5 Major Challenges F&B Companies are Facing Today

March 26, 2013

By Sparta Editorial


F&B companies face a number of challenges. While these challenges vary considerably from tightening regulations to shrinking operating margins and supplier quality issues, the good news for food processors is that there’s one central, connecting factor: quality management. Having a system that centralizes, standardizes, and streamlines quality data from across the value chain is imperative for a seamless F&B operation.

Though, before understanding how a strong, integrated system for managing quality can help companies drive improvements in business performance, we have to understand the main pain points for food processors. This post will provide an overview of 5 major challenges F&B companies are facing in today’s market as well as a brief discussion on how  an automated quality management system can help companies to overcome them.

Top Challenges

Tightening Regulatory Environment – Because the quality of products in the F&B industry is so closely tied to the health and safety of consumers, companies are constantly faced with the challenge of adhering to and staying in front of regulations. The 2011 Food Safety Modernization Act (FSMA) is changing requirements for recordkeeping in F&B, which is prompting many executives to evaluate current IT capabilities around quality and traceability.

Shrinking Operating Margins – The competitive nature of today’s global economy has added considerable pressure to operating margins across the F&B supply chain. In response, many organizations focus on identifying areas for improvement in the quality of products and processes. Moreover, there are other factors impacting operating margins such as fuel price volatility, rising competition and developing countries, and heavy supply chain use.

Visibility into Supplier Quality – While leveraging the global supply chain comes with many benefits, it also has a significant impact on operational risk, especially in F&B. In many cases, organizations lack the level of communication and collaboration with suppliers needed to improve end-to-end performance and close the loop on quality management. Market leaders are working to offset geographical limitations and operational inefficiencies with IT capabilities.

Traceability and Data Granularity – An issue every food processor has to be prepared for is a product recall, which requires strong traceability capabilities. When an adulterated product makes its way into the market, response time and the recall process are instrumental in preserving brand reputation and, peripherally, long-term profitability.

Disconnected IT Architecture ­– A common challenge that nearly every large F&B company faces or has faced is a disparate software and applications landscape. A unified information management system around quality is vital for improving the other challenges noted above. Though, because of acquisitions and a shortage of long-term strategic quality vision, many companies are stuck with a tangled web of processes that don’t effectively communicate with one another.

Streamlining Quality Processes to Overcome these Challenges

With challenges coming from every angle, leading F&B organizations are creating operational excellence models that align key resources – people, processes, and technology – with the strategic objectives around quality, finance, and operations. A critical component of executing on this model is in the architectural approach taken for quality management. In many instances, leading companies are building a quality backbone that leverages a set of Enterprise Quality Management Software (EQMS) functionalities.

EQMS can be thought of as a platform for communication and collaboration on content and processes from across the value chain. It enables organizations to centrally view standardized and streamlined global business process data, greatly reducing resources needed to ensure the quality of products and processes as well as to identify areas for improvement. With the right technology roadmap, F&B companies can align and then optimize end-to-end business process and take these challenges head on.

On March 27, at 2p.m. est, LNS Research’s President and Principal Analyst, Matthew Littlefield, will be speaking in a Sparta Systems webcast on this topic. The webcast will focus on overcoming challenges faced by F&B companies by building a holistic quality management system.

About the Author: Mike Roberts joined LNS Research in March of 2012 and is now a Research Associate for Enterprise Quality Management Software, Manufacturing Operations Management, and Sustainability. As a Research Associate, Mike is responsible for analyzing data, writing research reports, conducting case studies, and contributing to the LNS Research blog. Mike is a passionate writer and his research continually informs manufacturing executives on how to best leverage technology in their operations.

Before joining LNS Research, Mike spent three years working as a freelance journalist with his work appearing in numerous print and online publications. Additionally, he has spent time in both the healthcare and financial services industries. During his time at McLean Hospital, he managed the organization’s research risk portfolio, aiding a notable reduction in the financial reserve through analysis and process improvement. Mike graduated from Boston University with a BS in Economics and an MS in Financial Economics.

Email: mike.roberts@lnsresearch.com

Twitter: @mp_roberts

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