Supply Chain Risk Assessment for a Leading Fast Food Industry Player – A Case Study by SpendEdge

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In today’s competitive business scenario, maximizing the value obtained from the supply chain while catering to the fluctuating customer needs is a difficult balance to achieve.

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Originally Published on: SpendEdge |Supply Chain Risk Assessment for a Leading Fast Food Industry Player – A Case Study by SpendEdge

In today’s competitive business environment, achieving a balance between maximizing the value derived from the supply chain and meeting dynamic customer needs is a daunting challenge. To address this, companies must pinpoint the root causes of risks, a task facilitated by a robust risk assessment process. The supply chain risk assessment process aids in identifying the risks associated with supply chain functions and the operational vulnerabilities.

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It also helps companies identify threats across the supply network and implement appropriate risk mitigation strategies. While several institutions have developed guidelines for organizations to base their supply chain strategies on, developing an industry-specific risk assessment template is crucial. Our experts have outlined a five-step approach to supply chain risk assessment:

Step 1: Define stakeholder concerns

Step 2: Identify the risk factors

Step 3: Devise precise risk mitigation strategies

Step 4: Partner with third-party procurement intelligence firms

Step 5: Simulate the outcomes

Fast Food Industry Trends

In today’s complex food and beverage market landscape, the restaurant business is continually evolving, and this holds true for all fast-food companies as well. Consequently, there is a growing adoption of faster payment methods such as in-app and contactless payments on a global scale.

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Curious about other trends impacting fast food industry firms? Let’s explore key fast food industry trends that our experts predict will reshape the fast-food industry landscape in the coming years:

  • Faster payment methods
  • The use of organic and healthy ingredients
  • Leveraging technology to better serve customers

About the Client

The client, a Fortune 500 food and beverage company based in the U.S., is a leading innovator in the food and beverage market. It is well-known for introducing the concept of ‘healthy fast food,’ a major trend among the younger global population.

Client’s Challenge

The lack of a comprehensive policy to address the needs of players in the fast food industry was a key factor hindering growth. The shrinking global economy led to a rise in supplier failure rates, negatively affecting the stability of the supply networks for fast-food industry clients. These challenges necessitated enhancing the value of global supply networks by eliminating potential threats to the process flow.

The client found it challenging to meet growing customer expectations for sustainability and ethically sourced products, with the root cause traced back to inefficient supply chain strategies. The fast food industry client approached SpendEdge to help devise a risk assessment template to gauge the various risk factors affecting their supply network.

Engagement Overview

The fast food industry player sought to identify and classify supply chain risks to reduce the rate of supplier failures. Our expertise in supply chain risk assessment aided the client in overcoming this challenge with the development of a supply chain risk assessment template, starting with the process of risk identification.

The identification of supply chain risks helped in recognizing acceptable levels of compliance, developing strategies to mitigate high-risk scenarios, and aiding in the real-time monitoring of supplier risks.

Key Findings

The solutions recommended by our risk assessment experts suggested that developing a centralized supply chain risk management system would help track and monitor supplier compliance. The implementation of specific supply chain risk assessment steps empowered the fast food industry player to be more confident in their data, enabling quick risk identification and implementation of risk mitigation strategies.

Moreover, the use of the risk assessment template not only reduced associated losses but also enhanced the resilience of their global supply network.

Supply Chain Risks in the Food Industry

  • Supply Disruption: Disruptions in the supply of raw materials, ingredients, or packaging materials can lead to production delays or even halt production. This can be caused by factors such as natural disasters, geopolitical tensions, transportation issues, and labor strikes.

  • Quality and Safety Concerns: Contaminations, adulterations, and quality issues can arise at any stage of the supply chain, from production to distribution. Foodborne illnesses, product recalls, and quality-related incidents can harm consumers and erode trust in a brand.

  • Regulatory Compliance: The food industry is highly regulated to ensure consumer safety and product quality. Non-compliance with regulations can lead to fines, product recalls, and damage to a company’s reputation. Keeping up with evolving regulations across various regions can be challenging.

Effective Solutions for the Risks

  • Supply Chain Visibility: Implement technologies like real-time tracking and monitoring to gain visibility into your supply chain. This can help identify potential disruptions early and allow for timely adjustments. Identify alternative suppliers for critical raw materials, ingredients, and packaging materials. Having multiple sources can help mitigate the impact of supply disruptions from a single supplier.

  • Quality Control: Implement robust quality control measures at every stage of production, from sourcing ingredients to final packaging. Regularly test and inspect products to ensure compliance with safety and quality standards. Conduct regular audits of suppliers’ facilities to ensure they adhere to food safety and quality standards. Establish clear criteria for evaluating suppliers’ capabilities.

  • Regulatory Compliance: Keep up-to-date with relevant food safety regulations and standards in your region as well as in your target markets. Regulatory requirements can change, and non-compliance can result in severe consequences. Establish a dedicated team responsible for monitoring and ensuring compliance with all applicable regulations. This team can help interpret complex regulations and implement necessary changes.

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