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5 Challenges In Supply Chain


India is changing and if you want evidence of that just look at the food we eat and how we get it. In the last two decades, the tastes of Indians have undergone a dramatic change. A surging middle class with new aspirations and the disposable income to fulfill them, is eating a greater variety of food, and is no longer satisfied with the home-cooked meal. This transformation in eating habits has thrown up dramatic delivery challenges in companies in the foodservice space. Mastery will separate out the winners in this fiercely competitive market, where customers rule.

Keeping margins healthy with active cost control

Foodservice is a volume game in a country where the mass market will not tolerate high margins. Keeping costs under control goes way beyond traditional supply chain measures focussed on operations and logistics. Starting with outlet selection and capacity planning, to service levels and delivery models, cost control has to be designed into the entire supply chain from end to end.

Retaining customers is key in an industry with no switching cost
It is easy for a customer to try out a new brand or chain. How do you retain customers in an environment where switching is so easy and, in fact, sought after “just like that, for a change”? Companies have responded by using three methods: convert food service to a branding play to create stickiness and ensure the brand promise is fulfilled; provide variety and excitement in their menus; and ensure top class service to customers.

Learning to operate in a high-tech, high-touch environment
One way of reducing costs is to use technology. The majority of outlets took telephonic orders and online orders (very marginal), to keep costs under control. Multiple channels of ordering make it necessary to ensure they are all synchronised and staff trained in dealing with customers across channels. Explaining a selection over the phone can be very different from pointing at a picture and doing it over the counter.
Creating a fast response supply chain that delivers
With such a complex front-end for the business, it is no surprise that a lot of pressure is put on the back-end of the supply chain as well. Not only does the supply chain have to cater to a wide variety of input materials to source, which constantly change as new items are served on menus, but it also has to drive down costs. food service companies need to walk the knife’s edge of maintaining high service with low inventories. They respond by creating faster response supply Chains. Supplier integration is vital for high-speed response, especially in conditions of low inventory.

Forecasting an increasingly dynamic demand

The nature of demand in the food service industry depends on the season, the day of week, the time of day, the weather, and which side of the bed the customer got up in the morning! Notwithstanding this, precision inventories need to be stocked at each outlet. In such an environment, extremely short planning horizons and continuous updation of planning norms are vital.