The second wave of the pandemic affirms the importance of the Food and Beverage (or F&B) industry. According to Nielsen, although 50% of consumers have reduced their direct shopping activities in markets or supermarkets, purchasing power for essential products such as bottled drinks, instant noodles, and frozen foods is still continuously increased enormously (+67%, +40%, +19%) [1].
Until 2021, it is expected that the revenue of the F&B industry in Vietnam will grow by 14.5% [2]. To seize this opportunity, food and beverage manufacturers should take care of their logistics operations.
This article will cover logistics strategies that are likely to become new trends in 2021 and how F&B businesses can apply them to achieve the best revenue.
1. Intermodal Logistics
The supply chain operation of the food and beverage industry is currently under a lot of pressure resulting from limitations and inadequacies in border and customs policies [3]. It is causing significant challenges for F&B businesses regarding inventory management, especially for items that need to be refrigerated [4].
F&B enterprises need to reduce transit times to a minimum for long-haul shipments for effective inventory management. One strategy for that problem is to take advantage of the characteristics of many types of transportation for each consignment, thereby helping the enterprise's warehouse always have enough goods or not be overstocked.
How to apply this trend?
In Vietnam, F&B businesses can combine FMCG transportation by truck with motorbikes, barges, and trains. According to Resolution 556 in 2018 of the National Assembly Standing Committee, four railway projects going directly to the seaport area are being implemented, with a total investment of VND 7,000 billion. Subsequently, some roads with heavy loads connected to the main railway stations will also be built [5].
As a result, shortly, instead of using containers or trucks for long-distance shipments, trains can be used to bring large quantities of goods to the transshipment at a much lower price than ever before. From here, goods can continue to be brought to the distribution centers via waterway with barges or by road with trucks or motorbikes, depending on the order level [6].
F&B businesses also need to pay special attention to carefully predicting the demand for goods to plan a suitable combination of vehicles.
2. Crowdsourcing Logistics
Crowdsourcing in logistics is the outsourcing of logistics services provided by a community of capable individuals and organizations. This service model can make up for the shortage of drivers or warehouses when the volume of goods increases suddenly. Another benefit of this solution is that during times of low demand, especially from the impact of the pandemic, the lessee will not be bound by contractual obligations, thereby saving costs.
Currently, online platforms such as GrabExpress or Lalamove can help businesses access the logistics crowdsourcing model quickly. However, borrowing idle resources can cause problems with information or a lack of professionalism. F&B companies can consider adding the trends mentioned below to ensure reduced costs and delivery times.
3. The Internet of Things
Warehouse management can become more flexible with pressure sensors to know the number of items on the shelves of a particular product [7]. In addition, sensors can be used on vehicles to give managers real-time visibility to limit fraud and aid coordination operations. As a result, F&B businesses can make plans that are closest to the market’s actual needs.
How to apply this trend?
To put sensors into operation, leaders need to invest in equipment and spend time retraining the logistics management team of the enterprise. Another more cost-effective solution that managers can consider is the Abivin vRoute mobile app. This application can turn drivers' phones into GPS devices, record order status, and help managers observe the delivery route in real-time.
4. Digital Transformation
Digital transformation is implementing a series of changes in technology and people to restructure how it works, thereby creating new opportunities and value for businesses. If digital transformation is successful, F&B companies can operate flexibly and increase revenue by 15% per year [8].
How to apply this trend?
The Covid-19 pandemic has significantly disrupted the operations of businesses in the food and beverage industry. Companies can take advantage of times when operations are limited to change processes that are still cumbersome and inefficient.
5. End-to-end Track & Trace
Transportation management software is the key to turning digital data into real-time location and order status information. As a result, managers in the F&B industry can make timely and reasonable decisions in transportation coordination. In terms of warehouse management, demand forecasts will become more accurate to reduce specific risks such as out of stock or overstocking.
In some cases, delivery risks may happen, such as social distancing and withdrawn orders. At that time, leaders can know the status of delayed or incomplete delivery quickly to take prompt measures to avoid loss of goods.
End-to-end visibility also reflects in the transparency of order approval from outsourced carriers (2PL, 3PL) and shipping surcharge documentation. Abivin vRoute is a solution that meets the visibility needs across the supply chain of F&B businesses.
6. Automated warehouse
According to the latest report on logistics of the Ministry of Industry and Trade, warehouses of Vietnamese enterprises are doing most of the loading and unloading manually. However, in the past two years, mechanization and automation are being put into operation by major Vietnamese e-commerce platforms such as GHN, Lazada, or Tiki. F&B businesses can also boost their distribution thanks to the advantages of automated warehouses: limited human error, speed, high return on investment (ROI).
How to apply this trend?
Because of the nature of the industry, businesses should handle inventories of perishable foods on a First In First Out basis. Warehouse automation is a promising solution to minimize the damage of food items. However, automation is a long process and requires many continuous improvements in technology. F&B businesses can consider small steps like investing in forklifts, cranes or using an inventory management platform first.
Conclusion
The year 2021 will promise tremendous growth of F&B businesses after a long preparation and experience in crisis handling. In order not to fall behind, food and beverage businesses should start taking action today. Digital transformation, the Internet of Things, or a delivery upgrade due to changing consumer behaviors can start with the right partner.
Abivin wishes to listen to the difficulties you face in logistics operations to provide appropriate directions and solutions that would help you work more efficiently and overcome this difficult period.
References
[1] https://www.nielsen.com/vn/vi/insights/article/2020/how-has-covid-19-impacted-vietnamese-consumers/
[2] https://www.statista.com/outlook/253/127/food-beverages/vietnam#market-revenue
[3], [5] ,[9] Báo cáo logistics của bộ công thương năm 2019, tr 34, 41, 57 [4] https://www.sana-commerce.com/blog/shorten-time-market-e-commerce-food-beverage-industry/
[7] https://adamodigital.com/blog/top-iot-solutions-in-food-and-beverage-industry/
[8] https://www.moneycontrol.com/india-business-live-ibl/resource/thriving-in-the-digital-economy:-how-small-and-midsize-enterprises-are-adapting-to-digital-transformation/resources-1121.pdf
Top 6 Logistics Trends Changing Vietnam F&B Industry In 2021