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Effectively Managing Supply and Demand in the Fresh Produce Industry: 8 Key Challenges
Effectively Managing Supply and Demand in the Fresh Produce Industry: 8 Key Challenges
Dec 18, 2023Aptean Staff Writer
To say that the fresh produce industry is ripe with opportunity is more than just a clever pun. The International Fresh Produce Association’s latest State of the Industry Report measured the 2022 global revenue from fresh vegetable sales at $691.2 billion, and the same from fresh fruit sales at $622.8 billion, indicating that the market’s appetite is healthy.
What’s more, the report also projected continued growth for both segments, with fresh vegetable sales forecast to increase by 3.2% through the end of the year and fresh fruit sales to rise by 2.9% in the same timeframe. No matter what products your fresh produce business specializes in, there’s almost certainly potential for greater profitability and expansion.
That said, in order to achieve that sort of success, your organization will need to effectively manage supply and demand, a matter that is quite complex given the perishable nature of fruits and vegetables. There are also a number of challenges that stem from the nature of fresh produce supply chains, and overcoming them is critical to both your bottom line and brand reputation.
Between economic inflation, climate change, consumer demands and regulatory compliance, the external pressures that your company must deal with are considerable. But by using purpose-built software designed to handle the unique requirements of fresh produce operations, you can mitigate the negative impact these forces have and drive measurable improvements in your operations.
In this blog, we cover the eight key challenges that are inherent to effectively managing supply and demand in the fresh produce industry, as well as the features of a specialized enterprise resource planning (ERP) solution that can help your business tackle them head-on. Along the way, you’ll learn the benefits of leveraging technology from one end of the fresh produce supply chain to the other.
1. Maintaining a Precise Balance
To understand the importance of balancing supply with demand, simply remember that the further they are out of alignment, the slimmer your profit margins will be. Depending on the situation, you could end up with spoiled goods, missed production targets, unfulfilled orders, missed sales opportunities or a dry pipeline should you fail to establish an equilibrium.
A fresh produce ERP system can afford your company the forecasting features you need to create data-driven forecasts that inform optimal stock levels. By leveraging data from historical sales, existing inventory and consumer trends, the software can give you a reliably accurate estimate of your future material requirements to inform strategic procurement and production decisions.
Likewise, an ERP’s production planning capabilities allow users to view existing inventory alongside sales orders for close comparison and identification of shortages or surpluses that need to be rectified. The software can also automatically create production orders to cover your requirements, not to mention deploy alerts when an imbalance occurs.
Better still, advanced industry-specific produce ERP solutions come with a trading board that serves as a visual interface for real-time fresh food inventory management across multiple facilities. With comprehensive data at their fingertips, your decision-makers can effectively assign lots and optimize supply and demand no matter the season.
2. Preserving Profit Margins
While your organization is dedicated to the higher goals of delighting customers with delicious food and providing wholesome nutrition, remaining financially healthy is the only way you can keep achieving on those fronts. So, in the process of securing supplies and meeting demand, you need to keep a close eye on your profit margins and analyze how you might improve them when possible.
For this objective, there are few better tools than business intelligence (BI), which is an application that can be integrated with a food and beverage ERP solution to track hundreds of key performance indicators (KPIs). BI makes it simple to drill down into the drivers behind your margins and harness the power of scenario modeling to examine the potential impacts of changes.
Aptean's fresh produce industry ERP natively integrates with our BI application and also offers grower return capabilities to fine-tune pricing with precision using “grade out” or “pack out” methodology. Our system automatically calculates prices based on defined attributes—like size, color, shape and appearance—to improve accuracy and save your employees from having to conduct the process manually.
And going a step further, our solution comprises many unique technologies built on the Microsoft Dynamics 365 Business Central platform. That affords it a user-friendly feel and lets your users enjoy a seamless experience as they switch between commonly used applications in the Microsoft Office suite. Better still, it reduces the barrier to entry that might encumber newer employees learning the software.
3. Overcoming Supply Chain Disruptions
According to a ProducePay survey, 38% of fresh produce growers consider supply chain disruptions to be their greatest concern, and the same challenge was near the top of the list for most other respondents, too. Whether the root cause is a material shortage, geopolitical change, distribution delay or another issue entirely, no business wants to see shipments held up or deliveries missed.
The production planning functionalities of ERP systems certainly come in handy here, as they provide your personnel with an up-to-date look at how current stock levels compare with order volume and facilitate the creation of production orders to address any deficiencies. Aptean’s fresh produce ERP trading board is also tremendously useful on this front, enabling multi-site inventory management.
Our solution also has production scenario capabilities built in, which allow you to assign multiple combinations of bills of materials and routings both per item and per location. One configuration can be set as a default, with others to be used as back-ups in the case that certain materials are unavailable due to a disruption, allowing you to maintain productivity despite the obstacle.
4. Meeting Customer Requirements
Companies in the fresh produce industry often serve a wide variety of clients, from processors and manufacturers that use fruits and vegetables in their products to supermarkets and even foodservice outlets. Among such a variety of customers, there will be just as much variety in their requirements, and it’s on your organization to meet them in order to take on their business.
Speaking of customer requirements, transacting via electronic data interchange (EDI) can be convenient in some ways thanks to its fully digital nature and standardized methodology, but it’s simply impossible without the right tools. Thankfully, ERPs built for fresh produce businesses offer integrated EDI support, which will have your organization prepared to serve large retailers.
Furthermore, we designed our system with global trade features that eliminate the need to transcribe bulk orders by hand, not only boosting efficiency, but also reducing the risk of human error. Aptean's ERP for the fresh produce industry can automatically create purchase orders based on Excel files received by email from customers, further streamlining the process.
5. Handling Certificates Successfully
Managing the certificates associated with the fruits and vegetables that come through your facilities appropriately and efficiently is critical to keeping the fresh produce supply chain flowing. Because produce can bear many different certifications—from those that concern quality like Safe Quality Foods (SQF) to others that denote properties like organic—you must have the right tools to accommodate them.
That’s why our developers created our specialized food ERP with native producer certification features. These enable your staff to track producer, grower and vendor certificates at every step of the supply chain, not to mention view and assign certificates to individual lots. No physical documents or digging through reams of paper required with your fresh produce ERP software.
6. Unlocking Full Fresh Produce Supply Chain Visibility
Only with a complete picture of your fresh produce supply chain, from one end to the other, can you truly dial in your supply and demand. After all, you need to know where your products are, where they’re headed and their details in order to feel fully confident that operations are on track and no immediate changes are necessary.
To gain that kind of visibility, you’ll want the robust lot and sublot management functionalities of ERP software on your side, as these let you drill down to the item level to view product details, exact location and critical traceability data. The same set of features can be used to identify lot numbers, country of origin, production date and other important information.
Capabilities that let your staff set and update the status of products—especially as they pertain to quality checks that need to be or already have been completed—go one step further in giving you easily accessible product information at a granular level. Aptean's fresh produce ERP has those, as well as a full suite of dedicated quality control tools.
7. Sourcing Optimally
If you’re aiming to master the “supply” half of this balancing act, you’ll need to optimize your sourcing. Solid partners, satisfactory raw materials and efficient working processes are essential to succeed in that endeavor. You’ll need to be able to request replenishments conveniently, get the specific products you need and conduct the receiving process, as well as associated quality checks, efficiently.
A vendor item catalog like Aptean's fresh produce ERP offers can make that first step of creating and sending a purchase order to your suppliers for a restock a much easier task. With this module, you can generate purchase orders with just a few clicks while also benefiting from better accuracy and insight into your partners’ available inventory.
Advanced attributes features are another must-have for fresh produce businesses, as each fruit or vegetable has many qualitative characteristics that must be accounted for, and the requirements of your downstream customers are exacting. With the tools of an ERP system, your team will be able to search and filter through inventory according to the pertinent data elements, making their jobs easier.
8. Increasing Sustainability
Much more than a buzzword, sustainability is now an industry imperative, as governments around the world are cracking down with new legislation geared toward mitigating businesses’ environmental impact. And, with 26% of the world’s annual greenhouse gas emissions resulting from the activities of the food and beverage industry, your fresh produce business could help combat a serious problem.
A great way to do this is to reduce the amount of waste your facilities generate. Fruits and vegetables have a fairly limited shelf life, and the fact that they become inedible when they spoil is not a problem your produce business can solve. You can, however, take advantage of the expiration date tracking tools that an ERP solution can provide. By deploying proactive alerts when freshness windows are closing, you can make better use of what you have before it spoils.
It’s also worth pointing out that the fully digital nature of ERP platforms should help considerably in your efforts to reduce paper usage within your organization—plus, maintaining your documents electronically is much more convenient. And for those companies that distribute their products, you can couple your efforts to shorten fresh produce supply chains with ERP-integrated route optimization software, which can save your vehicles miles on the road.
Lastly, your company can reduce packaging waste by using less and/or exploring recyclable options, and then apply your new specifications using the packaging features of an ERP system. You can set a default designation by product and also keep close tabs on your packaging material inventory so you’re not caught with a shortage in the crunch.
Growing Your Fresh Produce Business With Aptean
The fresh produce industry is unlike any other food and beverage sector due to how and where various fruits and vegetables are grown—not to mention their seasonality, perishability, unique characteristics and varied shapes and sizes. Accounting for so much information for every product you deal with is a monumental task, and using manual methods to do so would make managing supply and demand nearly impossible.
So, to free you and your colleagues from mundane, repetitive tasks and empower the group to work on mission critical objectives, trust in a purpose-built fresh produce ERP system. With industry-specific functionalities to solve your key challenges, a user-friendly interface built on the Microsoft Dynamics 365 Business Central platform and flexible cloud deployments on the Software as a Service (SaaS) model Aptean's offering is ideal to accelerate your growth.
For another point in our favor, consider our industry recognitions, which include Frost and Sullivan’s Customer Value Leadership Award in North American ERP Software for the Food and Beverage Industry. That stands as a testament to not just the performance of our software, but also our team’s dedication to making your digital transformation journey come to fruition.
Our commitment to our clients is that we’ll be a partner, from assisting in the creation of a project roadmap for initial implementation to continued support after the go-live date. And because our passionate professionals have decades of collective experience working with fresh produce businesses, we can assure you that we know your challenges and the best practices to overcome them.
Ready to optimize your fresh produce supply chain and discover how our ERP for the food industry can propel your business to greater heights? Contact our expert team today or request a personalized demo.
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