// industry insights

Food Logistics 101: How to find the best Food Fulfillment for FoodTech Start-Ups and Merchants in Germany?

Published on: 9th June 2020, 5 min read.

Overview: 

Sustainable and organic nutrition is becoming increasingly popular. FoodTech Startups experience an increasing demand for their innovative food products amongst customer segments across business-to-business (B2B) retail, business-to-consumer (B2C) and direct-to-consumer (D2C) online shopping channels. Generally, modern marketing and customer-centric product development can be considered as strengths of these young food companies. Regarding logistics operations, however, there is often still potential for improvement.

Henrik Rackow, Managing Partner at Hungry Ventures adds: “For the implementation of new business models, the topic of logistics is often of great importance for both corporates and startups. On the one hand, the safety of the products must be guaranteed. Hygiene regulations and certifications are prerequisites for professional food logistics. On the other hand, dynamic processes and high flexibility of fulfillment services are success criteria. Supply and demand fluctuate. New products come onto the market – and often disappear. Scalability of small to large order volumes, seamless integrations with shops and third-party providers, real-time tracking functions of deliveries and location-based optimization measures are components of smart logistics. Startups can use it to serve small crowdfunding campaigns and large customers in the food retail sector at the same time. Corporates are empowered with the right partner to quickly and easily set up their own D2C channels and to increase interaction with the end customer. ”

Resulting from this is the question of how to find the best logistics for the distribution channels of my food business, eCommerce shop or Retail business? Who is the best food logistics provider in Germany, in Europe?

The food industry has specific requirements in regards to logistics operations. These logistics requirements need to be met across the line and consist of strict standards in terms of certification, hygiene, cooling and data transparency. These regulations often complicate the scaling of logistics operations into new distribution channels and the search for a qualified logistics providers.

The three Food logistics challenges:

01:
Fulfillment
Execution

02:
Warehousing
Logistics

03:
Retail
Requirements

There are three main food logistics challenges in regards to finding the best food fulfillment provider.

01: Search of qualified food logistics providers and fulfillment execution

The first logistics challenge consists of meeting the peculiarities of different distribution channels that have to be considered during the fulfilment process.  Food logistics from trade to direct sales is a route-order business in which merchants need to organise pallet and parcel shipments to B2B, B2C and D2C customers. The contract logistics is characterized by three main parts:

  1. B2B: pallet shipment via freight carrier forwarding pallet shipments to central warehouses of food retailers, such as Rewe, Edeka, and others
  2. B2C: parcel shipment (big parcels) to individual food Retail branches
  3. D2C: parcel shipment (small parcels) via e.g. the own online shop directly to the end-customer

In order to carry out these fulfilment requests, merchants need to find a logistics service provider that can provide proof of high quality services that are available at competitive prices. However, the market offers of third-party logistics (3PL) service suppliers are often not transparent and fluctuate immensely. Prices often vary due to the operational focus of the respective 3PL provider and the differing framework agreements between the 3PL and the parcel and pallet shipping provider (such as DHL, DPD, etc.).

02: Search of qualified food-storage and warehousing logistics

The second challenge entails the logistics requirements during storage and warehousing. The right temperature conditions must be met during all stages of stock storage and during packaging of orders depending on the respective product; either ambient (15-20°), cooled (1-4°) or frozen (<0°). Refrigerated and frozen goods require appropriate insulation material and cold packs inside of the warehouse and shipment cycle.

Overall, the sustainability of the business activity must be taken into account when dealing with fresh food shipments. For instance, in the case of cooled and frozen food, return handling and restoring of products that have been sent back from customers cannot be taken into the equation, as the cooling chain has been interrupted.

03: Food requirement claims in the Retail business

The third challenge comprises the high technological claim of the food Retail trade. Retailers in the fresh-food and non-fresh food sector, for example, must always guarantee the cycle traceability of complete order batches and best-before date (BBD). Real-time data regarding orders and possible delays are substantial as well, particularly in the B2B area.

Conclusion: Food logistics 101.

Optimal logistics for food startups & scaleups requires all-round logistics providers with strong references who cover all operative logistics processes in the fresh food and non-fresh food sector.

Additionally, technology plays an essential role; particularly in the food sector, a lack of automatization and data transparency can quickly lead to manual effort amounting to several thousand euros per month. Optimal inventory planning for future demand of food products by the respective distribution channel is an integral part of this. On the part of the logistics provider it is fundamental to fully integrate the shop- or ERP systems of the food retailer and make real-time data available.

everstox already supports a number of FoodTech companies with specialised food storage logistics and data driven fulfillment for distribution channels, such as the food Retail, eCommerce shops and online marketplaces. everstox enables food fulfillment for the next generation of FoodTech companies in Europe together with qualified 3PL logistics providers and its state-of-the-art cloud technology.

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About the Authors

Maximilian Nenning | everstox

Co-Author:
Maximilian Nenning
Marketing Manager
everstox

Henrik Rackow | Managing Partner at Hungry Ventures

Co-Author:
Henrik Rackow
Managing Partner
Hungry Ventures

About Hungry Ventures

Hungry Ventures is a consulting firm and venture builder for digital and sustainable innovation and has a diverse portfolio of clients, including Retail and manufacturer brands, such as Edeka, Ritter Sport and Nestlé.

Hungry Ventures focuses on the food industry. Its mission is to support established companies in the process of implementing digital business models, entering into entrepreneurial partnerships and establishing structures for innovation.

Further information about Hungry Ventures can be found under  www.hungry-ventures.com.

About everstox

everstox is a technology and Logistics-as-a-Service (LaaS) platform enabling scalable and data-driven fulfilment for eCommerce, B2B and Retail businesses through a European network of independent logistics providers.

We enable transparent, efficient and ecological logistics solutions by forming Europes first tech-driven network of trusted warehousing & fulfilment partners.

Further information about everstox can be found under: www.everstox.com.

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