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When you really stop and think about it, it’s amazing that a Big Mac in Miami tastes exactly the same as a Big Mac in Seattle. The question is, how do chain restaurants pull this off?
For chains, consistency is key, because with consistency comes dependability, and with dependability comes customer loyalty. Chain restaurants are also eateries that many travelers consider to be “safe” options, especially when they’re in a new city where they’re not familiar with the dining scene. That’s why tourists in New York, arguably the best food town in the country, flock to chains like Olive Garden and Applebee’s even though there’s an endless array of better dining options; the chains are safe, dependable, and don’t require much thought.
In order to ensure consistency, the process starts at the top, with recipe development and ingredient sourcing. If a chain is going to add an item to their menu, they need to make sure that all of the ingredients are available, which in some cases can mean buying entire farms. McDonald’s isn’t able to add quinoa to their menu, for example, because the current supply is simply too low.
Once all the ingredients are sourced and purchased, and recipes are finalized, it’s time to implement the change. The vast majority of chains will give new products a trial run at a handful of locations, not only to see if the product sells, but also to make sure that the item is easy enough to prepare that employees can be quickly trained in making the item and that it’s consistent every time. One of the main reasons why Shake Shack abandoned their hand-cut fries was because “ultimately, hand-cut fries introduced inconsistency,” Zach Koff, Shake Shack’s VP of Operations, told us.
Every chain has a centralized distribution network that delivers food to each outpost, as well as warehouses in strategic locations that store everything that’s needed, from the cleaning supplies to the fry oil. Every location gets the same exact products, and once those items arrive, very little in the way of preparation is left to the operators or cooks. In fast-food restaurants, items are simply heated and assembled instead of cooked (except for the burger patties, which arrive raw and are cooked for the exact same amount of time across the board). At casual dining chains like Applebee’s, most of the food is mass-produced and frozen, then shipped to the restaurants and stored in walk-in freezers. The food is re-heated instead of cooked from scratch; recipes are developed by corporate chefs, right down to the amount of salt used, and any variation can be disastrous.
Each menu item comes with its own set of instructions that cooks are trained to follow very carefully; most come with photos of what each dish is supposed to look like. How many wings come in an order, how many cherry tomatoes go on the salad, how many slices of bacon and cheese go on a burger… These types of rules not only ensure consistency, but also affect the chain’s bottom line. If one restaurant puts two slices of cheese on every burger instead of one, then they’ll obviously go through twice as much cheese as they should.
Using the proper serving utensils is also crucial to maintaining consistency in the kitchen. Every bowl of soup needs to contain the same amount, meaning that the same-size ladle needs to be used at every location. If the salsa with your nachos comes in a small plastic cup, that’s so every portion is exactly the same size. If you order a deli sandwich at a chain, you can be sure that, before the meat goes on the bread, it’s weighed out to the exact specifications. Again, nothing is left to chance.
So when you order that fried chicken sandwich at Wendy’s or that Tuscan Spinach Dip at TGI Friday’s, don’t expect the process to be the same as in a non-chain restaurant’s kitchen. While the end result might taste as if it came from your average neighborhood spot (at least, that’s what they’re striving for), in terms of actually preparing the dish, the process couldn’t be more different.
Chipotle: It’s not the burrito – it’s the operating model
Chipotle, the popular Mexican restaurant chain, is a great example of effective alignment between business model and operating model. “It works because of our system,” says the founder Steve Ells , and I think he is absolutely right. We can see the alignment reflected in the way the company designs and manages each of its stores, as well as in the strategic decisions that they took for the restaurant chain as a whole.
As the company website stated , Chipotle is in “the business of good food”, with the emphasis on “good”. Their core business model relies on the creation of an enhanced fast food experience in all of their stores. Chipotle combines elements of fine dining with the convenience of quick-service restaurants, creating value for the customers by offering quality food, clean dining environment and efficient service. Such hybrid dining experience, as FastCompany magazines calls “Fast Casual” , really resonates with middle class consumers and made the Chipotle brand stand out from the competition.
Chipotle’s business philosophy is reflected in many features of the restaurant’s operating model, both on the “fast” and the “high quality” perspectives, and a lot of those features run against conventional wisdom in the fast food industry.
- Chipotle stores maintain high throughput rate. Data shows the most popular stores turn over 300 customers per hour and an average store made $2.5 million revenue in 2014 with each bill averaging $10 dollars (that is, 250K customers turned over) . In order to achieve high efficiencies, the ordering system in the stores is arranged like assembly lines. From start to end, customers construct their perfect burritos with the help from multiple servers, each taking ownership of only a small portion of the work. Such division of labor streamlines the process and reduces the variability in throughput speed without sacrifice the flexibility for the customers to make choices on what goes into the meal. This setup is very consistent across all Chipotle stores, so customers can expect the same level of service anywhere in the country.
- Chipotle only sources high quality ingredients and prepares its food fresh (the stores have no freezers), because the company believes consumers can taste the difference . This decision is reflected in the premium pricing. They also only sell full price items and rarely run promotions, which is a very uncommon strategy given competitors such as Taco Bell famously offer “value menus” that have items priced around one dollar . Both of those decisions set apart Chipotle from similar fast food restaurants, and created the image of a higher-end, healthier food chain, making customers willing to pay a premium for the better quality food.
- Chipotle’s menu remains very simple and focused. Despite the recommendations from McDonald, which was once one of Chipotle’s big shareholder, Chipotle refused to serve “low risk high profit items”, such as coffee and cookies , because they do not fit with their signature dining experience.
Pathways to Just Digital Future
- While fast food industry is notoriously for paying low wages, Chipotle pays its employees well. What comes with this policy is a rigid performance review system. Low performers are dismissed regularly. The result of this policy is reflected on the high customer and employee approval rate. Chipotle constantly placed among the tops on the ACSI Limited-Service Restaurant Ratings , which measures customer satisfaction among mainstream US fast food restaurants.
The list goes on. Each of the operating feature contribute to the business model (“Fast Casual”) and the business model leverages the operating features (e.g. fast moving line, high quality food) to further drive the brand. The performance impact is huge – Chipotle has expended quickly to now with over 1,700 locations and 45,000 employees , and frequently ranked the best chain Mexican restaurant in the country.
Más Veggies Taqueria
Fast-casual chain Veggie Grill expanded with a new delivery-only chain focusing on Mexican-inspired fare. Más Veggies Taqueria offers tacos, burritos, bowls, and nachos with Tex-Mex–style taco meat, shredded jackfruit carnitas, cauliflower asada, crispy poblano “Chickin,” and crispy vegan fish. As of now, the chain has locations in New York City Seattle and Long Beach, Los Angeles, and Pasadena, California—and other locations are expected to open soon.
How Mom-and-Pop Restaurants Can Compete With the Big Chains
When you eat out in an unfamiliar place, do you default to choosing a big chain restaurant? National leaders Darden Restaurants (Olive Garden, Red Lobster) and Brinker International (Chili's) count on our lack of a sense of culinary adventure to drive us in their doors.
One unhappy experience at a locally owned restaurant can put a bad taste in our mouths that makes us run for the reliability of the chains. But mom-and-pops are far from dead -- seven of every ten restaurants are still one-unit eateries, the National Restaurant Association reports.
Last weekend, I took the family on a road trip out to a beach that's a couple hours' drive from my house, and we got a lesson in why independent eateries still predominate (even though it may seem as if there's nothing left but big chains if you drive down many towns' main drags).
We have a traditional place we stop for dinner on this trip, at one of the big chain restaurants. The food is consistent but unexceptional, yet it's become our normal stop just because we've had so many bad meals stopping at locally owned, independent restaurants in the area.
This time, I spotted a local eatery that looked intriguing and we decided to take a chance. We had a great experience which could provide a guidebook for other independents looking to lure customers away from the chains.
Here are four points of difference that made this homegrown restaurant stand out that other independents could use to beat the big chains:
- Better food. I'm not talking about organic salad greens here or grass-fed beef here, or anything super-fancy. We ordered basic road food -- fish and chips, fish tacos, and grilled cheese for the kids. You wouldn't think there could be much to blow your mind in these dishes. But the food proved exceptional. The French fries were homemade, skin-on, thick cut and lightly tempura-battered, then perfectly fried so they were crisp and not greasy -- head and shoulders above a typical chain fry. The grilled cheese was done up on thick slabs of homemade bread our kids about swooned over, and the cheese was cheddar, not American plastic. Seeing what this cafe did with these prosaic menu items shows you can exceed expectations even with simple fare.
- Service. Our servers were two sisters who were clearly owners of the establishment. One spotted us waiting for a table immediately and left the bar area to come around to the restaurant and serve us. It was probably her not her job, but she wasn't willing to let us stand a few minutes and wait. No need to take a vibrating beeper and wait around for 15 or 20 minutes before someone cared if we were hungry -- just good old-fashioned prompt customer service.
- Homey decor. The advantage of being a one-of-a-kind restaurant is that you can make the eatery reflect your personality. In this case, the interior was wood-panel cozy and filled with fun, one-off antiques including an old globe and a metal toy car, as well as local artwork. There was lots of see and discuss while we waited for our meal.
- No rush. I noted with interest that many tables seemed to be filled with local residents, who ate their meals in a leisurely fashion, relishing every moment away from their farms and homesteads in the backcountry. The owners put out no vibe that they should hurry up and clear out so they could turn the tables over faster, either. When's the last time you lingered at a table at a chain restaurant and didn't get the stink-eye from your waiter to finish up? When there's an owner on the premises, they keep their focus on what matters: building great customer relationships so that the regulars come back again and again, not trying to squeeze one more table into this week's dinner service.
Wherever you live, you probably know a local restaurant that creates a great experience like this. Too many small restaurant owners don't take the time, though -- and soon, they're gone.
How KFC Scales Technologies Across 22,000 Restaurants Around The World
KFC plans to have kiosks in 5,000 restaurants around the world by 2020.
If you think it’s tough trying to keep up with the dizzying pace of technology innovations in the restaurant space, try doing so across more than 22,000 restaurants in more than 135 countries. That's exactly what the KFC Global team is tasked with doing every single day.
Though there are vast disparities across many of these markets, KFC’s digital strategy is consistent across the system.
“It’s all about RED – relevant, easy, distinctive. The heart of all of that is easy and technology is the root of making everything easy,” said Gavin Felder, KFC Global’s chief financial officer, who oversees strategy, digital and technology, financial planning, supply chain and IT security for the chain.
For customers, achieving "easy" means implementing enhancements, like delivery, that are aimed at removing friction for customers and, ideally, contributing to positive sales. Doing so with such a large footprint, however, is easier said than done. That’s one of the reasons the company formed the KFC Digital Ventures Team about 18 months ago.
Based in the UK, the team essentially acts like a startup, taking on projects and developing those projects within a short time frame to see if and how they can work within the system.
“The team is trained in agile working methods. They’re product builders and developers who work in two-week sprints. We work in this waterfall way in which we advance the product piece by piece,” Felder said. “So when we’re building new platforms, we’re building the minimum skeleton first and then the flesh around it over time. This approach allows us to be more nimble. Our business is adjusting to how that little team works within the overall team.”
This process helps inform the KFC team what works where and what should be a priority. Right now, it’s clear there are three top priorities KFC is focused on to position the company as easy – delivery, click-and-collect and kiosks. How each is prioritized is different in every market. KFC has offered in-house delivery in the Middle East for decades, for example, and the mature channel drives over 30% of sales.
In the chain’s more developed markets, such as the UK, Australia and North America, the economics don’t work for an in-house model, so the team has to figure out which aggregators offer the best terms for both franchisees and customers. In the U.S., that means Grubhub, which signed a partnership agreement with parent company Yum Brands early last year.
As delivery reaches an inflection point across the world, Felder thinks KFC can differentiate by leveraging its signature offerings (bone-in chicken retains heat well) and by steering clear of the actual word “delivery.”
“’Delivery’ just feels very corporate. We don’t want just be an ‘us too’ in delivery, but something that is very unique to KFC. In the past, KFC has always been one of those unique brands that was allowed into your home and put onto the middle of your dinner table,” he said. “We know there’s a huge business to be built around delivery for us, and the question is how we build it to be more distinctive to our business.”
Click-and-collect is another priority for KFC, and for good reason. According to Nielsen, millennials prefer click-and-collect over home delivery when it comes to grocery shopping, which could easily translate into the restaurant space as more consumers get used to the channel. There are plenty of case studies to inspire KFC’s continued expansion of this channel as well. In Australia, for example, 98% of KFC restaurants offer click-and-collect and checks are 20% higher. The company is quickly ramping up this service, with plans to offer click-and-collect in about 18,000 of its 22,000 restaurants by next year.
“We have been pleasantly surprised with click-and-collect. We thought it could be interesting when we started, but we also wondered what the real benefit was since you’re still going to sit behind a stack of cars or in the queuing system in the store,” Felder said. “But it’s actually been a phenomenal success for us. It’s allowed us to access customer data, and customers are giving us credit for taking that small piece of friction away.”
Then, there’s kiosks. During Yum’s Q4 earnings call, COO David Gibbs said KFC will have kiosks in 5,000 restaurants by 2020. If McDonald’s kiosk rollout is any indication, this deployment should provide a bit of a sales lift for KFC. Last year, McDonald’s CEO Steve Easterbrook said average checks from kiosk orders are higher because customers tend to linger longer and select more offerings at a kiosk than in front of a worker.
Felder confirms that order anxiety is a real thing and is therefore optimistic about kiosks’ potential.
“You can take your time at a kiosk and not have to worry about five people standing behind you that may give you anxiety. For us, any small piece of friction we can take away–from the ordering stage to the collection stage–customers are rewarding us for,” he said. “The more we open up access and take friction away and make things easier and open up more options, that just gives customers more reasons to choose us.”
Beyond delivery, click-and-collect and kiosks, KFC is also working on a mobile app with a goal of providing a "unique" experience for fans. What that means, exactly, isn't clear at this point. Having a loyalty program within that app also remains an open question.
“If you don’t do loyalty well, you’re essentially just giving food away to your most loyal customers. If you do it well – if you can figure out how to make a seamless, rewarding experience and then use that customer data to better serve and re-target that customer, that’s where the magic is,” he said. “Everybody’s trying to figure out just what that looks like.”
The good news for KFC is that the company shares its headquarters with Pizza Hut, which Felder calls “one of the most evolved digital businesses in QSR.” Indeed, Pizza Hut was the first pizza chain to launch an iPhone app, which it did in 2009.
“We’re not starting from scratch, we’re learning from what Pizza Hut has learned around data science, loyalty, performance marketing and how to wrap that all within an app experience,” Felder said.
Employee-facing technologies also a priority
Felder also makes a point to note that the KFC Global team is focused on more than customer-facing platforms. With nearly 1 million team members across the system, the company is also exploring ways technology can make their lives easier. Right now, there are two employee-facing technologies that have emerged as the most promising–voice and Google Glass.
KFC is experimenting with voice automation in a handful of countries (not the U.S.) to facilitate back-of-house training. For example, if an employee needs to be reminded of a step in the cooking process, they can ask just ask Alexa instead of washing their hands, retrieving the textbook to find the answer, and then washing their hands again.
Meanwhile, KFC struck a partnership with Google last year in Ecuador that allows its teams there to be trained using Google Glass technology. The technology provides real-time audio/visual learning cues to tell an employee how to prepare a product step by step.
“We want to build on that because we’ve had much higher engagement levels from our team and they love the technology. It's super early, but I think it’s got broad implications,” Felder said. “We genuinely believe that if we can make a very demanding job easier for our team members, it’s going to translate into a better engaged employee and a much better customer experience. For us, it’s always about finding the right technology.”
Chefs and restaurateurs are busy people. Visits to suppliers, trade shows, civic and industry organizations, competitors and conferences meetings with bankers, accountants, journalists, prospective employees, and investors not to mention the occasional sick day, vacation or day off (are those allowed?) limit time on premises for even the most operations-oriented restaurateur. Throw in the morning show circuit, book tours, catered events, and awards dinners to the mix and you have chefs and owners who may be out more than in.
Guests, however, don&rsquot care what the responsibilities of a restaurateur are. If they are eating at &ldquoJon&rsquos Place,&rdquo they preferably want to see Jon and, if they can&rsquot, to be assured that their experience is as good as it is when Jon is stirring the pots himself.
Consistency is one of the most challenging elements of a successful restaurant to achieve. It requires clearly communicated guidelines and a full effort by every member of the team. To start:
- Standardized food and beverage recipes for all menu items along with standardized portion sizes, plate presentation diagrams, temperature guidelines and quality specifications.
- Comprehensive training program with cross-training for deeper rosters (i.e. a prep cook can fill in on the line if needed).
- Clear quality guidelines and purchase specifications communicated to suppliers and trained receiving personnel.
- Check lists for each station.
Ryan Poli, chef/partner of Tavernita&mdashMercadito Hospitality&rsquos new concept with locations in Chicago and Miami&mdashsays, &ldquoThe staff needs to be trained properly, making sure they follow the recipes. [It also helps to] really give them ownership of their station, making them feel part of the team and not just an employee. It is important that they believe in the chef and the concept.&rdquo
It is also important that guests have a clear feedback mechanism so that even in her absence, a chef can be kept apprised of guest feedback via a web comment form or comment cards in addition to open sites like Yelp. Some complaints are inevitable, but an uptick when the boss is out can indicate big problems. Mystery shoppers can also be effective in assuring that the experience is consistent across guests.
Restaurant food inventory tracking is both a loss prevention tool and a measure of profitability for your restaurant.
Why is it important to track your restaurant&rsquos inventory? Because if you don't know what you're losing, you don't know what you could be earning.
Inventory tracking means knowing exactly:
what supplies come into your restaurant,
what goes out of your kitchen, and
what's leftover in the back of the house.
Without knowing these exact numbers, you won't be able to understand where your supply (and money) is going.
It's one thing to notice that your recent shipment of cheese depleted quite quickly, for example. But it's another thing to know exactly why.
Was it all sold to satisfied customers? If so, great! You should easily be able to attribute every ounce to a price point.
But before you buy a round for the house, did you take into account these possible areas of loss?
Remedying customer complaints
Accidents happen, customers complain, and not every ounce of food makes it onto a plate. These losses aren&rsquot catastrophic: they are inevitabilities within the restaurant world. But they are areas of loss, affecting both inventory control and profit for your business.
And it&rsquos important to track those areas because not knowing what supplies have been wasted &mdash for whatever reason &mdash means you don't know exactly how much inventory has been unused. And that means you can&rsquot reliably calculate your true earnings for a shift, day, week, month, or year.
How food manufacturers can use technology to manage supply chains
New methods of data capture and gathering are becoming more commonplace in food and beverage manufacturing. Source: IFS.
&ldquoThe food and beverage industry requires dynamic, efficient systems that can manage high volumes of data while responding swiftly to shifting consumer preferences and new regulations,&rdquo says Dolphin&rsquos Brian Shannon.
Isotrak&rsquos temperature management solution monitors and manages varying temperature thresholds and safe temperature ranges to ensure food remains at a specified temperature through the duration of a journey. Source: Isotrak.
Isotrak&rsquos electronic proof of delivery (ePOD) solution enables drivers to submit customer signatures, shipment photos and other details directly from their mobile devices to Isotrak&rsquos online portal, allowing managers to streamline the collection and filing of delivery reports. Source: Isotrak.
NeoGrid&rsquos &ldquoEPOS Visibility - Distribution Insights&rdquo electronically collects, consolidates, processes and reports vital inventory and distribution information to better plan sales actions, increase inventory turns, encourage production and detect opportunities for growth. Source:NeoGrid.
&ldquoThe recipe for success in the food and beverage industry begins with a system that effectively handles high volumes of data and is adaptable to ever-changing demand and regulation,&rdquo says Dolphin&rsquos Brian Shannon.
Sometimes keeping it simple, stupid, is way easier, and much more fun to say, than actually doing it. Take the phrase “farm to fork.” The sentiment behind the statement is so intuitive: Let’s get the food from the farmer to the consumer’s dinner table as efficiently and directly as possible. That is, after all, the best way to ensure the food is good and good for the consumer. Actually doing this, however, is not at all easy or simple.
Processors have a lot of moving parts to keep track of, starting with the intake of raw materials and ingredients to making sure the right amount of product gets to the right place. Because many of the products have a limited shelf life, not to mention being under increasing food safety and quality scrutiny, getting the logistics right is crucial. To make matters more confusing, many variables, such as consumer tastes and market fluctuations, can rapidly change and are completely out of the processor’s control.
The optimal flow of food and beverage goods to consumers is vital for brand protection. To ensure the efficiency and performance of food supply chains, the entire end-to-end process, from sourcing to manufacturing to delivery, must be strategically planned and systematically managed. Fortunately, new technology is helping members of the food processing industry improve the management and performance of their supply chains.
Resilient supply chains
To be sure, food and beverage processors are facing a host of challenges.
“The complex processes that characterize the food and beverage industry bring an extensive list of challenges, including low profit margins, perishable products, stringent government regulations and changing consumer tastes,” says Brian Shannon, chief strategy officer for Dolphin Enterprise Solutions Corporation, a provider of SAP (Systems Applications Products) solutions.
Of these challenges, Reinhard Steup, senior manager of supply chain management for HAVI, says consumer demand is the most rapidly changing variable within supply chains.
“Consumers have become more accustomed to instantaneous response and reaction, so companies must maintain more efficient communication, productivity and supply chain optimization to stay relevant and effective with consumers,” he says.
Some of the other variables that can cause instability are oil and gas prices, as well as carrier capacity and availability. If you have a global supply chain, it might produce benefits, such as access to seasonal foods and exotic ingredients. However, the international scope of operations could expose a company to many variables in the suppliers’ locale, such as geopolitical issues and weather-related transportation disruptions, including natural disasters.
“More options can bring more opportunities for something to go wrong, so it is crucial that organizations recognize this and have contingency plans,” says Steup.
It would be unreasonable to expect processors to be prepared for every possible risk or unexpected change. However, the best way to guard against these things causing major upheavals in business productivity is to have a resilient supply chain. In its 2013 white paper “Supply chain resilience—A risk intelligent approach to managing global supply chains,” Deloitte defined supply chain resilience as being characterized by four things:
- Flexibility: Having the ability to adapt quickly to a problem while not increasing operational costs.
- Visibility: Having the ability to track and monitor supply chain activities in real time.
- Collaboration: Working effectively with supply chain partners to develop a relationship that will help both companies achieve productivity goals.
- Control: Putting robust policies and procedures in place to monitor and control all operational processes.
So, how does a company start building this resilience? A good place to start is looking at increasing automation.
“The food and beverage supply chain involves many steps and processes, most of which continually repeat as operations progress,” says Mike Lorbiecki, vice president of sales for IFS North America. “These repetitive processes present the perfect opportunity for automation.”
He suggests processors look at employing technologies that limit manual labor, such as barcode scanners, radio frequency identification (RFID) and sensors.
“Seizing automation opportunities can provide instant and long-term benefits, as the more steps and procedures you can automate within your supply chain, the less time employees will have to spend ensuring processes are completed as planned, limiting human error,” Lorbiecki says.
Automating data management
New methods of data capture and gathering are becoming more commonplace in food and beverage manufacturing. With the Internet of Things (IoT) movement making its way steadily through the industry, more emphasis is being put on using sensors and connected devices without needing a human to interact or interfere at all.
“From handheld barcode scanners to tablets, supply chain technology is always improving,” says Lorbiecki. But without the information being collected and analyzed, the full benefits are not realized.
“The recipe for success in the food and beverage industry begins with a system that effectively handles high volumes of data and is adaptable to ever-changing demand and regulation,” says Shannon.
New enterprise resource planning (ERP) systems are helping companies achieve full visibility across their entire supply chains. To be effective, ERPs should be able to log transactions that span entire supply chains and drill down into industry-specific data. But not all ERP systems are equal.
“Traditional ERP systems separate the different processes in the supply chain, meaning full visibility of all business operations isn’t always available,” says Lorbiecki. However, a new generation of software is able to provide a full view.
“Food and beverage companies typically sell a high volume of goods to a large number of customers, and these customers receive the goods through intricate supply chains, spanning immense distribution networks,” says Shannon. “To process and move inventory quickly, food and beverage companies require real-time access to all of this information to make swift business decisions.”
One method, according to Steup, is through what HAVI calls dynamic network management. This is the process of regularly monitoring supply and demand information through technology to gather real-time data and communicate this with partners in the supply chain. He says this can help processors anticipate changes in demand and respond quickly using an on-going method, as opposed to a “one-and-done” approach. This is especially true for processors with multiple manufacturing locations.
“Designing a network consists of determining the most favorable geographic layout of supplier locations, manufacturing facilities, forward warehouses and distribution centers,” which is the network optimization, he says. “The next step is streamlining the supply chain between sites, or the dynamic network optimization.”
The network’s flexibility is key to responding to changes in supply availability and demand fluctuations. Steup says having visibility into each location along the supply chain, as well as communicating between the sites, can allow the network to react quickly and nimbly. This should be the main goal of managing the supply chain—to efficiently move product where and when it is needed.
Fortunately, a variety of mobile devices can be used to collect more data to provide this insight. For instance, cameras, voice recordings and GPS can all be used by workers on the frontlines to capture “approvals-based” data, which records actions through completed forms. Traditionally, paper has been used to perform these types of tasks.
“Approvals-based data, such as supplier tracking and compliance, is often lost within paper forms and email trails,” says Jason Dea, director of product marketing for Intelex. “Approvals-based data surrounding compliance issues, ranging from government regulations to product requirements, can often be an unknown blind spot.”
However, IoT technologies and network-connected beacons can produce data points previously inaccessible. The value of this information, of course, relies on analytics and modeling to pull out the insights.
“The good news is that many cloud-based vendors are now tapping into their own pools of aggregated data across the customer bases and industries,” Dea says, which uncovers not only insights, but also benchmarks providing guidance and establishing best practices. Effective benchmarking used to model a supply chain should focus on three dimensions, according to Dea:
- Performance within an organization to learn the secret sauce of best-performing locations.
- Performance within a segment to learn from those industry-specific top performers.
- Performance across the industry to learn from best-of-breed organizations.
“A scalable, cloud-based supply chain solution will enable food and beverage processors to gather and use data as the data feeds increase, as well as ensure that this data is available to the entire supply chain,” says Gilson Torii, COO of NeoGrid, a technology provider of supply chain management. “Sophisticated software solutions can now process data feeds smarter and faster, assessing their quality and, therefore, usefulness to aid in supply chain management.”
As previously mentioned, consumer demand is one of the most volatile components of the supply chain. Because so many products are available to choose from, and tastes are rapidly changing, demand is a rather fluid variable. To address this, the point of data collection has been shifting. “There has been a trend within the industry of gathering information about products and sales as close as possible to the consumer in order to make supply chain decisions,” says Torii. “Through store and distribution center analysis, companies can figure out the overall demand of a particular product and see where that product is within the supply chain to determine if it is sitting at the wrong place.”
In order to help serve target markets, new tools can track trends in data related to demand, sales and customer changes, says Lorbiecki of IFS. Having this information and historical data can help processors pay attention to the changing market, thus, making their supply chains more agile. Additionally, companies can help shape demand through promotions and marketing campaigns, so it is crucial to align manufacturing plans with market drives.
“This becomes even more important in the food and beverage market, where the short shelf life of food and beverage materials makes it important to carefully manage margins and maintain cost visibility,” Lorbiecki says. Integrating these tools with the overall ERP system can help improve supply chain efficiency. “With this information, decision-makers can review trends and historical data, making it possible to conduct strategic forecasting to streamline ordering, inventory and production.”
Having data about the shelf life of a product, as well as inventory and demand, is helpful to managing the supply chain. However, the supply chain will have multiple systems, configurations and sources of data, so it can be a challenge to standardize all that data. To address this, companies should implement “harmonization” solutions, according to Torii, which brings together data from multiple sources in a consistent format. This way, information can be collected and analyzed in a centralized location to better understand the entire distribution, production and consumption processes.
“Once data is in a unified format, it must be cleansed to make sure it is consistent and reliable,” he says. It’s not so important whether this is done internally or through a solution provider, but that it is done. “If that does not exist, in time and in scale, inaccurate and misinterpreted data becomes a problem for the organization.”
When the data is integrated from different sites and presented in a centralized view, multiple locations can be seen as a unified distribution network and not just existing in silos. This can help optimize the supply chain by overcoming geographical barriers to build joint initiatives with supply chain partners.
“By centralizing information on demand, distribution and consumption, the entire supply chain can react as if it has one inventory distributed in multiple places,” Torii says. “Supply chain modeling can help determine the costs and benefits of lead times, network design, transportation costs and, ultimately, [the] freshness of product to the end consumer.”
This time limit on products makes the food and beverage industry stand apart from other CPGs. With the new emphasis on fresher foods and cleaner labels, stockpiling huge amounts of products just isn’t viable any longer, and overages can result in food waste.
“The importance of demand planning in reducing food waste cannot be overstated,” says HAVI’s Steup. “Monitoring demand in real time or near real time and adjusting forecast accordingly will help prevent the type of wild fluctuations in the system that could result in overages or breaks in supply.”
Lean manufacturing and “just-in-time” ordering can help adequately maintain inventory without overstocking materials. Additionally, ERP solutions can assist in keeping track of spoilage dates, inventory levels and trends in quality control issues.
“ERP systems can now maintain real-time awareness of the shelf life of materials in your supply chain and ensure that materials are used properly within that timeframe to dramatically reduce waste and the costs associated with it,” Lorbiecki says.
Traceability and audit readiness
Knowing exactly where product is located at any given time is useful information for not only optimizing the supply chain, but also complying with increasing food safety regulations. The Food Safety Modernization Act (FSMA) consistently emphasizes putting preventative measures in place at food processing operations to stop a food safety event before it happens.
“With the advent of food safety regulations like FSMA, having the ability to look at where products have been in the supply chain is a requirement as opposed to ‘nice to have.’ So, having tools that give organizations that visibility is vitally important,” Steup says.
To help contribute to that real-time understanding of where things are and what is happening to them in the supply chain, new technologies equipped with sensors can be used to track and maintain temperature, moisture content, light and the freshness of foods.
“Advancements in IoT and big data have helped revolutionize safety and compliance efforts in the industry,” says Lorbiecki. “Organizations can now see exactly where a product is, where it has come from and where it’s going, thanks to the affordable and automated labeling and identification IoT brings.”
With the existence of big data analytics, data can be easily stored and analyzed, which can help sift through the undesired information and identify where problems might occur. This is a proactive approach to food safety in the supply chain and aims to stop potential food recalls or contamination issues, which is in step with FSMA’s preventative controls.
“Traceability systems are now streamlining the management of supply chains and helping companies adhere to these strict industry regulations,” Lorbiecki says.
Previous traceability efforts tracked only a few ingredients back to a single point in the manufacturing process and didn’t provide full visibility. However, today’s ERP solutions have track and report functions to ensure compliance with all state, federal and even global food safety guidelines. This is needed in the event of an audit to deliver precise data and detailed historical records.
“When facing an audit or attempting to gain a certification, the amount of information you can provide will directly impact the outcome of the process,” Lorbiecki says. “Keep detailed records of materials processes, maintenance and cleaning efforts since the more you track, the better prepared your organization is.”
With a potentially huge amount of data being stored, having a data management strategy could be just as important as having the information. Dolphin’s Shannon says it’s a good idea to have a data archiving strategy in place to reduce data volume and complexity in order for management to access information more efficiently.
“Data that has met its prescribed residency period must be promptly archived and stored, and if done consistently, the system will perform more efficiently, with fast back up, upgrade and recovery times,” he says.
For more information:
Mike Lorbiecki, IFS North America, 888-437-4968,
[email protected], www.ifsworld.com/us
Brian Shannon, Dolphin Enterprise Solutions Corporation, 610-725-9125,
[email protected], www.dolphin-corp.com
Gilson Torii, NeoGrid, 312-948-9972,
Reinhard Steup, HAVI, 630-493-7400,
[email protected], www.havi.com
Brett Conner, Isotrak North America, 855-806-0821,
[email protected], www.isotrak.com
Sidebar: Fleet delivery management
When looking at ways to improve performance and ease of management through more automation, Brett Conner, president of Isotrak North America, says don’t overlook fleet management technology.
“Enabling better communication between drivers and management is ultimately the key to reducing errors on a number of tasks, from delivery confirmation to ensuring compliance with industry regulations,” he says.
Fleet management technology can be used in a number of ways, such as capturing driver and vehicle data submitted through mobile apps and compiling this all into one software-as-a-service (SaaS) platform. This gives supply chain managers the ability to see every step of a delivery as it is happening.
“One of these apps, electronic proof of delivery [ePOD], can dramatically improve driver productivity and data accuracy,” Conner says. The app allows drivers to submit customer signatures and shipment photos directly to an SaaS platform, reducing paper-based processes and putting drivers on the road faster.
“They no longer are required to wait on paper bills of lading to be distributed to them from the transport office before they begin their route for the day,” he says. Management can take advantage of this real-time reporting to address potential customer complaints. “If a pallet of eggs arrives at their destination with damage, the back office is instantly notified through the platform, so they can make the appropriate compensation and ensure customers receive an additional shipment of eggs in their next delivery.”
To keep drivers from exceeding their regulated amount of time on the road, mobile solutions, such as Hours of Service (HOS), can help management keep track of driving hours. With this compliance app, drivers can log and submit their driving hours electronically, which is instantly delivered to the back office team. However, once management can access data on fleet performance, they will need to pull actionable findings from the data. And to do that, businesses might want to run all the data through business intelligence (BI) solutions.
“BI solutions leverage powerful analytical tools to automatically review data and present it in digestible reports that provide increased transparency into transport operations,” says Conner. “Reports can also be customized to focus on specific metrics, such as average delivery turnaround times and fleet efficiency, so managers can proactively address problem areas that they might not have been aware of without these analytics.”
Fleet management technology can also be used to comply with food safety regulations, as well as ensure product quality. Mobile delivery solutions can provide real-time notifications on estimated time of arrival, which is crucial in controlling product freshness. Managers using telematics data can give accurate ETAs on the arrival of perishable goods, allowing retailers the time needed to prioritize incoming deliveries and prepare their loading docks. Additionally, real-time temperature management solutions can help ensure products remain at the appropriate temperature throughout the distribution process.
“As farm to table becomes the standard for health-conscious consumers, businesses need to bring the same mindset to food transportation and supply chain operations,” Conner says. “The best fleet management solutions comply with changing food safety regulations and provide customers with the real-time insights they need to address problems that can occur at any stage of the delivery process.”
How Starbucks, McDonald's, and Other Chains Are Reacting to Coronavirus
Most chain restaurants&rsquo statements are striking similar chords, but each brand has its own unique needs.
The ongoing coronavirus outbreak is having a massive effect on the restaurant industry, and fast food chains are no different: But quick-service restaurants have their unique challenges—such as covering a wide swath of markets and franchise owners𠅊nd advantages—like the ability to keep the drive-thru lane open even if the dining area has to close. Still, each chain is different, and so individual brands have been formulating their own plans to safeguard customers and employees alike—while avoiding having to shutter entirely.
As the biggest name in fast food, McDonald’s somewhat leads by default, and yesterday, McDonald’s USA President Joe Erlinger penned an open letter explaining the company’s approach: “I want to inform you of the proactive steps McDonald’s and our franchisees are taking to ensure the safety in our restaurants across all our communities—in proactive partnership with local and national health authorities,” he wrote. Beyond hering to our industry-leading, deep-cleaning procedures in every restaurant, every day,” he said additional steps included 𠇎nsuring high-touch areas get more frequent deep cleanings—places like ordering kiosks, pick-up counters and restrooms,” as well as 𠇎nhancing our McDelivery procedures to ensure order packaging remains safe before we fill it.”
Finally, the well-being of hourly-wage employees—who could face financial hardship simply by doing the right thing and staying home if they feel sick—has been a huge topic of conversation, so Erlinger also addressed that head-on, if not very specifically, saying McDonald’s USA would be “supporting employees in staying home from work if they are sick so they can rest and recover.” (USA Today reports that paid leave varies by franchise, but corporate-owned locations will pay quarantined employees for up to 14 days.)
Meanwhile, Starbucks𠅊nother industry leader—was a bit more specific in discussing how its employees would be supported. Rossann Williams, EVP and president of Starbucks’ U.S. company-operated business and Canada, covered a number of policy tweaks in an open letter. Among the temporary changes, any workers who suspect they were exposed to COVID-19 are eligible for 14 days of additional catastrophe pay, regardless of if they have symptoms or not, and “if partners are still unable to return to work, additional pay replacement may be made up to 26 weeks.”
And in general, Starbucks offered more depth about their plan. On Wednesday, CEO and President Kevin Johnson published his own letter, stating early on that “we will continue to make decisions with vigilance and courage informed by the latest science-based information.” Beyond “increased cleaning and sanitizing procedures” and preparing stores “to respond quickly to any emerging situation,” he also admitted that “your Starbucks Experience may look different as we navigate through this time together.”
Along those lines, the coffee giant also touched on the now-much-discussed idea of “social distancing.” 𠇊s we navigate this dynamic situation community-by-community and store-by-store, we may adapt the store experience by limiting seating to improve social distancing, enable mobile order-only scenarios for pickup via the Starbucks App or delivery via Uber Eats, or in some cases only the Drive Thru will be open,” Johnson wrote. 𠇊s a last resort, we will close a store if we feel it is in the best interest of our customers and partners, or if we are directed to do so by government authorities.” (One Starbucks location in Seattle closed temporarily last week due to a worker who tested positive for COVID-19.)
That same day, Chick-fil-A President and COO Chick-fil-A Tim Tassopoulos also lightly prepared customers for potential changes in the near future, writing that individual locations had the leeway to implement itional preventative measures … including staffing or service modifications.” And during an earnings call earlier this week, Del Taco CEO John Cappasola played up this idea even further, stating that he believes “that our drive-thru and delivery channels provide our guests options for limited interactions, if they so choose”𠅊 reminder that just because a store is open, customers don’t have to come in.
Speaking of which, chains have also been touting their delivery options—including Chipotle, which knows a thing or two about illness scares. Interestingly, the burrito chain never directly mentioned coronavirus in a press release yesterday however, the company is not only trying to lure customers with the offer of free delivery for the rest of March it also conveniently stated that 𠇌hipotle customers can leave special instructions for delivery drivers in the Chipotle app and Chipotle.com to limit direct contact” and later pointed out that 𠇌hipotle deliveries will feature a new, tamper evident packaging seal to help ensure food is untouched during delivery.” Similarly, Kentucky Fried Chicken announced today it would also be offering free delivery via its online platform through April 26.
Needless to say, plenty of other chains exist, and most of them have touched on similar points—though some offered brand-specific measures. For instance, Shake Shack CEO Randy Garutti told Nation’s Restaurant News that at its restaurants—known for having self-service ketchup pumps𠅊ll condiments and utensils would now be distributed by employees instead (though hand sanitizing options would be offered to customers, as well).
And even more unique business models have resorted to unique policy shifts. For instance, Chuck E. Cheese is reportedly offering refunds for anyone who wants to cancel an event they had booked through to the end of the month. And in line with the precautions MGM Resorts casinos took earlier this week, the buffet chain Golden Corral announced yesterday they had “issued guidance to all of our restaurants to begin preventive measures against the coronavirus” all the way back in January.
Essentially, everyone needs to be ready to take action, no matter what that action may be. The Atlanta Journal-Constitution reports that, beyond replacing customers cups between free refills, local fast-food chain the Varsity even created a position that’s dedicated only to sanitation: “That’s all they do. Start at the front door and continue around the whole building and wiping doors, tables, napkin holders on the table. That’s all this person does all day long,” President Gordon Muir told the paper earlier this week.
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