Published on: 9th June 2020, Reading time: 5 mins.
As the demand for innovative food products is continuously increasing, it’s also imperative to keep on improving your food logistics operations. Read our guide to understand how to master your operational challenges and what it takes to find the best food fulfillment for your distribution logistics. Plus, find the best logistics solutions and providers in Germany and Europe. Here’s the overview:
- Introduction: Logistics operations in the food industry
- The top three: Challenges in Food logistics
- Challenge #01: Food Fulfillment Execution
- Challenge #02: Warehousing Logistics
- Challenge #03: Retail Requirements
- Concluding Thoughts: Food Logistics & how to find the best 3PL for your business case
Logistics Operations in the Food Industry
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:
There are three main logistics challenges in regards to finding the best food fulfillment provider.
01: Search Qualified Food Fulfillment Providers
The first logistics challenge consists of meeting the peculiarities of different distribution channels that have to be considered during the food 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:
- B2B: pallet shipment via freight carrier forwarding pallet shipments to central warehouses of food retailers, such as Rewe, Edeka, and others
- B2C: parcel shipment (big parcels) to individual food Retail branches
- D2C: parcel shipment (small parcels) via e.g. the own online shop directly to the end-customer
In order to carry out these food 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 fulfillment and 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 Fulfillment and
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. Simply contact our team to find the right Food 3PL for your business case.
Did you enjoy our article on food fulfillment? You may also want to check out our other logistics resources for products like:
- Bulky Goods: How to handle Bulky Goods and Freight?
- Cosmetics: How to find the best logistics partner for Cosmetics and Beauty products?
Henrik Rackow is Managing Partner of Hungry Ventures and supports clients in this function to identify, validate and build products and business ideas. Prior to that, he worked for several digital consultancies and fast growing start-ups. With the founding of the food start-up Karl Karlo, he was able to achieve a successful exit by selling it to the Melitta Group.
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.
Max and the marketing team at everstox take care of researching, evaluating and writing all logistics insights that we gather from our day-to-day operations. If you have any questions on our thought-led articles, guide’s or any other blog-related topic, feel free to get in touch with our team.
Head of Marketing
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 Europe’s first tech-driven network of trusted warehousing & fulfilment partners.
Further information about everstox can be found under: www.everstox.com.