As 2025 approaches, food and beverage manufacturers are grappling with various supply chain challenges, including disconnected planning processes, and rising operational costs.
This situation is putting significant pressure on the industry.
Fortunately, innovative solutions utilising Artificial Intelligence (AI) and Machine Learning (ML) are emerging, providing ways to streamline operations and improve efficiency.
One key issue in the manufacturing sector is the fragmentation of planning processes, where different teams often operate in isolation. This disconnection complicates the ability to respond effectively to shifts in demand or production constraints.
To tackle this, RELEX Solutions has introduced a unified platform that integrates demand planning, production scheduling, inventory management, and more. This comprehensive approach ensures that any changes—like an unexpected increase in demand for a specific product—are automatically addressed across the supply chain.
The benefits of integration are illustrated in a case study involving Vita Coco, a coconut water producer with operations in 31 countries.
RELEX developed a digital twin for Vita Coco that incorporated various cost constraints and variables, resulting in an optimised 18-month supply plan that unlocked significant cost savings through improved sourcing and distribution.
Similarly, Snack Brands, an Australian snack food manufacturer, experienced advantages from an optimised weekly production plan that halved planning time and better aligned supply with demand. By reducing Stock Keeping Unit (SKU) runs from 40 to 15, they minimised changeover times and increased production efficiency.
The flexibility of RELEX’s solutions allows them to integrate smoothly into existing systems and adapt to individual manufacturing processes. The platform features no-code configuration, enabling it to learn from new data and adjust to evolving business needs.
With AI-driven capabilities, it offers data-informed recommendations for optimisation, leading to enhanced accuracy and efficiency in planning.
This coordinated approach to supply chain management allows for swift responses to disruptions or opportunities, ensuring that changes in one area are reflected throughout the planning cycle. Identifying and improving key areas of waste or cost becomes a strategic priority for manufacturers navigating these challenges.
Adapting to change
The adaptive nature of RELEX’s solutions makes them easy to integrate into an existing system and adapt to individual manufacturing processes.
The company’s platform features no-code configuration, allowing it to learn from new data and adjust to changing business needs.
Coupled with autonomous capabilities powered by AI, it provides data-driven recommendations for optimisation.
“Achieving these aims results in greater accuracy and efficiency in the planning process,” said Mike Taylor, director of Solution Strategy, RELEX Solutions.
This alignment across the supply chain ensures coordinated decision-making where changes in one area are reflected throughout the planning cycle, allowing for quick responses to disruptions or opportunities.
“Identify the biggest source of waste or additional costs and focus on improving that area first,” said Taylor.
By prioritising high-impact areas and leveraging data, manufacturers can establish a solid foundation for an integrated supply chain. Understanding the quality and sources of data is paramount for successful implementation.
Christer Liden, vice president of APAC Consumer Goods & Production at RELEX Solutions, also highlighted the intensifying competition in the food and beverage sector, where razor-thin margins drive companies to focus on cost reduction.
“For most companies, increasing gross margin is a top priority,” he said.
“Technology, particularly AI and ML, is becoming increasingly vital for navigating these challenges. Optimisation and automation must be the focus.”
A McKinsey article corroborates this, suggesting that advancements in automation could lead to a 20 per cent reduction in inventory costs and a 10 per cent decrease in overall supply chain costs.
“These improvements are crucial for our clients as they strive to streamline operations,” said Liden.
However, the path to automation is not without hurdles.
“Even user-friendly solutions require analytical thinking and a certain mindset,” Liden added.
Sustainability challenges
In addition to efficiency, sustainability has become a pressing concern for manufacturers.
“Companies are increasingly focused on maintaining a positive image and engaging in sustainability efforts,”
said Liden.
Effective inventory management can play an important role in these efforts.
“The more inventory you hold, the more storage space you need, which increases heating and cooling requirements,” said Liden.
By minimising inventory waste and optimising logistics, companies can enhance asset utilisation and reduce environmental footprints, while remaining agile to market dynamics.
Utilising AI and ML enables manufacturers to process data rapidly and accurately, providing insights that enhance responsiveness to market changes, whether it’s a surge in demand for gluten-free products or the latest organic trend.
“CPG companies must shorten reaction times to fluctuations in demand and supply,” said Liden.
Liden also highlighted real-time tracking capabilities that enhance communication between producers
and retailers.
“Using machine learning algorithms to forecast future demand allows us to gather valuable insights from both internal and public data,” said Liden.
This connectivity helps companies respond effectively to retail dynamics, bridging the gap between store-level insights and production strategies.
Looking ahead, Liden believes transparency in supply chains will continue to improve.
This capability not only enhances operational efficiency but also elevates customer experience, enabling consumers to receive timely updates on their deliveries.
The inability to provide transparency across the supply chain will threaten efficiency and profitability. Fragmentation of supply chain processes is a key issue for many businesses.
“Many companies operate on separate systems: one for demand management, another for inventory, and a third for production planning and procurement,” said Liden.
As mentioned earlier, this often results in siloed operations, leading to disjointed operations.
For example, sales teams might overestimate demand to increase inventory levels, ensuring that stock is always available. However, this can erode trust in the forecast, prompting the production team to focus on maximising production efficiency rather than actual demand.
As a result, products with low demand may be overproduced. Meanwhile, procurement teams may prioritise lower unit prices by purchasing in large quantities, which could lead to excess stock and, potentially, obsolete inventory.
There are numerous real-world examples of businesses vulnerable to these challenges. Companies often find themselves overstocked due to misaligned supply chain plans.
For instance, a well-known soup brand ended up with excess inventory after over-purchasing stylish bowls from overseas suppliers, driven by decisions to drive down the unit cost rather than align with actual demand.
“When the product didn’t sell, they were left with excess inventory,” said Liden.
A unified end-to-end supply chain planning approach
To counter these challenges, Liden emphasised the need for a unified supply chain planning approach.
“If orders are placed for items without actual demand or with extended lead times, warning signals should alert the team,” he said.
This fosters a collaborative environment where decisions are based on shared insights rather than
individual KPIs.
“The goal is to minimise debates over numbers and focus on actionable insights,” said Liden.
Even if a company is not fully mature in its supply chain practices, establishing a robust data-driven approach is critical.
“Relying solely on processes and spreadsheets can lead to disjointed operations,” said Liden.
When working with Snack Brands, Liden’s team identified areas for improvement, particularly in line utilisation. They were able to develop an optimised production plan that minimised downtime while still accounted for demand, inventory, and capacity constraints.
“If you can increase production by 10 per cent without additional resources, it impacts the bottom line significantly,” he said.
The complexities deepen for poultry producers like Tegel Foods, where supply chain planning is fraught with uncertainty.
“You know you’re going to get a number of birds, but you don’t really know their size, and they can vary from one delivery to another,” said. Liden. For fresh cuts, the order lead time is extremely short which leads to unpredictable demand.
To mitigate these challenges, companies often freeze products or further process them into cooked products like chicken nuggets that can be frozen.
“Understanding surplus and having a clear view in advance allows you to address this early,” said Liden.
Meanwhile, Arijit Saha, general manager of Supply Chain at Tegel, underscored three key benefits realised through enhanced supply chain practices: improved line utilisation, better control over surplus, and streamlined access to relevant information.
This visibility helps eliminate distractions and enables a focus on true challenges.
“Having the right systems in place allows you to quickly recap the plan,” he said.
“We have a true end-to-end supply chain. We don’t rely on disparate systems; everything is integrated,” said Saha.
However, Liden warns that if a planning solution can only meet 90 per cent of business constraints, companies may revert to spreadsheets, leading to inefficiencies.
“The details matter greatly in food manufacturing,” said Saha.
Harnessing AI for success
RELEX’s solutions are designed to tackle these complexities head-on. For example, a customer faced challenges with avocado production that had taken a year to resolve.
By using RELEX’s solution, the customer managed to solve the issue in under a week, demonstrating the speed and efficiency of modern solutions.
Meanwhile, Madhav Durbha, group vice president of Industry Strategy at RELEX, emphasised that the need for seamless end-to-end visibility in the supply chain is more critical than ever.
Durbha said AI-driven methods help maintain optimal inventory levels and minimise waste, while data accuracy provided proactive recommendations for corrections.
RELEX integrates these AI capabilities into its core algorithms, which have proven successful across more than 500 clients since 2005.
“With the explosion of AI technologies, I advise CPG manufacturers to invest in practical AI solutions sooner rather than later,” said Durbha.
Improving demand signal accuracy and forecasting represents a “low hanging fruit” that can enhance service levels and reduce waste.
While generative AI is advancing, he encourages companies to explore a range of algorithmic techniques, including specialised AI, to drive supply chain benefits and scale practical solutions.
As CPG manufacturers navigate this challenging landscape, the integration of AI and ML into operations is not just beneficial, it’s essential for future success. By embracing these technologies and strategies, the food and beverage sector can overcome current challenges and thrive in the years to come.