Farm to Fridge: Food & beverage’s complex dance

Food and beverage distribution is a complex dance involving a lot of moving parts, requirements and regulations. Perishable products, ever-shrinking shelf life, tight turnaround times and food safety concerns all come into play when moving and storing food and beverage.

Fresh and frozen goods require extra care, and the latest update to the Food Safety Modernization Act (FMSA) now requires all companies that make, process, pack or hold higher-risk foods to maintain detailed traceability records (beyond what was previously mandated).

Consumer tastes are also changing—a reality that puts even more pressure on food and beverage companies that have to pivot quickly to meet these needs or risk being left behind—and the warehouse labor shortage remains in full effect. In spite of these roadblocks, the companies that embrace innovation, efficiency and transparency are ensuring a smooth flow from “farm to fridge.”

In some cases, age-old habits have been hard to break in the food and beverage sector, where many of the largest companies have been around for a long time. “There’s a mindset of: ‘Well, we’ve always done it this way, so we’re maintaining course,’” says Brandon Novak, senior director at Alpine Supply Chain Solutions, “versus trying to adopt the new technologies and innovations that are out there and can help these companies overcome their challenges.”

However, not all food and beverage companies are sticking to their old ways of doing things. Novak recently visited a few different manufacturers and distributors that want to “overhaul their entire supply chains,” and are looking to robotics, automation and AI-driven data analytics for help achieving that goal. This is new territory for many of them, he adds, but these companies want to be leaders in their respective industries.

“The rest of the food industry should start taking notice of some of those capabilities. It’s historically a low-margin industry, which means that a lot of additional capital is usually not expended when it doesn’t have to be,” Novak explains. “As a result, both manufacturers and distributors in this space tend to be a bit behind when it comes to the [advanced] capabilities enabled by newer technology.”

Help wanted

The labor shortage has hit the warehousing and fulfillment space hard, and the food and beverage sector isn’t immune. Like many other industries, it’s now looking to more automation and technology to help fill those gaps and free up human workforces to focus on more strategic tasks. Frozen food producers and distributors face different challenges on the labor front, namely due to the environments that people have to work in.

“There’s always labor concerns in the frozen sector, which is looking for automated options to help fill in those gaps,” says Novak. Companies are also looking for ways to capture data ahead of time and get out in front of the fulfillment process, versus managing everything reactively. These and other strategies help food and beverage companies prioritize inventory, manage product shelf life and maintain good traceability records.

At DMW&H, senior account executive Michael Roe says the lack of labor continues to be the driving force behind many technology and automation investments in the food and beverage space.

“People just don’t want to work in warehouses anymore, and even when they do want to work there, retaining those individuals is difficult,” says Roe. “It’s very easy for someone to go work for another company for just a little higher hourly rate.”

This situation creates an opportunity for companies to look at things “in a different way,” says Roe, and to leverage automation, new technologies and other innovations to run their operations.

Food distribution, for example, has traditionally been a “pallet-in and pallet-out” or “single-SKU pallet-in and single-SKU pallet-out” operation. That’s changing, according to Roe, who says mixed-case palletizing is now gaining in popularity.

For example, you may have several layers of a similar SKU on the bottom of the pallet, which is topped off by individual cases or quantities of other SKUs. This can complicate the distribution process, Roe explains, “but with the right technology and automation and planning in place, it’s definitely a strategy that more companies are considering.”

Credit the lack of labor with driving these types of decisions in a work environment where “throwing more people at it” was generally considered the best way to solve a problem or to ramp up an operation. Instead, companies are looking at options like Movu’s pallet shuttle automated storage and retrieval system (AS/RS) combined with DMW&H’s indaGO warehouse execution system (WES) software to move products in and out of frozen facilities. The pallet shuttle can operate in temperatures as low as -13 degrees Fahrenheit.

This is just one example of how food and beverage companies are thinking outside of the box and coming up with more creative warehousing approaches.

“A lot of companies are getting more proactive about finding better and smarter ways to get the job done, versus just throwing more labor at the situation,” says Roe. “The overall attitude has certainly shifted in a more positive and open direction when it comes to automation technology, for sure.”

Managing SKU proliferation

The grocery store has become a dizzying arrays of flavors, niche brands, options and healthy choices. As consumers demand more customization and variety, food manufacturers are responding by offering more and more choices.

As a wider range of products are made and sold, distribution centers have to find new ways to grapple with the SKU proliferation that comes along with it.

Online grocery shopping is also playing a role in the SKU proliferation trend because it allows for a wider selection than ever before. With less physical shelf space constraints, for example, retailers can stock an even broader range of SKUs and give customers access to niche products and interesting options they may not find on the store shelves.

This has added a new dynamic to the supply chain and forced companies to rethink their traditional “pallet-in, pallet-out” approaches.

“Managing that many different SKUs in the conventional [warehouse setting] is extremely difficult,” says Jason Denmon, vice president of sales and customer service at Symbotic. The situation gets even more difficult when there are fewer labor resources to go around. Automation is often the answer for wholesalers, retailers and other companies that have to strike the right balance between having more work to do, but with fewer resources.

“By leveraging automation, food and beverage companies can provide more SKUs to retail store outlets and in a way that works best for those retailers,” says Denmon.

For example, companies are delivering more store-friendly or aisle-ready pallets to stores to help gain efficiencies on the retail floor. That way, as the pallets arrive at the store, every single case and stack doesn’t have to be sorted down to smaller carts that can be used out on the floor.

Instead, the aisle-ready pallet can be moved out onto the floor and used to replenish the shelves. This eliminates multiple steps in the receiving and replenishment process, and also makes better use of human labor.

Denmon says food and beverage companies are also looking for new ways to stretch their dollars and invest in automation that doesn’t come with a high, upfront price tag. In response, he says Symbotic recently partnered with SoftBank to offer a “warehouse-as-a-service” entry point for automation through their joint venture, GreenBox Systems.

“It’s about creating options for companies regarding how they want to commercialize their automation investment, and whether they want to invest their own capital,” says Denmon, who is seeing much interest in the new offering. “We give them the option to pay for it on a variable basis.”

No one wants to work in a freezer

Looking ahead, Derek Rickard, director of sales at Cimcorp Automation, expects more food and beverage companies to adopt the technology and automation required to run its operations without having to rely as heavily on human labor.

“Getting people to work in a warehouse is tough enough, let alone for a second or third shift or in a cooler or freezer.”

Rickard also sees more applications for mixed-case palletizing in the industry’s future and says equipment vendors are slowly moving in this direction. He also sees significant opportunity in the area of automated trailer and ocean container loading and unloading, which has fairly high potential in the fast-paced, high-volume food and beverage distribution space.

“There are some companies focusing on this area right now,” Rickard adds, “including a few startups that have received venture capital funding.”