The Logistics of Fresh Foods Retail Supply Chain in 2020 and Beyond

Fresh Food Supply Chain Challenges

The Coronavirus crisis has redefined consumer shopping habits and established some new trends in retail and consumer goods markets. Stockpiling of essentials, online shopping of consumer goods, and convenient contactless deliveries are some of the most talked about topics these days. One of the biggest trends seen in the retail market this year is the growing demand for fresh foods — fruits and vegetables, meat, seafood, fish, dairy, baked goods, deli products, and more.

According to a Deloitte report titled The Future of Fresh, fresh food sales are an important growth driver for retailers and a priority for shoppers who want to ensure their household has ample fresh food in hand. Sales of fresh produce were up $4.5 billion between January and August, 2020, compared to the same period last year. In terms of consumer preferences, fresh foods are more valued than ever; 9 in 10 respondents say it literally makes them happy.

The availability of fresh foods is a key driver of in-store traffic in supermarkets and convenience stores. The most important attributes shoppers say when selecting their primary stores include high quality fruits and vegetables — 80%, high quality meat — 77%, and fresh food deli — 53%. 

A number of fresh foods start ups have sprung up since the onset of the pandemic, getting investor attention as well as popularity among consumers. Impossible Foods, Memphis Meats, Nature’s Fynd, Alpha Foods, and Kate Farms are some of the top fresh foods startups of 2020 in the United States. In India too, there has been a spike in sales and investor interest for businesses in the fresh food space such as FreshToHome, Country Delight, Gourmet Garden, and Licious.

While the fresh foods market is soaring high, it is also one of the most complex supply chains to manage. The perishable nature of fresh produce makes their storage, transportation, and shelf-management a tightrope walk for fresh foods retailers. 

Suboptimal Sourcing

Many retailers approach procurement of fresh foods unsystematically and thus end up paying above-market prices. Retailers need to source fresh produce strategically, keeping in mind seasonal demand fluctuations, supplier costs, as well as supplier location. 

Every supplier relationship should be based on the product’s supply volatility — in quality and volume. Products with high supply volatility are best sourced primarily through stable suppliers, whereas products that are less volatile, can be sourced through transactional or even spot-market purchasing, which allows retailers to respond to changes in demand. 

Maintaining Freshness and Quality

From the minute meat is butchered, eggs are laid, milk is packaged, fruit and vegetables are harvested and a loaf of bread leaves the oven, the freshness and quality of fresh foods is at risk. It is important to keep fresh foods at the right levels of temperature and humidity throughout the supply chain. Fruits like oranges, grapes, and cherries need a temperature range of 0 to 2 degrees Celsius and 95% to 100% humidity. Items like garlic and onions, on the other hand, need to be stored at a similar temperature but at humidity levels from 65% to 75%, as high humidity is harmful to them. 

Other products like bananas, avocados, and mangos can be damaged by the cold, and they must be kept in the range of 13 to 15 degrees Celsius and between 85% to 90% humidity. Meat, poultry and dairy produce such as eggs, milk, yoghurt, and cheese need cold storage facilities. The storage and transportation of these temperature and time-sensitive fresh foods is therefore difficult, as compared to other durable products.

Packaging, Shipment, and Transportation Challenges

Fresh foods come in a variety of types, and must be packaged and shipped according to their durability and nature. Fresh produce such as apples, pineapples, pears, watermelons, or onions can be easily packaged into wooden trays. Foods such as tomatoes, eggs, softer fruits, and leafy vegetables, on the other hand must be packaged and handled carefully. 

Once these foods are packaged, they must be shipped in ideal carriages, keeping in mind that some foods cannot be shipped together, some foods can travel longer, some foods need fast transportation, and some foods need a cold storage container. Delays in transit can significantly reduce the available shelf life of fresh produce in stores which can be off-putting to customers and a waste for retailers.

Lack of Visibility in the Supply Chain

Did you know? Supermarkets throw away 43 billion pounds of stale food every year that remains unsold. Almost 30% of high-quality fruits and vegetables fall through the grid of trade chains and large supermarket chains only because of optical flaws. Lack of supply chain visibility is one of the biggest logistical challenges in fresh foods retail. 

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Due to this, retailers and logistics managers are unable to take preventive measures to salvage fresh produce when there is a delay in transportation or temperature instability at any point. Lack of visibility also leads to poor communication between sellers and retailers, as well as between retailers and customers. 

Logistics Tech Can Optimize the Fresh Foods Supply Chain

Digitization of the fresh food supply chain is a must, now more than ever due to the rising demand for safe, contactless, same-day deliveries and the intense competition in the market. Despite the serious challenges in the storage, shipment and logistics of perishable produce, the gaps in the fresh food supply chain can be filled with the help of logistics technology.

Technology such as Route Optimization can help retailers plan order dispatches and last-mile deliveries efficiently, and real-time visibility tools can help logistics managers to be on top of distribution and on-ground operations. 

By implementing AI-driven logistics solutions, brands can optimize every element in the fresh food supply chain; right from strategic sourcing, optimal storage, precise packaging and shipment in the right containers, to fast and efficient transportation.

Now stay ahead of the intensifying competition in the fresh foods retail market with Locus’ AI-enabled logistics. Get in touch with our experts for a quick tour of our solutions. 

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