Interestingly, consumer trends toward both indulgent and healthy eating are driving increased snack consumption, and the food industry supply chain is struggling to keep up.
Americans spend about 12% of their packaged food budget on savory snacks, according to Euromonitor, resulting in steady growth at 2.2% per year over the past decade.
Overall, consumers are turning snacks into meals and are searching for what they see as healthier alternatives, such as snacks with additional protein. Lines between categories are blurring, as many consumers say they sometimes have a beverage as a snack, and chocolate is found in nearly 60 percent of all food and beverage categories, according to Information Resources Inc.
However, consumers expect to be able to purchase their favorite healthy snack just about anywhere they may go. Quick service and limited service outlets have outpaced retail for snacking purchases. Mass-market grocery, club stores, conveniences store and drug stores are seeing growth in the snack market. E-commerce is seeing double-digit growth as well, IRI reports.
Consumers expect to be able to find their favorite brands within an arm’s reach to satisfy their cravings. That means distribution is shifting from large distribution centers built to serve bulk shipments based on predictable consumer demands toward smaller, more nimble distribution supporting consumers’ desires for fresher products.
A growing number of consumers are not only focused on what is in their food, but also its origin and supply chain. For example, fair trade chocolate is a purchasing signal for consumers. Of course, the Food Safety Modernization Act has shifted the focus from reacting to problems to preventing them from occurring. Shippers are focusing on traceability of products, which can also improve supply chain efficiencies as well.
To meet consumers where they live, work and play, snack food makers must reconsider their distribution channels. Consumers make different choices depending on the situation. They may use one channel for immediate satisfaction, opting for speed and convenience over lower price, and purchase via slower, less expensive channels to replenish their supply at home.
Keeping pace with the changes in consumer trends requires food companies to embrace a new level of logistics flexibility and cost efficiency. Transportation Insight’s Extended LEAN® approach combines LEAN principles with logistics know-how and state-of-the-art technology to drive out waste, reduce costs and streamline processes across the supply chain. We use tools including LEAN Assessment, Value Stream Mapping and Kaizen Events to extract maximum value from each process. This process is especially effective in the case of growth through mergers and acquisitions that can leave companies with supply chains operating in silos on unconnected technology platforms.
Advanced analytics can help develop a consumer-driven supply network that allows retailers to increase on-shelf availability, improve inbound transportation service levels and reduce landed costs to the shelf. The LEAN journey is one of continuous improvement to optimize logistics by constantly evaluating carriers, modes, routes and costs to target peak efficiency.
In the competitive food market, logistics is a strategic differentiator as part of the total customer experience that extends beyond the product itself.