implemented dynamic pricing science are taking next
steps toward what he calls “supply aware optimiza-
tion.” These companies use data about their inven-
tory positions, products and raw material availability,
along with production and stocking costs and other
supply chain variables, to drive profitability. They are
e-optimizing production and demand plans as inputs
to their pricing strategies with “great success.”
Most observers say that grocers of any size can ben-
efit from switching to digital processes and automa-
tion. They just need to scale appropriately and focus
on their priorities.
“In fact, the smaller operators can be more nimble
and quick to change versus some of the larger compa-
nies that have a much bigger shipment to move and
more complex change management issues to resolve,”
says Randy Evins, senior principal, SAP food, drug
and convenience at SAP Retail. “Going digital will
help small- to medium-sized grocers compete with
larger chains, and even help them scale more easily as
Orbis has started to introduce solutions for small
format retailers because they see “mini-mart” gro-
cery concepts expanding to all types of stores. The
exact products that move material from the distribu-
tion center to the retail floor will not necessarily be
the same from one grocer to another, but the concepts
can expand to all sizes.
In reality, however, many innovations start with the
large chains that are aggressively seeking supply chain
efficiency. Eventually, the price of entry lowers and
becomes acceptable for smaller grocers.
“Some innovations, particularly around robotics and
automation, may be better suited for grocery retail-
ers with large scale operations,” says Dhaneshwar. “The
same may hold true for some of the hardware intensive
Io T technologies around asset maintenance or track
and trace. Analytics, on the other hand, will be uni-
versally beneficial irrespective of scale of operation.
Likewise, benefits from increased consumer transpar-
ency will be advantageous to retailers of all sizes.”
In short, says Evins, digitization changes everything.
“A digitally mature organization no longer accepts
invisible inventory, even in fresh,” he says. “It expects
instant access to information that drives more accurate and subsequently more valuable decisions. This
creates an environment that moves the needle forward
in customer satisfaction and brand loyalty along with
the bottom line.”
FSMA Makes an Impact
Companies are improving traceability throughout the food supply chain ever since the Food Safety Modernization Act (FSMA)
forced the industry to scrutinize its safety practices.
“FSMA is the most sweeping legislation to hit our industry in
the last half century or more. Compliance is not an option. It’s
a requirement. The regulations ensure that we have notification, certification and confidence in the supply chain,” says Mark
Baum, senior vice president, industry relations and chief collaboration officer for the Food Marketing Institute (FMI).
FSMA, the most sweeping reform of America’s food safety
laws in more than 70 years, was signed into law by President
Obama on January 4, 2011. It is designed to ensure the U.S.
food supply is safe by shifting the focus from responding to contamination to preventing it.
“Since the passage of the Food Safety Modernization Act
in 2011, operators across the cold chain have been required
to adopt new regulations to ensure the integrity of the products they store and transport—and thereby ensure the health
of consumers,” says Jeff Rieger, director, marketing cold chain
solutions at Digi International, a global provider of machine-to-machine and Internet of Things (Io T) connectivity products and
services, based in Minnetonka, Minn.
Rieger describes how some of the safety procedures work:
Temperature monitoring sensors wirelessly pair with networks to
monitor and collect data along the cold chain from a refrigerated
truck to a walk-in freezer, or anywhere in between. This pairs with
task management capabilities that replace traditional logbooks
and streamline operations to prevent oversights and adhere to
regulatory and in-house guidelines. If at any point these ready-made sensors detect improper temperature, however, it alerts the
operation team and the problem can be isolated and solved.
“Once these sensors are in place long enough and have gathered a significant amount of data, companies can analyze their
supply chain and implement data-based best practices that go
beyond stopping a problem and moves towards preventing it at
its inception,” he says.
Baum says that the food industry needs to do a better job
with track-and-trace procedures and document management, as
well as the verification and certification of upstream suppliers.