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Matching Supply with Demand in Food Businesses

July 14, 2020

Matching supply with demand is difficult because of uncertainty and variability. We don’t know exactly how many customers will buy from us tomorrow or even today. Sales and trends also regularly change and those changes could be huge from hour to hour and day to day.

Matching supply with demand in food businesses

In response, we try to estimate and forecast demand. We start from there and then try to match our inventory of food ingredients and other supplies. However, supply rarely matches demand. With excess supply we waste a lot of ingredients and money. On the other hand, if demand exceeds the supply, we waste the opportunities to make more sales and profits.

There’s always a trade-off and business owners and managers are already used to this level of risk and uncertainty. As a result, they focus on other things that will minimize the variability and make things more predictable. For example, transport and deliveries should be on time so that business owners can better plan and manage the supply. If those are delayed, it will result in wasted opportunities because the supplies were not used to make sales. The integrity of the deliveries is important as well because damaged goods and spoiled food products result in huge financial losses (some might even end up in the customers’ orders and ruin the company’s reputation).

There are more challenges now than ever because of new threats and risks to the supply chain. Contamination and tampering of supplies and products might happen during transport and delivery. We also have to watch out for coronaviruses and other microbes. We also have to properly handle the goods to prevent physical damage. In other words, there are dozens of things that could go wrong in the supply chain.

Here at Cooltrans we do things right and eliminate or minimise the risks and uncertainty. We maintain tight temperature control and make sure deliveries arrive on time (we regularly maintain our fleet and prepare backup vehicles to avoid delays). This helps business owners better match the supply with demand through on-time arrival of crucial goods and better planning for the day and future.