Inside Logistics

2019 Outlook: Food

Visibility and collaboration


December 31, 2018
by Kara Kuryllowicz

Uncertainty is in the Canadian air as 2018 comes to a close. Questions about trade deals, interest rates, housing values, oil prices and the GM plant closure are all weighing on the collective mind as we close out what has been a strong year.

Economists say we should expect further growth in 2019, in spite of an overall gloomy outlook for world economies. In fact, the OECD revised Canada’s GDP growth outlook for 2019 upwards in a November update.

Of course, a lot of our economic success is predicated on factors beyond the control of our own businesses, like politics south of the border, trade deals and wars, interest rates and oil prices. And with that knowledge business continues, dealing with many familiar challenges.

To get some insight into how several of Canada’s key sectors are faring, freelance writer Kara Kuryllowicz spoke with business leaders and asked them about the challenges they see for 2019. Here’s what she found out.

Canadian consumers demand a lot when it comes to their food and whom they trust to make it for them. Year-round, consumers eagerly anticipate fresh, ready-to-eat produce, dairy, seafood, meat and packaged goods, and regardless of the country of origin, the distances travelled or the many modes of transport involved, they assume it will be safe to eat and arrive well in advance of the “Best Before” or “expiry” date.

“As the largest food company in the world and a trusted brand that is in 95 per cent of Canadian homes, we have to execute flawlessly to live up to the trust consumers have in us,” says Greg Christopher, senior vice-president, supply chain operations at Nestlé Canada.

“The entire company thinks and acts with this trust in mind, end-to-end across our consumer value chain. This means we must have transparency in terms of route-to-market flows and how we commercialize our products. A shorter upstream consumer value chain is more important now than ever as consumers are moving away from the very things that can extend shelf life, for example, product ingredients and complex packaging barriers.”

Sluggishness in the supply chain creates activity or facility waste as well as inventory buffers that are costly and often unnecessarily wasteful. Food manufacturers and retailers are working now to build a collaborative approach, using vendor-managed inventory strategies to streamline replenishment and ensure fewer stockouts, as well as product quality.

The trend to omnichannel commerce in the food and grocery marketplace also means more grocers are opting for smaller, more frequent deliveries to keep up with demand. Such strategies also help eliminate food waste, which is being targeted as a significant contributor to greenhouse gases and an environmentally unfriendly and unacceptable outcome in a world where people go hungry.
“Food safety and the elimination of food waste have always been important to us, and in the next three to five years, we will increase our collaboration and leadership with industry groups and across our value chain to further improve transparency,” says Christopher.

Yet, transparency is more complex and challenging than consumers may realize. As the food and grocery industries globalize and consolidate, a single organization’s raw ingredients are grown by multiple farms, collectives and co-operatives in various countries. They’re then shipped to facilities worldwide for processing, production and packaging, before their journey to Canadian distribution centres and retailers.

Transparency helps ensure the integrity of food products and eliminate food waste, so companies like VersaCold Logistics Services based in Vaughan, Ontario, rely on technology to plan and monitor everything from the product’s route to Canada, temperature variances and weather, to monitoring vehicle equipment performance to predict and respond to any mechanical failures.

“In our warehousing operations, we use building temperature sensors as well as various equipment sensors to monitor the performance of material handling equipment and building systems to ensure operational performance and minimize energy consumption,” says Douglas Harrison, president and CEO of VersaCold. “We need to access, analyze, manage and react to that data to preserve the integrity and safety of the food products entrusted to us.”

Artificial intelligence, automation and robotics are some of the systems used to monitor, transport, track and handle products to better expedite and facilitate supply chain processes. More affordable, smarter technology that’s easier to set up, program and use now offers a better return on the investment, which makes it more accessible to a wider range of businesses.

“Technology has a place in the toolbox we’re developing to ensure we’re lean in the supplier ecosystem, and it lets our talent work on the most important parts of our business,” says Christopher.

“At the moment, a lot of the technology is test-and-learn with plenty of proven wins that can be adopted. For example, collaborative forecasting and replenishing with artificial intelligence capabilities and the simple use of SAP and decision-support software to codify the value chain.”