insights - December 2019 - 2

of pricing, payments, risk management and other crucial
If an efficient supply chain helps companies meet
customer expectations and maintain margins by reining
in costs and protecting products from a quality and safety
standpoint, an inefficient supply chain can break down
quickly and cause problems from minor headaches to
significant losses.

Emerging Complexities Kink the
Links in the Chain
In the competitive and increasingly international
market, supply chains are not as simple as they used
to be. The farm-to-distributor/store/restaurant to
consumer chain, which was often linear and limited, is
joined by new and different types.
Many food and beverage companies are working with
more or different suppliers than they used to, with various
processes of regionalization and internationalization.
Manufacturers with a global presence are often
producing in a fragmented way, with some items made
in their area and others combined with production
done abroad. Single plants may have to serve an evergrowing market with limited transportation at their
facility or area. In addition, as consumers change the
way they buy and browse, the omnichannel marketplace
around the world has amped up competition, including
price competitiveness, and resulted in more or different
Within this more intricate chain, there can be (and
usually are) more complexities, spanning unforeseen


glitches in production, market-specific volatility,
outbreaks of potentially devastating animal diseases like
bird flu or swine fever, geopolitical fallout and more. And
while disruption has always been a potential challenge,
the scope of disruption has expanded right along with
the increasing number of players.
At the same time, there is another type of shift in
supply chains, as some organizations have gone the
route of vertical integration, including what's known as
backward integration. Some large U.S.-based retailers,
for instance, are moving to source perishables, including
meat, from company-owned suppliers or processing
facilities. Although most manufacturers won't be able
to have that type of supply chain given the significant
resources needed to do so, these big shifts by well-known
corporations are upending the more traditional model.
Supply and demand situations also can cause
manufacturers to get creative with their supply chain
management. For example, as consumer demand for
certain products grows - like sorghum or chia have
recently - a processor might accumulate acreage for
a crop-sharing arrangement or form a co-op to get the
supply they need.

New Technologies on the
While supply chains are set up differently regionally
and globally, new technologies are changing the way
those chains work. Advanced capabilities have fueled
the growth of blockchain, a process that enables the
secure storage of information in a decentralized online


insights - December 2019

Table of Contents for the Digital Edition of insights - December 2019

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