How to create a potent produce supply chainHow to create a potent produce supply chain

Connecting with the optimal supply chain partners is a crucial, and often arduous, endeavor for produce retailers.

Merchandisers face the complicated task of leveraging dependable and efficient chains that enable them to maintain product inventories while supporting evolving shopper purchasing behaviors and attitudes, minimizing operating expenses, and enhancing returns on investment.

That includes reducing produce waste and other costs across the supply chain, which can be tricky, said Peter Bolstorff, founder and chief executive officer of InspireSCE.ai, a Stillwater, Minn.-based supply chain advisory firm, and former executive vice president for corporate development, innovation, and business intelligence for the Chicago-based Association for Supply Chain Management.

A lack of adequate planning by supply chain members can cause product spoilage, he said, which is becoming a critical issue for eco-conscious consumers. “Food insecurity continues to increase in the U.S., but we still throw away more than 30% of what was harvested,” Bolstorff said, adding that having stocks of high-quality produce is also vital for enhancing shopper trust.

Retailers face additional drawbacks by having a singular focus on lowering the cost of goods, which frequently increases product lead times, adversely impacts inventory turns, and reduces produce shelf life, he said. Inconsistent product availability and a negative impact on revenue and operating margin also can occur, Bolstorff said. “The fresh food supply chain suffers from the negative side effects of cost-reduction tunnel vision,” he said.

Operators can enhance customer loyalty by meeting shopper expectations for an efficient e-commerce system, which requires the selection of competent third-party partners to develop and manage home delivery operations, Bolstorff said. “This is an issue for laggards and an opportunity for median performers to gain competitive advantage using well-orchestrated solutions,” he said.

Effective supply chain partners will have a history of meeting delivery timelines and sustaining product quality; are willing and able to integrate with retailers’ operating systems for visibility and transparency; and have mature distribution networks that ensure product availability, Bolstorff said.

While partners also can potentially benefit from the use of artificial intelligence, that will not occur on a wide scale until there is greater trust in the technologies, he said.

A more immediate focus should be on aligning supply chain and business strategies using the common shareholder measures of revenue growth and return on invested capital, which can include enhancing cold chain logistics and achieving greater visibility and collaboration with growers, Bolstorff said.

“Successful partners will have open book pricing structures and competitive rates and are operationally and strategically resilient to enable pivots during disruptions or changing market demands,” he said.