How Process Improvement Helps Cut Costs in the Food & Beverage Industry
There is no shortage of challenges the food and beverage industry faces today.
Challenges that come with rising industry costs and a more complicated world following a global pandemic.
Food and beverage companies need to look at their existing processes to find ways to improve and optimise them if they want to spend less.
How will that help?
Let’s take a look.
Challenges in the Food and Beverage Industry
There are five distinct challenges in the food and beverage industry that organisations have to grapple with:
Rising Costs
Between a worldwide pandemic and a war, inflation is on the rise: food has increased by 15%.
Restaurants and food and beverage companies have faced huge losses as a result of both, and food prices have increased dramatically.
Between the effect of both worldwide catastrophes, the additional challenges on this list and the ever-changing environmental and climate condition, costs are increasing across the board.
Organisations in this industry are struggling to keep up, and are starting to tighten their grip on their spending.
External Supply Chain Issues
As with the above, the pandemic, the war, and climate change have had an enduring impact on supply chains around the world. After all, Russia and Ukraine provided nearly 30% of the world’s barley and wheat.
During the pandemic, between panic buyers stockpiling food and workers not being able to go to work, supply chains around the world ground to a halt. While they are starting to recover, the amount of lean waste generated during this time is still being calculated.
Not to mention the ever-growing concern with cargo theft, which can cost businesses over 30 billion per year. And even if they recover their cargo, laws prohibit recovered food from being sold. So companies spend more on security to protect their cargo while also spending on moving it.
Labour Shortage
On top of the external issues affecting the industry, it is also one of the most affected by the Great Resignation.
Not only are companies in the food and beverage industry losing key support staff and operations, but also important company knowledge. As workers move on from their positions, they take with them everything they learned while working for the company.
Unless that knowledge has been retained, the most recent process is thus lost to company leadership.
This slows down existing processes as remaining workers and leaders have to re-learn the process themselves, and it slows down training as you cannot justify hiring new workers until you know how to train them.
Changing Customer Preferences and Expectations
At the same time, customer preferences and expectations are undergoing a major shift.
Modern buyers are a lot more in tune with their choices and their impact on themselves and the world around them. People are reading food labels, taking note of whether companies match their beliefs, whether the packaging is recyclable, and whether the products are made with renewable energy.
Interest in healthier options and more varied international cuisine in an interconnected world requires food and beverage companies to be creative, resourceful, and mindful of customer tastes and interests, all of which have an additional cost at the moment. But it may well cost these companies a lot more in the future if they begin to lose customers.
Quality Control and Compliance
And finally, they have to adhere to some of the strictest rules and regulations out there.
As food is something all humans require and can directly impact our health, the laws surrounding quality control and compliance leave no wiggle room. They are enforced quite strictly with regular audits to ensure the organisation is acting accordingly and respecting the ever-changing requirements of both the government and the public when it comes to health and sustainability.
An additional cost for companies, those that do not find ways to adapt quickly and not bleed out money will be unlikely to make it through the next few years.
Which begs the question – how is the food and beverage industry navigate these challenges?
The answer lies in process improvement.
The Role of Process Improvement in the Food and Beverage Industry
Business process improvement and business process optimisation is the practice of visualising the way your business is run and finding spots where you can make changes for the better.
In both instances, you are looking to make your business run more efficiently, and cutting costs or reducing practices that will negatively affect this.
It is through studying their business processes that folks in the food and beverage industry can overcome the challenges they are currently facing.
Let’s look at the labour shortage.
In the UK, especially post-Brexit, there is a shortage of workers in this field. Business owners and farmers can map out their hiring process over time, and find spots that are overcomplicating the process. For instance, depending on the role, multiple interviews or a take-home assignment are probably unnecessary, thereby cutting your hiring window.
Additionally, you can compare how much it is costing you to post on different job boards and reduce costs by focusing only on the few that do provide you with candidates.
When it comes to retention, process maps help you retain company knowledge about how things are done. Workers will always move on, but knowledge management of your business processes must be maintained in order to hire and successfully train new workers, avoid any significant slowdowns during employee turnover, and optimise your workforce even further. After all, by retaining your process knowledge, over time you find spots to improve and start doing more with less as you increase your efficiency.
In terms of the supply chain issues, you can map out how goods are delivered as a process, and then begin to research spots or ways to reduce costs. Reducing wait times, sourcing from alternative places, and hiring security teams for a longer stretch of time are all steps you can take that will help you keep costs down in the long run.
When you seek alternative sourcing locations you can also keep in mind your consumer’s mindset and interests. Perhaps focusing on more ethical options will be more expensive at first, but pay itself out with higher consumer demand. Or it might even be more cost-effective from the very beginning, as it will also help you keep up with the quality control and compliance the industry requires.
Visualizing how your processes are running helps you find these spots where you can make a change to improve your processes’ efficiency while simultaneously helping you cut costs. If you do not have a clear idea of how your business is being run, inflation will continue to grow and eventually you won’t be able to keep up.
Understanding how your business is currently functioning has never been more important for the food and beverage industry.
But how can you go about improving your processes?
How Skore Helps Reduce Costs
Our Skore platform was designed specifically with business process improvement in mind.
Not only are you able to map out your processes in a clear, simple view, but you can retain information and knowledge for all workers thanks to our process libraries. It is also an entirely collaborative experience, simplified so that every person involved with a process, from stakeholders to front-line workers, can add and follow along during a workshop.
Its user focus also makes creating processes during a workshop faster than ever. And due to our standardised notation, everyone will be on the same page when it comes to meaning. No miscommunications happen when relying on Skore.
Thanks to how easy it is to map processes through Skore, finding those improvement spots has become as easy as pie. Not only can data be added, visualized, and drilled down for multi-level processes, but Skore also has a unique data analysis dashboard that provides succinct information quickly to users.
Through the data it is given, Skore’s Quantify Module specifically helps users analyse costs, systems, time, roles, compliance and quality checks, and process risks as they have been mapped. It will then help pinpoint the bottlenecks that result in your process slowing down and costing you precious time.
The module also provides the possibility to model and see what your changes may impact before you take that step. After all, adding a step may cancel out the cost reduction you were imagining. On the other hand, it can be used for making a case for spending on technology or automation that will make you more efficient, as it will calculate how spending on this will save you money in the future.
Other ways the module helps is by calculating the cost of services such as accounting to see if it makes sense to have it at the existing budget. Understanding capacity and calculating whether it is possible to make a change at this particular moment, exploring potential future scenarios and how they may impact your costs and revenue.
Our clients at Skore have seen significant success with our tool when it comes to improving processes and thus cutting costs.
From gaining a week’s worth of time off work back to expanding their business at the appropriate scale without overspending, they have met their organisational needs without compromising their budget.
We’d love to help the food and beverage industry do the same.
Conclusion
It is a challenging time to be a leader in the food and beverage industry.
There are significant hurdles to overcome due to the last few years, and it will not be easy.
The best way to respond to these problems right now is to take control of your business and understand how it is running. From there, you will be able to find places to improve your processes, run a more efficient ship, and cut costs while increasing revenue opportunities in the future.
All you have to do is set up a call with our team and we’d be glad to show you how.