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By Steve Wells

The food and beverage manufacturing industry has its ups and downs just like all businesses. However, unlike most businesses, it experiences dramatic shifts in consumer buying patterns. For example, the trans fat and the Atkins Diet crazes created tremendous, rapid shifts in buying patterns that caught many manufacturers by surprise. Knowing that the industry is fickle in this way, what can food and beverage manufacturers do to prepare for a future downturn? And what can companies in other industries learn from the F&B sector?

Don't Wait — Prepare Now

The first and most important step is to start preparing your supply chain right now for the future. Don't wait for the downtown to happen to address these issues, because when it does happen (and it will, at some point), it will be the speed of your response that will dictate your ability to remain profitable or even survive. The challenges you could face during a downturn might be daunting without a plan. You may be forced into making decisions without supporting data and you may well be betting the company on those decisions. Expenses such as utilities, plant operations and labor are a high percentage of cost. And despite the push for lean strategies and customer-driven supply chain principles, one of the most common ways of dealing with any type of demand uncertainty in many companies today still appears to be to insure against the uncertainty by holding extra inventory across the supply chain — an expensive and increasingly unacceptable solution.

In the event of an imminent downturn, you need to know how you can best control these factors. To do that, you have to have the technology, such as a strong enterprise resource planning (ERP) application, to gather the necessary information in order to build scenarios so you will know the best way to respond.