Food prices are skyrocketing as inflation, product instability and supply chain delays cause all sorts of disruption in the food industry. As a result, consumer goods manufacturers and food and beverage companies are having to rethink their strategies and offerings, and even question how consumers consume as they try to navigate this uncertain time.

The consumer goods and food and beverage industries may have been the hardest hit in recent years due to persistent disruptions. The lingering effects of the global pandemic were only the beginning. Continued shortages of raw materials from Ukraine and Russia, delays in production and processing, and rapidly rising oil and gas prices have directly impacted food production, transport of goods, and agricultural supply chains.

Today, the food and beverage manufacturing and distribution business is plagued by economic challenges and supply chain instability. Phew… so much noise and uncertainty that keeps supply chain leaders up at night.

Overcoming challenges

Problems arising at the level of production of consumer goods, as well as in the field of distribution and retailing of food, occur all over the world. In particular, U.S. food manufacturing and processing businesses are experiencing shortages of raw materials (wheat, corn, oats, barley, and rye) to produce cereals, flour, bread, beer, and other marketable products. In addition, shipping and container companies are delaying shipments and are now charging higher fees, further adding to inflation frustrations. Overall, shortages and delays have led to empty grocery store shelves. Food industry and transport delays also led to spoilage and waste, especially for products with a limited shelf life. These delays can cause a ripple effect in food production processes, affecting food quality.

There have also been reports of shortages of raw materials such as copper, cobalt and nickel used in glass production. This caused a 20 percent spike in glass bottle prices, and some fear that wineries will have to raise prices to offset this higher cost.

Changing consumer preferences and requirements

These issues seriously affect current forecasting and supply strategies for CPG companies and F&B distributors. What about consumers? They only see empty shelves and higher prices in grocery stores.

Persistent shortage of goods, high consumer price index and unplanned inflation naturally change buying behavior towards higher value and lower prices. As a result, CPG companies must adapt their forecasts to withstand challenges, high costs and supply chain disruptions.

An innovative business model is needed

Before the pandemic hit, CPG and F&B focused on reducing costs and inventory of finished products, raw materials and materials for maintenance, repair and operation. Now time calls for a different plan of attack.

To mitigate risk and reduce penalties while prioritizing consumer demand, CPG companies must adapt to the use of real-time data and analytics. Gaining this data helps to counter unpredictable market fluctuations, shortages and surges, and allows you to develop a proactive contingency plan in case of disruptions in the run-up to a crisis.

One way to reduce the costs associated with a supply crisis is to integrate Intelligence for MRO into CPG and F&B group companies. This will help ensure that production risks remain low, so customers receive the right supplies at the right time and with the exact amount of product needed to meet demand.

And strong MRO strategy on the spot can also help companies anticipate market disruptions due to shortages, delays, or product spikes. For example, one global CPG organization has achieved significant cost savings by harmonizing MRO inventory data across multiple regions to reduce costs, improve service efficiency, and optimize procurement. In addition, CPG and F&B can ultimately achieve organizational alignment and engineering soundness with a strong partner.

This is the best way to cut costs, lower your penalty threshold, and create a more robust strategy for dealing with market and product violations. With AI supporting a manufacturer’s MRO strategy, businesses can proactively respond to situations rather than react badly at a disadvantage.

MRO optimization to deal with changing customer demand

Persistent food shortages and high inflationary costs are forcing a large number of consumers to consider cheaper alternatives to meet their food needs. Business must reduce risk as well as stay in working order.

For example, Capgemini. report found that 68% of consumer goods organizations and retailers say that a lack of accurate and up-to-date information about changing consumer demand during the pandemic has hampered their demand planning. Also, given that inflation is likely to cause a reduction in orders, manufacturers should look to MRO optimization to remove wasteful working capital from their balance sheets.

Having a strong MRO strategy (something many organizations overlook) is a quick way to get started, and the same plan can be applied to direct materials management. Companies need improved material management now more than ever, and MRO should not be a missed opportunity to improve flexibility and optimize cash flow. Companies reconciliation of MRO inventory data with AI-powered tools and the cloud can realize real-time value during this challenging time.

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