Challenges in fresh foods
4 Infor
Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Forecasting shelf life for daily and
long-term production
Though the common grocery store saying may be that bread is “baked fresh daily,” bakers
cannot manufacture on demand. To produce baked goods, food manufacturers need to
anticipate and forecast for demand in order to meet multiple daily shipments.
Products such as confectionery goods, condiments, or dry goods could have a shelf life of
several months and still be considered fresh. Most bakery products need to be available for
sale on the same day they are baked to be considered fresh. This results in bakers working
in shifts that can run around the clock to meet shipping demands.
Baked goods are not alone when it comes to forecasting challenges. Harris Ranch is one of
the largest family-owned agribusinesses in the US, with annual sales in excess of
$400 million. It distributes to foodservice markets in the US and around the globe. The beef
producer’s cattle are exclusively sourced, fed, and humanely processed in order to raise beef
that is pure and natural. Meeting market demands for Harris Ranch means determining the
proper balance of product types to avoid production shortfalls and overages.
While food waste is a concern for all food manufacturers, overstock of beef can impact shelf
life as well as it can affect spoilage concerns. Consumers also want to know that their meat
has been sourced with care. For Harris Ranch, Infor® Advanced Planning and Infor Demand
Planning allows the company to use real-time data to create statistical forecasts that help
determine how best to use their raw materials and how much of each product needs to be
packaged so as to meet customer demand while also maximizing their profitability.
For the food and beverage industry, forecasting supply and demand is only one part of the
complex equation that goes into the story of fresh foods. With increasing consumer concern
about where food comes from, food manufacturers must not only be able to track and trace
where food is going, but how it gets there.
Planning and scheduling a fresher product
The challenge of planning and executing fresher foods with shorter shelf lives is not going
away. IDC Manufacturing Insights and IDC Retail Insights predict that by 2016, 50% of national
retailers “will invest in distributed order management, enterprise inventory visibility, and
workforce management to enable same day fulfillment.”7
Fresh foods cannot sit in a storeroom or on grocery shelves past their freshness date. Food
manufacturers must have a clear understanding of their supply chain in order to plan and
schedule the creation and shipment of a fresher product. To do so requires the agility to plan
and re-plan on a daily or even hourly basis.
The reason for this is quite simple: Overproducing products can lead to food waste, which
has the potential to increase costs for both the manufacturer and retailer. It is essential to
avoid the guesswork involved in the planning process to avoid the wasted time, money,
and resources caused by over- or under-producing products.
7 IDC Manufacturing Insights and IDC Retail Insights, “What will consumer goods look like in 2014?” Dec 13, 2013, press release.
5Infor
Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Rynkeby, a Danish manufacturer of fruit juices and other fruit-based foodstuffs, grew its
business by taking advantage of the demand planning tools found in Infor M3 ERP to meet
industry-specific requirements and avoid excess production or stockouts. By better
understanding its existing planning processes, Rynkeby was able to forecast for the long-
term. “Now we have the right system in place to improve the availability and accuracy of our
key company data and information, providing overall reporting abilities for our management
team,” said Steen Lund-Pedersen, IT Manager, Rynkeby Foods.
Achieving the right inventory mix
Fresh-food planning requires the right inventory mix at the right time. Out of stock equals lost
revenue, while overstocking means incurring unnecessary costs either in waste or increased
expenses at the warehouse and refrigeration level. One tested and proven planning
assumption is that for a particular product or product segment, the demand pattern is similar
every week (see Figure 2), assuming it is a normal week—one with no holidays or promotional
events. If so, food manufacturers like you can anticipate the pattern, because consumer and
retailer behaviors are repetitive and habitual.
Figure 2: Consumer and retailer behaviors are often repetitive and habitual. During weeks without holidays
or promotional events, you can predict the demand pattern for particular products or product segments.
C
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Time of Day
Current Week Prior Week Rolling 12 Week
Weekly Sales Demand Patterns
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6:00 8:00 10:00 12:00 14:00 16:00 18:00
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Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Consumers, for example, resupply basics after the weekend or shop on Thursday for a
weekend event. Retailers restock the shelves based on that pattern. Because they can’t keep
stock, fresh-food manufacturers need to know the pattern and incorporate it into their
planning. The more SKUs a manufacturer produces, though, the more complex this exercise
becomes and simple Excel spreadsheets and manual calculations become overwhelming.
Infor has worked with companies around the globe to study and build solutions that allow
manufacturers to use this sort of historical data to better forecast the future.
Ensuring transparency in food production
Producing a safer product is a much greater obligation to food manufacturers than ever
before. Food contamination costs the US $77 billion a year in total healthcare costs,8 making
contamination a serious issue for government regulation. With the signing of the FDA Food
Safety Modernization Act (FSMA) in 2011, government regulations have become more focused
on preventing food contamination rather than responding to it.9
Food safety remains top of mind for the industry as well. Food professional respondents to
Food Processing’s 13th Annual Manufacturing Trends Survey, “overwhelmingly ranked food
safety as 2014’s most important manufacturing issue, far and away the top priority in a list of
11 that readers were asked to rank.”10
One way to assure food safety compliance is by reducing labeling errors. Nearly 20% of
recalls are due to labeling errors. There are two key areas where label compliance can be an
issue. The first is ensuring that the listed ingredients match what is actually in the product, in
regards to completeness and correct order. Failure to disclose all ingredients, especially if
there is potential for allergic reactions, can result in a recall.
Secondly, a product label’s nutritional and health claims must be accurate and comply with
government standards. Due to changes in formulas, as well as raw material fluctuations, food
manufacturers like you must have the means to make sure that the product you produce
matches the label you are using.
With that in mind, realizing the cost benefits of traceability, while also ensuring your products
are fresher and safer than even before, means investing in an industry-leading product
lifecycle management solution (PLM). Infor Optiva®, a best-of-breed PLM solution, is designed
specifically to address this issue—none of the customers who use it have ever had a labeling-
related recall.
8 Robert Roos, “New study puts cost of US foodborne illness at $77 billion,” Center for Disease Research and Policy (CIDRAP),
Jan 2, 2012.
9 Food Safety Modernization Act (FSMA), Frequently Asked Questions, Product Tracing, US Food and Drug Administration
(http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm247559.htm#ProductTracing), Oct 25, 2013.
10 Kevin T. Higgins, “2014 manufacturing trends survey: The swagger’s back,” Food Processing, Jan 13, 2014.
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Infor is in no way committing to the development or delivery of any specified enhancement,
upgrade, product or functionality. See “disclaimer” paragraph contained herein.
Building a better warehouse
When Keith Oliver, a consultant at Booz Allen Hamilton, coined the term supply chain
management (SCM) in the early 1980s, he was referring to a supply chain where the supplier
is linked directly to each customer and to each buyer. Thanks to the growth of Internet-based
technologies, today’s supply chain has evolved into a more complex animal—with global
suppliers, customers, and buyers working together with manufacturers in real-time. To keep
pace, it has become necessary for your warehouse to have the technological infrastructure to
manage operations, logistics, and procurement—in addition to supply and demand.
The warehouse is at the core of the food manufacturing supply chain. The software
technologies that drive today’s warehouse functions operate on one, unchanging, crucial
concept—first expired, first out (FEFO). You must be able to flawlessly move older products
out to make space for newer products. Not only do you need to make sure that your products
are hitting retailer shelves during the optimum delivery times on their freshness dates, but you
must also reduce food waste and maintain an efficient, cost-effective operation. For fresh
food manufacturers, knowing where your inventory is when you need it is essential for
successful warehouse management.
As a food manufacturer, you need Internet-based technology tools to be able to view and
operate your entire supply chain as a unified whole that encompasses participants both
inside and outside of your company—including customers, contractors, and suppliers.
Infor Supply Chain Execution is the first solution to let you view and manage your supply chain
execution activities as a coherent whole, which helps to eliminate bottlenecks and improve
all-around efficiency. By combining warehouse management, labor management,
transportation management, and 3PL billing in a unified solution with a common user
interface, it unites your entire supply chain into an integrated, streamlined business process.
With Infor Supply Chain Execution, you can run your supply chain like a single, well-tuned
machine, not just a batch of unrelated segments.
Going the last mile with direct store delivery
Due to the nature of fresh foods, typical distribution models often don’t work. The shelf life is
so short that you need to go directly from manufacturer to retailer within a day or two of
production so the adoption of direct store delivery (DSD) becomes more common.
Your DSD replenishment program should be responsive. A poorly executed DSD program is
worse than none at all. Complexity comes with the territory, however, and must be managed
with systems that offer exceptional power, agility, and a specifically focused functionality.
Some manufacturers have tried to execute DSD programs using their existing ERP and CRM
systems, only to find that most of those systems lack the speed and functionality they need to
meet retailers’ needs.
The usual response is to implement specialized software to support DSD operations outside
of the main ERP installation. But if your specialized solution doesn’t interoperate smoothly with
the ERP system of record, isolated silos of information emerge, which tends to undermine a
DSD program’s goal of rapid, flexible responsiveness throughout the delivery chain.
Therefore having that last mile visibility integrated with your overall business systems is
imperative in a short shelf life environment.
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Delivering fresher foods with software
that won’t expire
When it comes to successful fresh food planning, only a few hours exist between planning
and execution. Like the shelf life of your food products, your software also shouldn’t expire,
yet many companies are using outdated or “generic” software that doesn’t meet the needs of
today’s food and beverage manufacturers.
Many of the world’s most successful food and beverage companies turn to Infor software to
help them manage the unpredictability of the food industry, while delivering great products
profitably. Infor has the deep food and beverage experience that you need in a technology
partner in order to stay competitive in this dynamic industry.
Infor solutions help you maintain the highest standards of product quality and ensure food
safety even with extremely short shelf life products, by giving you unmatched power to help
manage your top challenges.