How to grow a healthy supply chain in the food and beverage industry

by | Mar 11, 2025 | Suppliers

Food and beverage industry suppliers need reliable, responsive supply chains to be successful.

But challenges like global supply chain complexity, evolving regulations, economic uncertainty and consumer demands for sustainability and transparency require continual adaptability to stay competitive.

Read on for an overview of the issues and key strategies to build a healthy and sustainable supply chain.

What are the obstacles to growing a high-performing food supply chain?

Food and beverage industry suppliers face several key challenges to building a healthy, profitable supply chain.

Global supply chain complexity​:  Global supply chains are vulnerable to disruptions, including:

  • Environmental stressors – From heat waves decimating cocoa bean yields to hurricanes flooding peanut fields, food suppliers are at the mercy of environmental factors affecting the availability and cost of raw materials.
  • Geopolitical tensions – Conflicts, labor strikes and policy shifts can disrupt key trade routes and impact the global supply chain.
  • Transportation issues – Shipping delays from port congestion, accidents or labor disputes can put perishable goods at risk of decreased shelf life or spoilage.

Regulatory compliance​: Complying with regulations in a complex supply chain is a continuing challenge, as regulations continually evolve and can vary by region.

  • FSMA 204 – By January 2026, suppliers must comply with the US Food Safety Modernization Act (FSMA), section 204 and provide traceability records for products on the Food Traceability List in the event of a recall.
  • EUDR – The European Union Deforestation Regulation (EUDR) requires extensive supply chain traceability, including geolocation data for production areas. Initially set to take effect on Dec. 30, 2024, it was recently postponed for 12 months.
  • ESG – Retail trading partners may have required standards for company practices that impact the environment, society and corporate governance (ESG).

Economic uncertainty: Years of high inflation have reduced demand for certain products and made consumers especially wary of price increases. With margins already slim, food and beverage suppliers may struggle to turn a profit as costs rise.

  • Tariffs – Food products are especially vulnerable to tariffs because they’re both perishable – unable to be stockpiled – and not easily sourced from alternate producers, especially for products that require specific climates. Import-heavy sectors such as fresh produce have little ability to prepare or respond to tariffs. Even for domestically produced food, key ingredients and packaging materials may be produced elsewhere and subject to import tariffs.
  • Shrinkflation – While other industries raise prices, food and beverage companies sensitive to inflation-wary consumers often cut costs through smaller portion sizes or ingredient changes – an increasingly unpopular practice.

Consumer and regulatory demands for sustainability​​: Consumers increasingly demand sustainability, ingredient transparency and reduction of food waste. But challenges include:

  • Achieving sustainability targets without increasing costs
  • Adapting to shifting environmental regulations across regions
  • Minimizing waste while maintaining product quality

Digital transformation obstacles: Suppliers may need to invest in technology upgrades to remain agile and efficient. A common roadblock to improved supply chain agility is difficulty managing and analyzing data. Suppliers need actionable data, but often struggle with:

  • Translating data pulled from multiple retailers and channels into a single source
  • Analyzing data for clear and actionable insights and accurate demand forecasting
  • Using data to improve collaborative planning and trading partner relationships

How to overcome supply chain challenges

Solutions for building a more agile and responsive supply chain in the food and beverage industry include technology adoption, innovation and strategic sourcing strategies.

Technology integration: Modern supply chains integrate technology into order-to-cash processes, along with data analytics for demand forecasting, reporting tools for sustainability and even revenue recovery. Ideally, these systems seamlessly connect to your existing ERP, WMS and TMS tech stack.

  • Process automation – Routine tasks such as order processing can be automated with a fulfillment solution  to respond faster to changing conditions, reduce disruptions and improve supply chain resilience.
  • Data transparency – Real-time supply chain visibility allows better product tracking to identify potential issues before they lead to spoilage.
  • Efficient inventory management – Real-time inventory updates and automated inventory alerts reduce spoilage and stockouts and support just-in-time inventory strategies to optimize storage and reduce waste.
  • Data analytics – Access to more complete and accurate retail sales and inventory data enables more informed decision-making, efficient inventory management and accurate demand forecasting for a more transparent and responsive supply chain.
  • Demand forecasting – Predictive analytics and data-driven tools can be used to better align production schedules and inventory with consumer demand, mitigating risks of stockouts or overstocks, forecasting trends and potential disruptions.

Technology innovation: Evolving consumer and trading partner demands require specialized tools to meet reporting standards, while other tools offer opportunities to maximize your revenue.

  • Reporting tools – Whether your trading partners require emissions data or you want insights to improve sustainability, Optera and SPS Commerce can help you demonstrate your commitment to sustainability.
  • Revenue recovery – For suppliers working with top retailers,  automated tools can diagnose and track deductions, analyze revenue recovery and maximize revenue.

Adaptive sourcing strategies: A resilient supply chain can remain agile when necessary. While this may be especially difficult in the food and beverage industry, a single-source supply chain is a known risk, and especially prone to disruptions. It may be worth considering:

  • Supplier diversification – In volatile markets, diversify globally to mitigate the impact of regional disruptions while balancing the strengths of various regions.
  • Nearshoring – If possible, prioritize local sourcing if it cuts costs and the risks of import tariffs.  Regionalizing production also reduces transportation times and costs, supports regional economies and addresses sustainability goals.
  • Timely field insights – Use predictive analytics to identify emerging risks and opportunities more effectively, so you can adjust procurement decisions as disruptions occur without derailing your operations.

Look to knowledgeable partners to navigate challenging times

Building and maintaining a healthy supply chain requires proactive steps to address key issues and mitigate potential risks. Success requires not just efficiency, but resilience and the ability to adapt.

SPS Commerce is ready to help you build a more robust and adaptable supply chain. We provide the people, processes and technology you need to streamline your processes and not only survive challenging times but continue to thrive.

Lindsey Merchant
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