Whether you’re consuming it at a restaurant, buying it at a grocery store, or getting it at a food bank, food is a basic necessity, which makes the logistics behind the food industry critically important. But the food supply chain has been impacted by the Covid-19 pandemic similar to other industries, creating both challenges and opportunities. What challenges is the industry grappling with today? What innovative improvements are companies making to their food logistics processes, and how is technology helping? Those are the main questions I discussed with Ken Wood, EVP of Product Management at Descartes Systems Group, during a recent episode of Talking Logistics.
The Many Facets of Food Logistics
Food logistics comprises several different types of companies and business models. So, I began our discussion by asking Ken to describe the different segments and their needs.
Ken began with companies that deliver a broad array of foods and supplies to restaurants and other institutions such as schools and care homes. These goods are typically delivered on a regular schedule to multiple locations. He says predictability of order fulfillment is a critical logistics requirement for these customers.
Ken compares this to the grocery wholesale segment where large quantities, often truckloads, of fewer commodities may be delivered to one or two store locations depending on their orders.
Then there is the retail snack and beverage segment which may be driver merchandised on store shelves or stocked in store back rooms. These typically involve a very narrow range of products going to gas stations and convenience stores, for example.
“These are three very different business models,” says Ken. “And then there is the new phenomenon of ecommerce with B2C deliveries of food and prepared meals.”
The Impact of the Pandemic on the Food Industry
I asked Ken how the pandemic impacted the food industry. Ken explains that it has been an evolving story as the economy went through lockdown and recovery.
“During the early lockdown phase the restaurant supply segment was decimated while demand in the grocery segment was skyrocketing,” Ken says. “Food companies were looking at ways to shift away from supplying restaurants to supplying grocery stores. This caused a chain reaction in technology needs as these companies shifted from recurring patterns of stable business to the need for dynamic routing and delivery planning.
“It was also a stimulus for companies to experiment with ecommerce and home deliveries, which involved new technologies and delivery partners.
“Now as the economy has roared back, there is a shortage of human capital such as truck drivers. This requires new technologies to make their lives easier in order to attract and retain drivers.”
Changing Business Models
I next asked Ken if all of the turmoil surrounding the pandemic has caused companies to change their business models. Ken indicates that it has.
“We don’t see things ever going back to the way they were before even as restaurants reopen and business patterns stabilize,” Ken says. “It has opened companies’ eyes to opportunities to be more dynamic and have multiple delivery models. Rather than have set delivery schedules they can be more flexible to accommodate customer demand changes and order patterns.”
Ken also points out that more dynamic planning technologies have allowed companies to look at using their fleet capacity, which they primarily use for outbound B2B deliveries, for inbound pickups and deliveries too, potentially reducing costs and increasing utilization.
Innovation in Food Logistics
Besides dynamic planning and increased utilization, what other innovations are happening in the food industry? Ken notes that like other industries, food logistics is moving to the cloud.
“This is impacting many areas such as how routes are planned and dispatched, the technologies in drivers’ hands and the communications and transparency you can provide to customers. As you move from set schedules to dynamic deliveries, the onus is on food companies to provide visibility and ETAs, and to increase their digital engagement with customers.”
Ken went on to discuss how innovations such as AI and machine learning are impacting the industry, as well as the road ahead for food logistics. Therefore, I encourage you to watch the full episode for all of Ken’s insights and advice on these topics and more. Then keep the conversation going by posting a comment and sharing your experience and perspective on the final mile in food logistics.
