Y. Hata & Co., Limited has been an essential part of Hawaii’s economy for more than 108 years. Yoichi Hata and his wife started the company as a “mom-and-pop” operation in 1913, selling products (wholesale) out of a family garage on the Big Island of Hawaii. But the visionary founder soon transformed the modest backyard operation into a prolific statewide network.
As today’s organizations keep looking to add new suppliers, intermediaries, and sales channels to their B2B value chains, legacy EDI solutions cannot stand up to the task. Modern EDI needs to support shared processes, transactions, document types, and communication methods, all while meeting stringent service levels and customer demands.
In this whitepaper, our experts provide pointers to the right tools and a consolidated approach that simplify the partner onboarding process and help modern organizations set up connections with vendors and suppliers at the speed of business.
In March 2020, McKinsey forecast[1] electronics companies could face serious reductions in inventory due to epidemic-induced factory shutdowns. This was a clear signal to electronics suppliers that the diversification strategies initially developed during the predicted US-China trade war were quickly becoming a recommended path.
But while companies scrambled to onboard suppliers, the move could not mitigate the disruption. 53% of electronics industry leaders were anticipating delays or cancellations in new product launches by May 2021, with 91% of the shortage attributed to challenges in supply chain management [2].
The need for semiconductor chips has continued to surge with the advent of newer automotive technologies such as electric vehicles, collision avoidance and automatic braking systems, real-time navigation, night vision, and lane-change warning systems. There’s no predictable relief in demand for these and other advanced technologies involving artificial intelligence and autonomous vehicles.
The Semiconductor Industry Association has projected global chip sales to grow 8.4% in 2021 – a massive 5.1% hike in a $433 billion industry. With much of the world’s workforce having migrated to home offices and home-based leisure activities, computers, tablets, and gaming consoles are in high demand and chip production is struggling to keep up. A year after McKinsey’s original forecast, the world’s biggest chipmakers like AMD and Qualcomm continue to announce new shortages.
And the impact is not limited to consumer electronics or sub-systems. GM extended its automobile production cuts in the US, Canada, and Mexico; other automotive giants like Ford, Honda, and Fiat/Chrysler have also warned investors about slowdowns in new vehicle production due to chip shortages.
So has begun a cycle of delayed customer value and intense competition among vendors and a new race to market supply chain capabilities which hold the key to delivering increased value in the supply chain.
This widespread shortage in semiconductor chips has underlined the critical role of their supply chain in today’s economy. While optimized supply chains in the electronics industry had helped temper the explosion of IT and digital services in the past two decades, several unexpected factors have since emerged with the potential to disrupt the optimized global model.
There are three key challenges –challenges of immediate concern and which the consumer electronics supply chain needs to address in order to deliver the right product, in the right quantity, at the right price, place, and time.
The world’s largest chip makers continue to largely depend on manufacturing centers in China. While some supply chains had begun to migrate towards other manufacturing centers, such as those in Malaysia, Thailand, and Vietnam, these migrations occurred very close to the beginning of the pandemic.
Since then, China, who recovered rapidly from its pandemic-induced slowdown, continues to dominate US electronics imports, while the other centers have been slower to respond. They also have the disadvantage of being newer players in the market, which means less depth in terms of production inventories, staff, and other resources.
Such geographical concentration of manufacturing activity carries an inherent risk, which was laid bare first during the US-China trade (tariff) war and then by the global pandemic. Given China’s existing supply and production infrastructures, most of the larger manufacturing entities have decided to stay put. A recent PwC survey said as much, stating that most companies are planning a ‘China +1 strategy’ once the pandemic subsides. This strategy involves relying on China as the primary source, while looking to one other country as a strategic manufacturing alternative.
US companies are similarly keen to nearshore operations to countries like Mexico; however, all of these plans have been complicated by uncertain economic and trade climates.
Advances in technology and rapidly changing customer behavior have also had an impact on the life of the average electronic product, leading to challenges in supply chain management. Companies have to carry larger inventories or depend on faster inventory turns; this increases overall inventory costs and significantly impacts the bottom line in the event of a short lifecycle product or worse, a product failure.
Electronics companies push for newer and more complex product variants to remain competitive. Having outsourced part or all of their manufacturing process to specialized centers, they remain vulnerable.
Vulnerabilities increase as product components move through multiple facilities and geographies and the chance of counterfeits increases. A lack of supply chain visibility makes components and raw materials increasingly difficult to trace. While companies spread out the manufacturing of parts and assemblies across regions to reduce the risk, vulnerabilities continue to appear.
‘Nearshoring’ and localized manufacturing have the potential to enhance traceability of parts and assemblies. But consumer electronics supply chains also need solutions with increased visibility capabilities to strike a balance and mitigate multiple risks simultaneously.
Over the last few decades, consumer electronics companies have leveraged their global supply chains for cost advantages and specialized manufacturing expertise. But factors such as tariffs, the fallout from the pandemic, and a perceived failure of just-in-time logistics have renewed the push for regionalization.
Industry leaders must be proactive to ensure a more distributed and more collaborative future. Consumer electronics supply chains need digital solutions that facilitate easy entry into new markets and with new suppliers, centrally optimize their supply chains, and provide an end-to-end visibility from point of order to delivery.
Investing in enterprise IT and supply chain solutions to optimize individual business processes shows promise. But these investments often lead to multiple solutions, ranging from spreadsheets to portals to demand and supply chain planning tools, many of which are loosely integrated at the enterprise level.
As a result, supply chain partners continue to operate on multiple systems and platforms, creating an even larger integration challenge. Network architectures with limited flexibility cannot accommodate multi‐party, multi‐tier supply chain structures that exist between customers, manufacturers, and trading partners.
A modern supply chain in the electronics industry needs access to real‐time supply and demand transactions. It needs a flexible platform that allows each company in the supply chain to implement its own processes – one that makes sense to their culture and way of doing business. More specifically, the platform should drive visibility, planning, communication, analysis, and execution in perfect orchestration across unlimited numbers of trading partners.
Such a platform will allow trading partners to execute activities in their own home-based systems and communicate along the supply chain as required for order to cash, freight, and trans-ocean transactions. This makes an agile and scalable cloud‐based architecture all the more critical. An easy-to-deploy supply chain solution can help organizations build their capabilities in stages. This ensures immediate and incremental value at each stage, paving the way for self-funded deployment and reserving capital for events yet to unfold.
PartnerLinQ is an innovative, process-centric, easy-to-use EDI solution that enables API-led, cloud native integrations. With a simplified B2B communication engine that includes EDI, AS2, SFTP and real-time APIs, PartnerLinQ is a fully integrated platform and easily handles both standard and proprietary file-based formats, including custom integrations. The solution is well suited for retail, e-commerce, wholesale, transportation, 3PL, as well as distribution, digital, and analog partner extensible platform and helps your team achieve operational efficiency and gain real-time visibility.
PartnerLinQ is designed by a team with more than 25 years of experience in providing industry-focused leadership in technology and consulting and in the development of innovative solutions that drive global supply chain transformation from the factory floor to the consumer’s doorstep. Hosted on Microsoft Azure, the PartnerLinQ platform integrates natively with Microsoft Dynamics 365, while also providing robust support for integration with other ERP systems as well as e-commerce platforms.
[1] Knut Alicke, Xavier Azcue, Edward Barriball. (Mar 2020). McKinsey. Supply-chain recovery in coronavirus times
[2] Supplyframe. (May 2020). Supplyframe Electronics Sourcing Report.
[Cranbury, NJ], [Marina del Rey, CA] [June 28, 2021] – Supply chain business connectivity iPaas solution PartnerLinQ has announced a significant expansion of “Visionet VAN” to its EDI and Supply Chain Connectivity offerings. PartnerLinQ has selected ECGrid Network service of Loren Data Corp. (LD.com) – a leader in B2B messaging platform technology, to enhance digital connectivity for its clients.
Consumer interest had increasingly tilted towards experiences like travel, movies, and entertainment over the last decade. So being homebound over a year and a half has naturally created a void in people’s lives, with a craving for activities that create memories and provide entertainment. This was reflected by an immediate increase in restaurant transactions when municipalities tentatively eased restrictions for on-premises dining in 2020. And following a widespread rollout of vaccines in the US, consumers are becoming more confident about eating out. The first signs of a shift in spend pattern are already evident. The US Census Bureau’s Advance Monthly Sales for Food Services1 show a surge in April sales for food services and bars, with dollar sales up 15% from a pre-pandemic 2019 and a whopping 116.8% over last year. As per a NielsenIQ survey2, 62% of Americans miss eating out at restaurants the most and 28% of households are planning more trips to restaurants and bars than they did in 2020.
Foodservice outlets are also innovating in terms of customer experiences and product offerings as their buyers still prefer contactless, hands-off transactions. Quick-service giants like McDonald’s and Burger King are redesigning premises3 with smaller dining rooms, more pick-up options, and a distancing of store operations from guests. Some like Maggiano’s are presenting a whole line of pre-cooked meals for consumers to take home and eat later. As restaurants desperately try to recapture lost sales, they are boosting up their catalog of digitally-delivered meals to ease household cooking burdens and provide in-home restaurant experiences. New methods of delivery like on-demand food trucks and in-garage grocery delivery services are picking up, while brands like Albertsons, Domino’s, and Kroger are experimenting with sophisticated technological alternatives like robots, drones, and driverless delivery services.
But the F&B industry also needs to continue looking for ways that optimize supply chain and partner networks in order to meet quickly evolving market demands. Many food makers and distributors are facing impediments like labor shortages, supply constraints, and high freight costs, which make it difficult to deliver all their products on time. Retailers had overlooked such deviations for months during the pandemic. But they are less willing to accommodate now as companies strive to get back to business-as-usual amid a reopening economy. Big buyers like Walmart are imposing chargebacks on suppliers for late deliveries or incomplete orders, while Kroger has launched a new ‘supplier discovery program’ to add new, diverse, and more reliable suppliers for farm produce, bakery, meat, seafood, and dairy.
On one hand, friction between food retailers and their suppliers adds costs across the food value chain. On the other, end-consumers are struggling to come to terms with job losses or other financial hardships brought on by the COVID-19 pandemic. Buyers are growing increasingly more price sensitive; IRI data4 indicates that a 10% increase in the price for edible products could reduce sales volume by as much as 17%.
To fully utilize a period of increased demand, PartnerLinQ provides food service organizations a number of distinct advantages to extract maximum value out of their supply chains.
F&B companies need to rapidly onboard new sales channels and supplier partners to take advantage of opportunities as and when they emerge. PartnerLinQ supports EDI communication as well as direct B2B transfers to and from non-EDI organizations. It also supports a wide range of common data interchange standards to ensure reliable and secure communication across partner networks. With its EDI-optimized business rule engine and extensive preconfigured business rule library, PartnerLinQ increases the flexibility to connect with partners on their own terms and makes it possible to respond faster to partner-driven changes.
PartnerLinQ’s infinite job scheduler allows organizations to configure, schedule, and execute multiple transactions simultaneously, including features like a bulk transfer of business-critical data to trading partners without any human intervention and without interfering with other business processes. Removing hands-on processing means that F&B organizations can ensure fewer errors and improved customer relationships, leading to improved delivery of goods and services and reduced customer turnover. A streamlined and automated communication process enhances compliance and helps avoid fines due to SLA breaches, payment delays, and performance gaps. PartnerLinQ’s built in auditing functionality gives F&B organizations the information to combat chargebacks and provide proof of delivery to end customers.
PartnerLinQ integrates natively with Microsoft Dynamics 365 and can be integrated with other ERP systems at the same time without the need for additional licensing or subscriptions. It also provides robust support for EDI integration with dozens of ERP systems and ecommerce platforms. This allows foodservice businesses to shift seamlessly between EDI ERP and API-based integrations and with corporate parent companies or wholly owned subsidiaries at the same time, making support and maintenance more efficient, more attractive, and less vulnerable. F&B organizations can enjoy seamless connections with all network partners and a variety of internal systems while deploying multiple supply chain solutions within a single platform.
The food supply chain software ensures a simple and robust cloud deployment that minimizes infrastructure costs and enhances analytical reporting powered by Azure’s serverless, scalable, event-processing engine. A hybrid cloud architecture provides the most agile, flexible, and frictionless way to exchange B2B data, enabling further F&B supply chain optimization and empowering foodservice companies to take on the complexities of a multi-enterprise, multi-application integration process. In addition, they can now enjoy real-time visibility to garner insight and control across the entire value chain.
PartnerLinQ’s multi-channel integration capabilities allow it to combine perfectly with a Headless Commerce architecture, which separates the front- and back-end of an ecommerce solution to enable faster and more flexible customer experiences. It is also aligned with a unique CSP program and a layer of API integrations, delivering tailored experiences unique to customer preferences.
In addition to a digitally-empowered F&B supply chain optimization, PartnerLinQ helps foodservice companies increase throughput, establish and enhance supplier relationships, keep track of deliveries and stay on schedule, while reducing chargeback risk and taking on new market opportunities and additional channels in the new normal. PartnerLinQ’s food supply chain solution also helps manufacturers keep traceability in house, remain in line with customer preferences, and increase connectivity across channels – both traditional and e-commerce.
Businesses and individuals will struggle to associate the words ‘high-point’ with 2020; amazing as it sounds, that has been the case for the consumer packaged goods (CPG) industry as a whole. In fact, the CPG sector grew 19% in 2020 according to NC Solutions – a firm that has been providing research-based insights for more than 10 years to help brands target the right segments on the basis of in-store purchase behaviors, optimize in-flight campaigns, and measure the outcomes.
The upward trend on its own, and in comparison to the years prior to 2019, has not been predictable or uniform. While some companies enjoyed an unprecedented surge in demand, others suffered drastic sales declines. There were rapidly deployed workforces and simultaneous lay-offs due to lockdowns.
Despite all this turmoil, the CPG industry overall is definitely in a much better place to take on an uncertain future when compared to other sectors in this brave new world.
The momentum of CPG companies has historically comprised gradual shifts in priorities as business changes are observed and accounted for. Incoming waves of wax and wane in the early days of 2020 caused concern for most companies who wanted to ensure the health and safety of customers and employees. Safeguarding cash balances and optimizing supply chains came later in the year; later still were efforts to build new supplier networks, optimize existing networks, and make them all more resilient.
Now, with western economies largely emerging from the crisis, attention has again turned, towards return to business and recovery. Business leaders across the CPG sector are starting to see some measure of an economic rebound; this is also the moment when they are beginning to consider long-term strategic moves as the future unfolds and looks much different than what they had envisioned last year at this time.
Most consumers will need some time to recover and return to more normal levels of spending. Consumer demand for toilet tissue, cleaning products, bottled water, and personal protective equipment (PPE) has just about returned to a normal level. McKinsey projects that 40% of US buyers are now more mindful of where they spend their money, while 31% are choosing less expensive products.
Consumer spending is also predicted to continue to focus more on essentials, groceries, household supplies, and less likely to focus on PPE like masks and gloves. Consumers are also being mindful about their spending with regard to savings – the personal savings rate in the US amounted to 13.7% at the end of 2020, compared to 11% in 1960.
Many consumers, failing to find their favorite products on store shelves in 2020, changed to new brands that were more readily available. Driven largely by value and availability, more than 60% of global consumers tried a different brand or shopped at a different retail outlet. Trends like online ordering and delivery and remote working were all accelerated, leading to the digitalization of some business processes – changes that were previously projected to take place over decades happened in days.
So success for an omnichannel brand also depends on the right value proposition for CPG products and efficient supply chain planning towards supply chain network optimization. How much can the product command in terms of price and at what cost? What CPG supply chain management initiatives can ensure that the product is available where and when the consumer wants it and what variables are likely to impact that state?
As new consumer behaviours begin to emerge in all areas of everyday life, CPG companies need to use this transition period between the crisis and the new normal to rethink their consumer-decision journey and enhance and improve supply chain efficiency.
In a price-conscious CPG market, supply chain managers are desperate to optimize costs and increase supply chain throughput. The increasing number and complexity of sales channels demand end-to-end supply chain visibility as products travel from manufacturing centers to the end-customer; such transparency at the speed of business requires a digital supply chain.
As businesses embark on digital transformation initiatives to improve supply chain efficiency, they will need the right supply chain software to navigate the 4 stages in order to maximize network value.
End-to-end connectivity across the partner network inevitably concentrates large amounts of information across multiple connections. Facilitating collaboration with other channel partners by forging stronger relationships through efficient and coordinated actions increases end-to-end connectivity. This, in turn, results in increased activity leading to a concentration of information.
While grocers remain important and strategic trading partners, CPG companies will need to connect across various channels, including e-marketplaces and their own web presence. For smaller brands, it becomes a question of finding the channel that best fits their existing or extended distribution model.
Traditional supply chain planning can fail to accurately predict sudden rises or falls in demand as these forecasts are based on historical data. Integration with ‘big data’ systems helps develop a more holistic approach and supports an agile demand plan. CPG manufacturers need to quickly become experts in big data analytics, insight generation, and ROI tracking of investments, particularly for e-marketplaces.
Based on the demand forecast, companies would need to respond quickly and efficiently to address production and inventory capacity throughout the supply chain. Factory, logistics partners, and warehouses will have to be coordinated and synchronized to serve multiple goals and partner networks would need to operate in near real time.
All this might require jettisoning legacy services and investing in smarter supply chain software that are designed for faster, point to point communication and at a lower cost.
When a CPG supplier is in a position to manage its demand, production, and inventory, it has more control over its costs, product pricing, and placement. It can take a varied price approach depending on the demands and requirements of a particular buyer. According to Forbes research, the best CPG performers reallocate 2-3% resources per year removing unproductive costs and channelling funds to priority initiatives.
The lessons learned over the past 14 months present retail and CPG companies with a tremendous opportunity for improvement of supply chain operations. They can now reinvent themselves for the new normal with more speed, new innovation, and increased agility.
These companies can learn from their own experiences and from each other as they get ready to take on a less predictable future. The right digital investments can help long-term supply chain planning while observing and reacting to consumer behavior and the business environment.
PartnerLinQ is the result of Visionet’s decades-long industry expertise and technology leadership. Hosted on Microsoft Azure, PartnerLinQ is an innovative, process-centric, easy-to-use EDI solution that enables API-led, cloud native integrations. With a simplified B2B communication engine that includes EDI, AS2, SFTP, and real-time APIs, PartnerLinQ is a fully integrated platform and easily handles both standard and proprietary file-based formats including custom integrations. PartnerLinQ is well suited for retail, e-commerce, wholesale, transportation, 3PL, as well as distribution, digital and analog partner ecosystems – helping your team achieve operational efficiency and gain real-time supply chain visibility.
The PartnerLinQ team at Visionet has more than 25 years of experience in providing industry-focused leadership in technology, consulting, and in the development of innovative solutions that drive global supply chain transformation from the factory floor to the consumer’s doorstep.
Visionet’s technology practice includes leveraging Azure to build, test, deploy, and manage large-scale enterprise solutions for its clients. So when Visionet set out to build PartnerLinQ, it made perfect sense to build, test, deploy, and manage the PartnerLinQ integration platform from within Azure.
While the impact of the COVID-19 pandemic has been unprecedented, supply chains have also been upended by trade and tariff ‘wars’, geopolitical tensions, and environmental disasters over the last decade. Clearly, supply chain disruptions are going to end anytime soon. So, Retail Trade organizations need a strategy and tools to be ready for the next one.
This whitepaper looks at how Retail Trade organizations and their supply chains have responded to disruption through the various stages of the pandemic and brings these observations forward to lay out a path for the future.
US food makers have been warning about impending price increases over the last few months and since we are all consumers at heart, we can see the evidence at the grocery store. According to NielsenIQ, 50 of the 52 food categories it surveys are reporting higher prices when compared to last year.
This cost push inflation effect can be attributed to a few things: rising commodity prices with the cost of raw materials at its highest in almost a decade, increasing transportation costs, supply chain disruptions, and changing consumer demands. Acosta’s study on eating habits shows 55% of Americans are eating more at home since the start of the pandemic.
Balancing the Green New Deal with the closure of the Keystone XL pipeline as well as COVID vs consumption are all contributing to a cost push inflation. The subsequent attack on the Colonial Pipeline directly impacted consumers right at the beginning of the summer travel season. The big question is how businesses can prepare for such unforeseen circumstances, circumstances with real consequences.
Disrupted supplies, fluctuating demands, and changing consumer behavior all signal a period of major change for CPG, while events such as an impending cost push inflation will push organizations further towards optimizing costs and reassessing their entire business processes.
While e-commerce continues to gain momentum and smaller and more agile competitors challenge the titans of grocery, the increase in competition has reignited cost and performance pressures like never before. Scale is no longer enough to drive a competitive advantage. More participants plus more channels means more complexity in moving packaged goods from the factory floor to the ‘Bull’s-Eye Zone’ on store shelves.
Modern organizations have worked on ‘lean’ philosophies for decades, but The Economist’s Intelligence Unit reports that almost 60% of its surveyed respondents are looking at changing these strategies and dramatically so. Market participants are more eager to maintain redundancies. Redundancies in excess capacity and supply chain resilience proved to be more beneficial in 2020 than speed and efficiency.
As a result, the supply chain is no longer being viewed through the lens of being a cost center – rather, supply chain planning has become a strategic imperative and a capability to be invested in.
The Economist’s Intelligence Unit is also reporting that 90% of retail and CPG executives now plan to change their supply chain networks, with more than 40% expecting to increase CPG supply chain investments with a focus on digital agility, supply chain visibility, and resilience.
In short, the very concept of gathering a 360° view of customer information has been unseated by an expanding plan to gather a 360° view of supply chain entities and assets well beyond the classic sense. What we are talking about stretches the limits of what was once considered practical – we are talking about assets, accounts, items, locations, and legal entities; materials, products, and reference data; suppliers, partners and customers. The question now is how and where to begin.
Core ideas around alternative factories, multi-sourcing, and maintaining generous amounts of buffer stock are gaining traction, along with the need for cutting-edge technology to enhance omnichannel presence. Big retailers and CPG companies have begun constructing more agile and flexible networks of partners and intermediaries, sources and supply chains, augmenting their pool of primary suppliers with a complete secondary network and tertiary markets that can fill in when needed.
More and more grocers are returning to or developing their own private label brands to supplement their current supplies in an attempt to keep shelves full and counter cost push inflation effects. They are encouraging existing suppliers to build frameworks that allow them to produce in multiple locations, while also returning to inventory policies that have all but reversed cross-dock operations.
Such alternative sourcing strategies are being complemented by intelligent and autonomous systems, powered by digital innovations like Internet of Things (IoT), Artificial Intelligence (AI), and Machine Learning (ML) – all targeting further cost optimization and digital agility across the value chain.
Connected CPG supply chain software can efficiently communicate with each other to enable decision-making without human intervention. Making the most of Industry 4.0 tools will also provide supply chain visibility across all nodes in the partner network and facilitate on-the-fly remediation in case of disruptions.
Agility, supply chain visibility, and insights thus become vital for the survival and success of a modern CPG enterprise. More and more supply chain managers are playing a key role across board rooms and contributing to critical and strategic decisions like cost optimization, product and vendor selection, merchandising, and operations.
According to Bain andMicrosoft’s combined study of supply chain leaders, digital agility and resilience top the list of priorities in their choice of supply chain software. The same study identified two key areas for future-resistant investment:
A very fine line lies between survival and success; after a year of turbulence, CPG is making its way into this new era, the new normal.
The most successful brands are using intelligent technologies to adapt to faster-evolving consumer demands and market challenges like cost push inflation and regulatory constraints. While many still lack in resources to invest, supply chain planning has to take into account preexisting conditions, business plans, and other obstacles that impede progress towards resilience.
Striking a balance between efficiency and resilience is not easy. Increased resilience implies an increase in operational costs, but such costs can be offset by an integrated approach and a technology redeployment. Organizations need a CPG supply chain solution that brings together operational scale and flexibility, analytics and predictive planning, and an omnichannel capability – such digital agility provides the much needed degree of supply chain visibility, flexibility, and resilience that modern organizations need.
What CPG companies (as well as others, including Transportation, MRO, and electronics) need are committed and experienced technology partners who can provide network connectivity, partner communication, and supplier and customer insights and can set them on a path towards crisis-resilient growth.
PartnerLinQ is a hosted integration platform for EDI, B2B, and API integration; it is the result of Visionet’s industry expertise and technology leadership. The PartnerLinQ team at Visionet has 25 years of experience in providing industry-focused technology, consulting, and innovative solutions that drive global supply chain transformation from the factory to the end-consumer. Hosted on Microsoft Azure, PartnerLinQ is an innovative, process-centric, easy-to-use EDI solution that enables API-led, cloud native integrations. It includes a simplified B2B communication engine that combines EDI, AS2, SFTP, and real-time APIs and easily handles proprietary file-based formats and custom integrations. PartnerLinQ is well suited for retail, e-commerce, wholesale, transportation, 3PL, distribution, and digital and analog partner extensible platform, helping your team achieve operational efficiency and gain real-time visibility.
Visionet, a long-standing Microsoft gold partner, leverages Azure to build, test, deploy, and manage large-scale enterprise solutions for its clients; so when we set out to build PartnerLinQ, it made perfect sense to build, test, deploy, and manage the integration platform from within Azure.
Consumer spending on food had been remarkably consistent in the US from 2016 to early 2020. As per McKinsey’s study, growth hovered around 4% annually, while total spend was almost evenly split between retail outlets like grocery stores and supermarkets and food service organizations like restaurants, fast-food locations, coffee venues, and school and office canteens. While the COVID-19 pandemic drastically impacted margins for almost all business segments, the food & beverages (F&B) segment rode the storm better than most. From $6196.15 billion in 2021, the industry is expected to reach $8163.61 billion in 2025 at a CAGR of 7%.
Yet, March 2020 upended the distribution of consumer spend dramatically. Amid lockdowns and the perceived health risk in public places, people preferred staying and eating at home. Sales in groceries and supplies grew 29% compared to the previous year, while food service centres saw a corresponding dip of 27%. More cooking at home led to more staples sales, while consumers increasingly turned to comfort food to cope with heightening anxiety. Canned soup sales were up 200% year on year, frozen food 40%, potato chips 30%, and popcorn 48%.
Over the years, F&B distributors have been running a balanced and optimized supply chain where upstream orders come in based on the forecast of downstream orders going out. As a result, revenue margins were also largely dependent on a steady flow in both directions.
But with the rapid shift in consumer spend pattern brought about by the pandemic, the previously balanced system was completely upended. Downstream orders came to an abrupt halt with restaurants closed, but upstream orders kept coming in from the farms, food-service producers, and processors. This led to a clog in the logistical chain as well as shortages in storage space. As distributors cancelled incoming shipments from farmers, food products were stranded upstream, leading to food-security risks for the more vulnerable consumer segments.
Food distributors have also been by quick-service and casual-dining outlets switching to takeout-only modes of service. Some have partially adapted by taking the online route and initiating delivery services. But those that do not supply to retail channels have had to completely overhaul their sales routes, making their supply chain transformation even more challenging.
F&B distributors who managed to rebalance their supplies are now left with overcapacity in their storage facilities and distribution networks. But the pandemic has also taught them a very crucial lesson – about maintaining reliability in supply even at the cost of price. As consumers grow more comfortable with the ‘new normal’, they will continue to save trips to the store given the increased domestic responsibilities they have picked up. While panic buying has ceased, using digital will only continue to increase. Many buyers who preferred to shop offline before the pandemic are now using digital channels having realized the convenience that online ordering provides.
So F&B organizations are increasing production to maintain their presence on retail shelves, while others are scaling up their e-commerce presence. But dilemmas still remain about the means to address demand peaks and the future demand scenarios to prepare for. In addition, consumers need to be reassured, employees protected, and high quality supply maintained even at elevated costs.
For F&B participants from farm to shelf, it is imperative to come up with creative solutions and integrate their collaboration channels to ensure a reliable supply despite intermittent plant closures and demand disruptions.
A flexible and agile supply chain can help F&B companies effectively respond to these ongoing challenges. But they also need increased visibility and data from every node of their value chain to generate actionable insights. Lack of transparency exposes supply chains to unnecessary risk; this is exacerbated by using outdated systems or traditional paper tracking and manual inspections. Fragmented information and lack of communication leave parties in the supply network with little to no knowledge of each other’s actions. This leads to inefficiency and waste and generates mistrust among suppliers and their customers. And the problem gets much worse as organizations begin to expand their markets and partner networks.
Increased visibility will also go a long way in keeping operational costs in check. While simple supply chains can optimize costs using spreadsheets, more complex ones are better served by an integrated network solution that does not require customizations for each individual supplier. Modern B2B integration solutions make a business more efficient, more attractive to customers, and less vulnerable to competitive forces. They enable seamless connection to all your network partners, while deploying multiple supply chain solutions within a single implementation process.
The complexities of the post-pandemic landscape are acting as a trigger as more and more industries feel the push to go digital. Only a cloud-based, integrated solution can provide the convenience, scalability, and reliability that food service organizations need for managing data exchange, workflow, and transactions.
Visionet’s PartnerLinQ ensures a simple and robust cloud deployment that minimizes infrastructure costs and enhances analytical reporting powered by Azure’s serverless, scalable event-processing engine. PartnerLinQ is designed to guarantee business success by quickly setting up connections with new partners, customers, and sales channels and seamlessly integrating with smart devices and appliances. It minimizes repetitive processes and works across all data formats and transaction protocols. With PartnerLinQ, F&B enterprises can automate end-to-end workflows, achieve elasticity and scale, and enjoy a hybrid architecture that also integrates with on-premise legacy systems.
As regulatory mandates demand faster and more extensive reporting, customers want more visibility into all aspects of a transaction, and new business models start being formulated, the need for simplified and end-to-end B2B integration becomes more urgent. F&B organizations can no longer afford to work in silos – a smarter B2B integration on cloud can quickly reduce their time-to-market, optimize costs with standard, industry-specific integration processes, and take an omnichannel approach to order fulfilment.
No-one could have imagined how our way of life would be transformed by the summer of 2020. Changes in our daily lives, changes in our needs, wants, and desires have impacted individuals and businesses alike as we continue to struggle with the vagaries of life and the ‘new normal’.
The world is still unfolding and evolving. With the arrival of every new season, business reacts to a landscape marked by turbulence and turbidity, clouding our vision of the future or at least how we envisioned it. All the while, technological innovation continues as digital interventions work out difficulties of the new normal and hold the key to connecting and enabling disrupted supply chains, displaced societies, interrupted markets, and businesses trying to survive and thrive.
While all industries have, and many are still struggling with the effects of this past year and a half, some clearly bore a bigger brunt than the others. In case of retail, grappling with ‘change’ has been a challenge for most retail establishments over the last couple of decades. The severe impact on their supply chains in 2020-21 has accelerated its growing need for transformation like never before.
The beginning of the pandemic saw people rushing to the stores to stock up on all varieties of items. The surge in demand, however short-lived, brought new volatility and the closing of factories and assembly plants the world over has added layers of stress to an already stressed system.
While large swathes of the population went in and out of quarantine, the retail supply chain overall was damaged by a drastic fall in the availability of products used for everyday life. The spikes in demand this spring and the subsequent turmoil were exacerbated by supply disruptions on one hand and the prolific growth of e-commerce on the other. As borders closed and equipment were redirected, shippers and carriers struggled to get raw materials to the factories and distribute finished goods across the supplier value chain.
Consumers too were sceptical about venturing out to a store, with many taking online purchasing seriously for the very first time; by some estimates, e-commerce achieved its next decade’s forecasted growth in just six months. Even after brick-and-mortar shops were back in operation, e-commerce retained its newly broadened share of retail sales.
The digital experience has impacted all our lives over the last 18 months. As human beings, the way we communicate, teach, shop, pay, learn, and entertain ourselves have all taken a digital turn on what we used to call the information superhighway. We have also taken more kindly to merchants and businesses that changed their modes of operation quickly and reacted to this new sort of normal.
These ready-to-engage-and-win establishments came up with creative and innovative ideas to address our needs and kept our lives moving forward, not to mention our sanity. As consumers, we now seem to expect all businesses to understand our immediate requirements, adapt accordingly, and provide an experience that has a long lasting and positive impact on our daily lives.
Events like 2020-21 do not always have easily available solutions; more importantly, the same set of solutions often cannot be repurposed or retooled to address every crisis or every business, and certainly not as quickly as was necessary in the past year or so. Often, when businesses set out on a new market such as this, they are at a loss trying to determine where to begin and for some retailers, the crisis was an inflection point that allowed them to reassess their entire business processes.
A majority of business leaders agree that the most effective approach is to start by developing a deep understanding of the technology you possess and then working out how such technology can be best utilized to address your immediate needs. While early digital adopters can focus more on accelerating their transformation initiatives, they may need to add some additional capabilities to an already robust order management system or quickly enable services like buy-online-pickup-in-store (BOPIS) and ship-from-store.
On the other hand, organizations that have delayed their digitalization or modernization efforts are now caught in the cross-hairs of unalterable market forces. In addition to a lack of online presence, consumer-facing retailers are facing completely new logistical challenges to facilitate curb-side pickup and consumer delivery. Now, they have to prepare for an environment where a significant percentage of their sales will be forever altered and come from online sources and much more quickly than ever envisaged in any digitalization or modernization discussion.
Big change takes time and with stores getting shuttered and with customers rapidly turning to e-commerce for day-to-day requirements, time is something most retailers and suppliers to retail do not have. Brick-and-mortar establishments are realizing that an online presence is imperative for survival and effective consumer models are what retail suppliers call necessary in the new marketplace
Where deploying an online store would take a few months under normal circumstances, the new ‘normal’ has sped up that requirement. Many a retail technologist has been pleasantly surprised by how quickly they could cut through the red tape to facilitate technology that supported new order fulfilment models. Business teams are welcoming collaboration with their technology counterparts to arrive at a holistic strategic approach for the entire organization.
While early and rapid implementations may not always be perfect, engaged technology partners can get off the blocks in weeks. Once the stores ‘re-open’, organizations can begin migrating back to further optimize and enhance their online capabilities, while keeping their businesses running. This is where having a strategic technology partner like PartnerLinQ can help immensely.
While the pandemic is abating and relinquishing control in many parts of the world, organizations are beginning to blend their learnings from the past with their available capabilities and newly discovered potentials. They will need to be fit for future growth, and be more resilient to subsequent and wide-scale operational risks. Achieving balance will require scaling value chain visibility, risk awareness, and scenario planning.
Today’s landscape demands a deeper understanding of supplier vulnerabilities and enhanced automated workflows. While ordinary supply chain tools provide visibility, driving an alternative supply chain requires much more, including insight into the sales processes and increased visibility into every component of the value chain. Achieving all of this can be a long and arduous journey; but it can be made easier if you have the right set of tools at your disposal.
PartnerLinQ’s supply chain connectivity solution connects your business with your value chain – providing complete visibility into capacity constraints across your first-, second- and third-tier suppliers. Its unified platform supports EDI, real-time APIs, and proprietary file-based formats, allowing seamless integration with e-commerce platforms, digital marketplaces, and your value chain.
PartnerLinQ connects directly with your CRM, ERP, MRP, WMS, and TMS systems, as well as your social channels. The PartnerLinQ platform uses intelligent field-mapping techniques to automatically reconcile your business partners’ data formats to your own; this dramatically reduces onboarding times and leading to improved efficiency with instant benefits and direct B2B communication.
PartnerLinQ’s ‘integration without complication’ facilitates value chain integration and connections with hundreds of supply chain partners, while ensuring a single point of management for your team. It packs enhanced analytical reporting capabilities powered by Microsoft Azure’s serverless, scalable event-processing engine at no extra costs.
Hosted on the Microsoft Azure platform, this unified supply chain solution enables API-led, cloud native integrations, simplified B2B communication, and real-time APIs. PartnerLinQ includes the tools that modern retail organizations can rely on now to build their digital partner ecosystem, achieve high levels of operational efficiency, and gain real-time visibility, to be ready to take on tomorrow’s business challenges.