Supply Chain Concerns for the chocolate industry
Supply Chain Disruptions are the most serious concern for the chocolate industry.
Supply chain disruptions were ranked as the top challenge in a February 2021 survey of FCIA (Fine Chocolate Industry Association) members. Over half of survey respondents reported that their businesses are better or significantly better than they were in March 2020, allowing them to shift their focus away from concerns about surviving the pandemic and toward long-term strategies for managing supply chain disruptions such as Covid-19 and the recent Suez Canal blockage. Prior to the pandemic, food and beverage manufacturers faced trade wars, tariffs, and constantly changing regulations, making commodity procurement difficult.
Consumer preferences are constantly changing, and there is an increased demand for ethically and sustainably sourced raw materials. And it's not just a matter of delivering the right products on time. Because raw material costs account for 40 to 60 percent of manufacturing costs, obtaining resources at the wrong price has a significant impact on profits. Cocoa faced additional challenges in 2020 as a result of Covid-19, including travel and transportation restrictions, payment delays, certification issues, and a supply shortage. Supply chain disruptions pose a significant problem for manufacturers who obtain raw materials that must travel long distances to reach manufacturing plants. The solution is real-time, connected data.
Connected, real-time data is required for effective supply chain management. To truly optimise your supply chain, you must have real-time visibility into the status of all commodities across your entire supply chain. You must understand what commodities you require, how much of each commodity is currently on order and secured through contracts, what commodities are in inventory, and what commodities are in transit. With the proliferation of internet access, IoT sensors, and so on, it is now possible to track commodities from farm to manufacturer. Putting all of this data into a comprehensive commodity management system ensures that everyone in the organisation has a complete, accurate picture of every commodity at every stage of the supply chain, allowing you to optimise scheduling, transportation, and storage.
Real-time data is also essential for avoiding the most severe consequences of supply chain disruptions. If you monitor your entire supply chain in real time, you will be aware of any disruptions and will be able to respond quickly. When real-time data is combined with business intelligence, simulations can be run to evaluate potential options. What are your other options if a ship is blocking the Suez Canal? Is there another option, and how would it affect your costs, profits, production schedules, and deadlines? Simply run some simulations to determine the best strategy for your company.
Indeed, using AI-powered business intelligence, you can run simulations long before disruptions occur to test potential scenarios and better prepare for potential disruptions. You can run simulations to assess alternatives while monitoring changing global politics, fluctuating fuel prices, and trade wars in real time. You're aware that ships can become stuck in the Suez Canal; how does this affect your transportation options? You can use simulations to select the best options for keeping your products moving - profitably.
Furthermore, with real-time data, you can set up alerts to notify you when commodity markets change, allowing you to act quickly to mitigate risk. Market shocks can be caused by a supply chain disruption, political upheaval, or bad weather, but you can receive an alert and act as soon as a threshold you define is breached. Chocolate companies must invest in real-time data and connect that data across the entire supply chain to combat the threat of supply chain disruptions. Complete visibility, combined with the ability to analyse potential disruptions, may mean the difference between a major disruption and a minor inconvenience.