What are food producers doing to keep shelves full despite rising energy and capital costs? What makes food logistics more difficult? These and other questions were discussed by food producers and over 150 students and researchers from seven universities in an online workshop.
Representatives from Gerolsteiner, Müller-Milch, Raps and Frischemanufaktur presented the current challenges in supply chain management at their companies and then answered questions in a panel discussion. Prof Dr Christian Fikar (University of Bayreuth), Prof Dr Andreas Holzapfel (Geisenheim University), Prof Dr Alexander Hübner (TU Munich), Prof Dr Heinrich Kuhn (KU Eichstätt-Ingolstadt), Prof Dr Manuel Ostermeier (University of Augsburg), Prof Dr Michael Sternbeck (TH Ingolstadt) and Prof Dr Sandra Transchel (Kühne Logistics University) were also involved in the discussion.
Weather, season and offers make sales forecasting difficult
Seasonal business, short-term weather fluctuations and increasing promotional business make it difficult to plan production and distribution in beverage sales, emphasised Roland Keul, Head of Supply Chain Management and Logistics at Gerolsteiner Brunnen, in his presentation. The seasonal and strongly fluctuating demand also poses a particular challenge for Müller Milch, reported Dr Benedikt Scheckenbach, Head of Group Supply Chain at Unternehmensgruppe Theo Müller, known as “Müller Milch”. “Retailers are constantly demanding promotions from us and our competitors. The promotional business of retailers and competitors makes sales forecasts impossible in some cases,” he continued. “We know about promotions for our own products, but not those of our competitors, and this can lead to massive shifts in sales,” Dr Scheckenbach explained the problem. The associated “considerable fluctuations in demand require flexible time and shift work models, which would not be possible without understanding employees,” said Roland Keul from Gerolsteiner.
Use of AI, but lack of data from retailers
The use of AI-based sales forecasts in combination with empirical knowledge helps Gerolsteiner to build up the necessary seasonal stocks and thus ensure high availability. However, stocks tie up capital, which is now having a much greater impact due to higher interest rates. The unwillingness of retailers to provide point-of-sale data for food manufacturers prevents greater supply chain transparency. “This could significantly improve sales forecasts,” Dr Scheckenbach clarified.
Fresh products and their limited shelf life
However, fluctuating demand can only be compensated for to a very limited extent by building up stocks of fresh products, as their shelf life is limited by the best-before date. To make matters worse, so-called milk pressure influences sales prices and demand. Milk pressure results from the long-term purchase obligations that exist with the agricultural sector for continuously produced milk. As a result, supply chain management must continuously decide which products (e.g. butter, drinks, quark) the milk is to be processed into in order to produce sufficient products, but also to avoid overstocks, which then have to be discounted and sold at lower margins. The aim is to counteract this through holistic supply chain planning and control.
Social responsibility in the supply chain
Aspects of sustainability and socially responsible action are currently a particular focus at RAPS, as Michael Unger, authorised signatory and Head of Logistics at the spice company RAPS, explained. This is achieved through a consistent sustainability strategy in the company’s own production as well as through a strict social code and regular on-site visits to suppliers. RAPS maintains numerous supply relationships in far-flung countries and is therefore particularly challenged with regard to fluctuating delivery quantities and qualities as well as the resulting transport costs, sustainability issues and the Supply Chain Duty of Care Act.
Organisational hurdles as a start-up
Dr Jenny Müller, founder of Die Frischemanufaktur, highlighted the organisational challenges faced by start-ups in sales. The company holds a patent for the preservation of flavoured water, which is infused with fresh herbs and fresh fruit to extend its shelf life. Dr Müller gave an example of the problem that the glass bottle they use can also be used for other types of product. However, different VAT rates then lead to billing problems in the deposit system. As a start-up, the company has so far only been able to supply the shops directly. In future, the company plans to supply the shops via the retailers’ distribution centres. This would lead to a considerable simplification of logistical processes.
The presentations were followed by a panel discussion in which the companies once again discussed their sustainability strategy, the avoidance of food waste, the climate crisis, falling groundwater levels and the particular challenges of increasing product complexity due to market demands for vegan, gluten-free and/or allergen and preservative-free products.