Top 5 Challenges Facing the

Food and Beverage Industry

September, 2013
Executive Summary
Let’s be real. There are more than five important challenges facing the food and beverage industry. It is
one’s own perspective that creates the priority of these challenges. ExtenData®’s perspective is
focused on the distribution and transportation of products from farm to plate. As an experienced supply
chain logistics solution provider, the following are the top five challenges facing the food and beverage
industry.

1. The Food Safety Modernization Act

2. Reducing waste and creating efficiency in the supply chain
3. Increasing cash flow and improving the bottom line
4. Greener business practices
5. Creating and maintaining a competitive advantage

It is ExtenData’s assertion that adoption of electronic proof of delivery, route optimization software, and
other onboard computing technologies designed to provide accurate and timely information, will solve
the issues at hand.

Challenge #1 - The Food Safety Modernization Act

The Food Safety Modernization Act,
which passed Jan. 4, 2011, is generating
sweeping reform. The implementation of
the new rules and regulations has been
slow and lacks teeth. However,
eventually food and beverage producers,
processors, and distributors will need
significant staffing and technology to
meet the new requirements set by the
Secretary of Health and Food and Drug
Administration.

One of the most significant elements of

the act will include improvements to
product tracing. A product tracing system involves documenting the production and distribution chain of
products. In the case of an outbreak or evidence of contaminated food, a product can be traced back to
a common source or forward through distribution channels. This portion of the act will include a
requirement for the use of appropriate technologies for rapid and effective tracking and tracing of foods.
In addition, this will include a requirement for recordkeeping requirements for high risk foods to assist
with tracing products.

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 Thankfully, the technology to achieve the new
requirements is already available. These technologies
include enterprise resource planning (ERP), warehouse
management systems (WMS), and electronic proof of
delivery (ePoD). Each of these tools provides a certain
element to the food and beverage supply chain. Food
and beverage companies who act now can become
compliant before these requirements are mandated.
Doing so early will allow an organization to plan for and
select technologies that suit the needs of the
organization best.

Challenge #2 - Reduce waste in the

supply chain and create efficiency
Beginning in early 2008, the United States global economy
felt the sting of the latest recession. It became imperative for
organizations to create improved efficiency and reduce
waste in order to avoid layoffs and office closures. With the
worst of the recession behind us, these imperatives still
exist. Unfortunately, the areas within the food and beverage
industry that need efficiency and waste reduction are an old
story.

Many of these issues have been around for decades and

are centered on the paper based systems for product
tracking, tracing, inventory accountability, delivery, and accounting. Understandably, these processes in
the beginning could only be handled using pen and paper because of the lack of technology. Farmers
manually counted the volume of their products going to market. Food distributors accounted for product
in their warehouses through manual inspection and counting. Invoices were manually updated by

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finance departments based on the quick scribbles of the
60% reduction in foodservice delivery drivers.

back office labor The resulting errors from manual paper and pen based
with ePoD processes are significant. Without accurate inventory
control, theft or product being misplaced creates lost
revenue. Hand written corrections or additions to driver invoices incur significant backend labor to
update accounting and inventory systems. In addition, inaccurate invoices are sent to customers
resulting in invoice disputes or worse, non-payable invoices.

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 { }
Through the use of electronic proof of delivery (ePoD)
technology, food and beverage distributors can create 40% reduction in
significant gains in productivity and waste reduction. new driver ramp period
Inventory is accurately tracked throughout the entire
and overall optimized
supply chain. Product is scanned on and off trucks
allowing companies to know exactly where product is and efficient driver
located. Route drivers gain productivity through workflow with ePoD
efficient truck loading, driving routes, and improved
workflow. Additionally, ePoD enables significantly reduced driver training or ramp up period through
process driven work flows. Finally, savings can be seen in back office labor. The need for manual data
entry of the day’s route business is automatically updated to the inventory and accounting systems.

Challenge #3 - Increase cash flow and improve the bottom

line
Similar to reducing waste and creating efficiency in the supply chain,
improving cash flow and increasing the bottom line are imperative to a
healthy thriving business. Many organizations will use tactics such as
extending terms of payment to vendors and suppliers, increasing cost for
customers, or seeking new customers. However, these tactics and their
gains are short lived or ineffective.

Organizations seeking to improve cash flow and improve the bottom line
should look toward gains achieved through electronic proof of delivery
(ePoD). At its most basic level, ePoD provides enhanced accountability,
accurate data and timely communication. These enhancements can be
directly applied to invoicing and customer service. With enhanced
invoicing, invoices are accurate and evidence of product delivery is
indisputable. Customers can be assured that the correct product was
delivered when and where the invoice indicates. Thus, food and beverage companies will see a marked
reduction in no-pay invoices and invoice disputes.

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A reduction of no-pay invoices, invoice dispute credits,
customer service costs associated with invoice disputes and
other labor means more money flowing to the bottom line.
70% reduction in
Additionally, the gains in reducing waste in supply chain and no-pay invoices
creating efficiency discussed in Challenge #2 will also with ePoD

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generate a positive impact on the bottom line.

Challenge #4 – Greener Business Practices

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For years, the concept of “green” business practices was thought
50% reduction in to be a fad. However, growing consumer demand of
environmentally sound business practices means more and more
paper with ePoD organizations are looking for simple ways to demonstrate their
dedication toward the improvement of day-to-day operations.
Unfortunately, most foodservice companies cannot afford to retool their entire fleet of trucks to support
renewable energy sources. Even more unfortunate is that smaller, more business friendly sustainable
choices for greener practices are over looked.

Electronic proof of delivery (ePoD) and route optimization can

provide food and beverage companies with the small wins needed
to demonstrate an environmentally conscious business strategy in
two ways. As discussed in Challenge #2, ePoD can completely
eliminate the need for paper based forms during daily routes.
Residing on a handheld mobile computer, ePoD and route
optimization means drivers are not carrying stacks of paper with
them throughout the day. In addition, routes that are optimized for
time naturally create a reduction of fuel usage.

Reducing paper and fuel usage will have positive impacts on

customer satisfaction and loyalty. Moreover, implementing these
green tools will save money by reducing paper and fuel overhead.

Challenge #5 – Create and maintain a competitive advantage

The final challenge to the food and beverage industry is maintaining a competitive advantage, as it is
for any business in the US. Specific competitive challenges for foodservice revolve around distribution
capacity, reliability, and customer service. Many in leadership will say that expansion is the only way to
create a competitive advantage. “More customers mean more market share and stability against our
competitors.” Fortunately, this is not completely true.

Already within the first four challenges discussed, several strategies for creating and maintaining a
competitive advantage are evident. Current customers and prospects will see the advantage to working
with a company that has preemptively adopted mandates of the Food Safety Modernization Act.
Customers will feel confident in a food and beverage company that maintains an efficient and reliable
supply chain that inherently includes accurate invoicing, product tracking and enhanced customer

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service. Finally, customers will have a “warm and fuzzy” feeling knowing their foodservice partner is
doing what they can to encourage environmentally sound
practices.

As if those factors are not enough, electronic proof of delivery

(ePoD), route optimization, telematics and other supply chain
tools provide food and beverage companies with more
competitive advantages. Through the use of these
technologies, companies can be certain that their operations
are modern and up-to-date. Customers and prospects will
appreciate that their foodservice company will remain relevant
in the fast paced world of technology.

ExtenData® and MobileConductor™

Provide Solutions to the Food and
Beverage Industry
The challenges we face in life come from our own perspective. It is that perspective that drives
innovation and advancement within business. The key is to view challenges as opportunities. Each of
the top five challenges facing the food and beverage industry is an opportunity. The single opportunity
heading that each challenge falls under is simple.

{ Utilizing technology to create a more thoughtful,

responsible and sustainable food supply chain }
The opportunity to utilize technology and create a more thoughtful, responsible and sustainable food
supply chain is where ExtenData® and our solution MobileConductor™ excel. MobileConductor™ is a
comprehensive mobile supply chain software. This tool allows farmers, processors and distributors the
ability to track and trace food and beverages from farm to store as it travels the country.
MobileConductor™ is the only platform that provides a 360° view of the food and beverage supply
chain. In addition, ExtenData® can fulfill all track and trace needs as it relates to food and beverage
transportation. ExtenData® has over 11 years of hardware, software, integration and managed service
experience. When one selects ExtenData®, one is selecting a leading technology and distribution
partner.

For more information about ExtenData and MobileConductor, please visit www.extendata.com, email
info@extendata.com or call 1.866.260.2556.

7399 S Tucson Way, Unit B-1 | Centennial, CO 80112 | www.extendata.com

7399 S Tucson Way, Unit B-1 | Centennial, CO 80112 | www.extendata.com