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Food Retail: logistics as a differentiating and competitiveness factor

27 July 2021
Article by Joana Moreira, consultant, and Regina Paiva, trainee consultant in Industrial Engineering and Management at INEGI.


The food retail sector is undergoing a major transformation, spurred on by changing consumer habits and lifestyles, and the advent of new digital technologies. Online channels, home delivery schemes, greater demand for fresh and 'healthy' products, and the appreciation of sustainability, are some of the challenges that lie ahead.

Faced with these changes, however, the old maxim remains: customer satisfaction is key to business success, and retailers must be prepared to respond to what consumers want, when they want it.

In 2019, food retail represented a sales volume that exceeded 13 billion euros1. It often responds to essential needs, such as food and hygiene, but it is highly influenced by changing patterns of customer demand. This, together with the abundance of competition and offering, encourages retailers to constantly look for new ways to create value and reinvent themselves.

The management of logistical processes is an area with great potential to create value, as it plays an important role in a company's financial results, and strongly influences the customer's perception of service quality.

Competitive advantages are differentiation from the competition

In this context, logistics is not only about planning, implementing and controlling the flow of goods, services and information, but also assumes itself as a differentiating factor to keep up with customer demand and distinguish oneself from competitors.

It is also through logistics that we can reduce costs, seeking to increase competitiveness. Thus, the more efficient all the processes involved are, the more competitive the final value proposition becomes, as we have proven during projects successfully implemented with several clients.

Let's see then, the most important aspects to take into account in the logistic organization of this type of industry.

Avoid product losses

Due to the short-term nature of products, there are unique difficulties that are not found in any other industry. This type of product needs extra care, in order to guarantee not only its arrival at the final destination with the desired quality and appearance, but also the minimization of breakages.

Deadline accomplishments

Good logistical practices ensure that food products reach final consumers within the defined deadline, as this factor has enormous weight in the perception of the level of customer service, as well as in terms of reducing obsolescence.

The new paradigm of home deliveries, with shorter delivery times, even on the same day, requires a flexible and reliable logistics network.

Product conservation

Due to the perishability of food, logistics plays a very important role, not only because of the care required when storing it, but also because of the need to protect it from extreme conditions to avoid deterioration in its quality.

In this way, all movement of products, in storage, loading and transport must be carried out with adequate temperatures and conditioning to maintain the quality and characteristics desired by consumers.

Stock management

Not only because food retail deals with perishable foods, but also because each and every industry is concerned with a good forecast that allows visibility to the business and excellent stock management.

In this specific case, optimizing the stock of perishable products is extremely important, since food that is out of date or that does not meet the minimum quality required, should not be sold. It is necessary to study and fully understand the needs of customers in order to optimize the entire process.

Sustainability

Yes, in the field of logistics the topic of sustainability also plays a parte. When you want to achieve a high level of service, Just-In-Time (JIT) deliveries and, at the same time, keep low amounts of stock, you can open the way to a cycle of waste (human, raw materials and/or equipment), a result of the lack of control in the implementation of all these techniques. This, combined with careless use of resources, will consequently have environmental impacts.

As such, an important goal to be achieved is environmental efficiency and, once achieved, it should maintain its place in the priority list.

In the food products market, a flexible and easy-to-adapt logistics network may be a key differentiating point, with direct implications for the customer's purchase decision. Organizations must bet on the elasticity of processes, and be prepared to implement changes on the spot.



Referências

1 Estatísticas do Comércio (16 de dezembro de 2020), INE - Instituto Nacional de Estatística





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