Can you compete with Amazon if you are Food Distributor?
Amazon is a Goliath among tech giants, having moved from selling books to electronics to general merchandise and, more recently, fast-moving consumer goods.
Amazon is a Goliath among tech giants, having moved from selling books to electronics to general merchandise and, more recently, fast-moving consumer goods.
So it’s hardly surprising that the next logical step appears to be groceries, which are purchased with even greater regularity – one suspects with a view to increasing its Amazon Prime subscriber base.
Amazon’s acquisition of upscale grocer, Whole Foods, a deal which will give the online retailer bricks-and-mortar locations as well as closer access to consumers with last-mile distribution.
So, if you are a food retailer, manufacturer or distributor, you better ask yourself how to compete with Amazon? Or is it even possible?
Faced with the combined buying power of the Amazon-Whole Foods synergy, supermarkets will be under greater pressure than ever to reinvent themselves.
The acquisition is likely to be a game-changer in terms of how the grocery model operates in the US and UK, with implications beyond the food segment for retail in general.
What makes Amazon so disruptive is that fundamentally, while many traditional retailers are wrestling with fast-evolving technology, Amazon is a first and foremost a tech company that happens to sell products.
It consistently finds ways to reduce friction in the consumer journey and, by staying at the forefront of innovation, has redefined people’s expectations of all B2C brands, from packaged goods to banking and telecoms.
Staying competitive and relevant
So how can manufacturers and distributors in food and analogous segments compete or collaborate with Amazon and remain relevant?
Simply put, whether you are looking to work with or against these tech-savvy organizations, you have to change the way you do business.
That means developing a more customer-centric supply chain model which focuses on the last mile of the delivery process.
Only then can you offer (and meet) narrow delivery slots, keep customers informed of delivery progress and estimated time of arrival, reconcile every delivery on site, recalculate amounts due and automatically generate a clean invoice.
To compete with Amazon on the same level, you need to deal with consumers’ expectations of competitive pricing at a time of unprecedented transparency, you need to focus on production efficiency, too.
You may need to identify processing and packaging methods that extend shelf life to minimize waste or look at process optimization and streamlining production flow to reduce any efforts that don’t directly add value to your product.
Distribution partnerships with collaborative logistic agreements will become increasingly commonplace, to reduce road miles (or kilometers) in line with growing consumer awareness.
And you will need to be more proactive and adaptive than ever to keep pace with regulatory developments and maintain compliance.
In most cases that means you need to invest in a software that provide this functionality and it better be integrated with your existing ERP.
The pursuit of operational excellence
Technology is central to achieving operational excellence and institutionalizing best practice, with opportunities for improvement typically found in four key areas:
Business integration
For any tech investment the best chance of delivering value, you first need to break down the informational and operational silos in raw material sourcing, manufacturing, warehousing, distribution and inventory management.
This will also provide visibility into production and inventory to other departments such as sales, marketing and finance.
Productivity and efficiency
To revitalize processing productivity, you need to be able to manage inputs, control inventory and reduce waste.
Information systems can give you the tools to optimize the product mix and track inventory levels and cost.
Better information management and automated quality controls will also give you reliable insight into compliance, enabling you to anticipate and respond faster to regulatory changes that could impact production.
Supply chain management
To forge tighter relationships with customers and suppliers, you’ll need to take a more inclusive approach to supply chain management: information sharing and systems integration with suppliers will become the new norm.
An ERP solution will go beyond routine task automation to provide controlled information access to supply chain partners.
eCommerce transactions
You’ll need to consider eCommerce integration if you’re looking to enable EDI inbound/outbound transactions to/from your ERP system.
This will allow you to improve transaction efficiency, reduce manual data entry and support the growth of your business without proportionally increasing back-office staff.
And because you’ll be accumulating analytical information with every transaction, you can use this data to identify efficiencies or deficiencies in the supply chain.
Spotlight on success
One company that has made great strides through this type of modernization is wholesaler, Hanan Distribuciones.
The Mexican food and beverage specialist had identified that shorter delivery times were key to improving customer satisfaction. However, as product expiry dates were still being recorded manually, the company was struggling to manage its FEFO picking strategy.
Hanan implemented Produmex WMS fully integrated with SAP Business One. Now, expiration dates are captured with handheld scanners, eliminating manual data entry.
This has enabled outbound logistics to be automated, improving picking, packing and shipping processes, while automated cycle counting dramatically improves the accuracy of its inventory.
Hanan’s management has the benefit of full visibility into vendor performance, product movement and customer orders, to support better decision-making.
Now, an impressive 99% of orders are able to be delivered within 24 hours, and the company has seen a dramatic uplift in its efficiency and productivity.
To find out how more about how we helped Hanan Distribuciones deliver customer satisfaction in short order, download the case study.