Foodand Beverage Industry Management Challenges
Thefood and beverage industry have been defined as one among the mostcomplex businesses known today, for a variety of reasons. Theprincipal reason for the complexity that characterizes the industryis that the changing needs of customers, including their culturalpreferences, must be met while at the same time maintainingprofitability (Wood 81). In addition to this, organizations operatingin this sector must stay at par with changes in technology in orderto ensure exemplary customer service. As Wood observes, "managingfood and beverage is more complex than managing rooms, and it demandsa greater range of knowledge and a degree of creativity" (81).This statement suggests that managers of hospitality businesses areconfronted by a host of challenges and issues, which must beanticipated and addressed properly if the objectives of exceptionalcustomer service and profit maximization are to be met. This essayidentifies and discusses the major management issues or challengesfacing the food and beverage industry.
Withouta doubt, compliance with food safety regulations is one of the mostpressing management issues in today`s food and beverage companies. Inthe United States of America, there are a number of institutions thathave been set up with the primary mandate of ensuring that food andbeverage providers adhere to the highest standards regarding theproducts they deliver. For instance, the Food and DrugAdministration-FDA- closely monitors all entities that engage in foodprocessing, placing particular emphasis on food safety (McKewen, para3). As part of the efforts to ensure food safety, the FDA passed theFood Safety Modernization Act in 2011, the aim being to protectconsumers against contaminated food. An important clause in the Actis the process through which food should be moved from the farm tothe market. According to Ejantkar, (para 4) the Food ModernizationAct requires that the entire process should be documented in order tohelp detect any incidents of foodborne diseases.
Theregulations on food safety are seen as a major management issue notonly from the perspective of compliance but also when it isconsidered that organizations are forced to incur additional costs asthey comply with the regulations. Referring to the Food ModernizationAct, these additional costs are incurred in the course of preparingthe paperwork as products move from farms to the market. This is partof the reason why high costs are regarded as one among the keyproblems that foods, as well as beverage managers, have to grapplewith. In a report published in the Hotel Business magazine, Lampereports that managers in the industry are regularly forced to spendhuge sums of money in order to remain competitive. Although theauthor cites supplies and recipe control as the main items on whichfood and beverage managers overspend, the report nonetheless revealsthe costs incurred in providing quality, safe products to customers.
Closelyrelated to the issue of food safety is the increasing awareness aboutthe benefits of healthy eating. In recent years, a lot of emphaseshas been put on the topic of healthy eating as a way of reducing theprevalence of conditions such as obesity and overweight (Buttriss61). In an attempt to identify the causes and risk factors of suchconditions, it has been found that some of the foods that areconsumed do not contain the right proportion of nutrients requiredfor healthy growth. As a result, governments all over the world havebecome actively involved in promoting food security, with the focusshifting from production of more food to the provision of nutritiousfood (Buttriss 61).
Asa result of these government initiatives, specific standards havebeen formulated to guide the manufacture and sale of food products.For example, food manufacturers are now required to reformulate theirproducts such that the foods they offer contain low amounts of sugarand fatty acids. Similarly, food manufacturers are under anobligation to introduce healthier choices whilst also ensuring thatthe foods that are most easily available are the healthiest ones(Buttriss 64). These are just some of the standards that have beenenforced that pose management challenges to food and beverageorganizations. It is worth noting that the challenge in thesestandards lies in the fact that managers and organizations do notenjoy total control over production processes they must abide by setrules and standards.
Besidesfood safety, competition within the industry is another seriouschallenge facing food and beverage managers. As the name suggests,food and beverage comprise a variety of products that include bakedgoods, candy, coffee, soft drinks, meats, milk, and juices, amongmany other products (McKewen, para 4). Inasmuch as this assortmentgives organizations a diverse mix of products from which to choose,meaning that organizations can gain significant competitive advantageby focusing on a single product line, it also creates managementchallenges. It is well-known that operating in a highly competitiveindustry calls for organizations to adopt efficient processes whilstat the same time staying updated on trends in the market. In the foodand beverage sector, important trends to keep track about includeconsumer tastes together with nutritional trends (McKewen, para 5).The implication of this for managers is that continuous marketresearch is needed in order to stay informed about emerging trends.Again, investment in continuous research consumes a substantialamount of money.
Otherthan the costs that must be incurred in market research, the intensecompetition within the food and beverage sector pose a majormanagement challenge to organizations in terms of identifying thebest strategy through which to deal with the competition. McKewen(para 5) observes that many companies operating in the industrycompete by way of creating and delivering products that are differentfrom those offered by their rivals. While there is nothing wrong inthis, the author postulates that it is possible to gain a sustainablecompetitive advantage by offering similar products, yet ensuring thatthe process through which these products are delivered is efficientand modern. In other words, the intense competition in the industrydemands for creative thinking on the part of managers, such that thecompetitive strategy that is embraced is superior and appropriate.
Inthe hospitality industry, the kind of service that customers get isthe key determinant of business profitability and continuity(AbuKhalifeh & Som 135). In fact, customers make the decision ofwhether or not to revisit a hotel basing on the quality of servicethat they obtain on the first visit. This clearly implies that it isthe duty of managers to ensure that guests are given the best servicepossible. The challenge lies in the fact that in the context ofhospitality business, quality is not very easy to predict. This isbecause service quality is defined in terms of customers’perception regarding the service provider (AbuKhalifeh & Som135). The interpretation of this is that it possible for a serviceprovider to rank the service offered as being exceptional, only forthe end user of these services to rate them oppositely. In otherwords, this is to say that managers must seek to fulfill theexpectations and attitudes of diverse customers in order to cultivateloyalty and satisfaction.
Inorder to provide quality service to customers, managers of food andbeverage companies are required to focus on five critical dimensions.The first one encompasses tangibles such as physical facilities andthe physical appearance of staff. Here, it is very important toensure that the premises wherein guests are accommodated arepleasant, spacious, and well-arranged. Secondly, it is vital formanagers to make sure that their services are dependable and of thehighest quality. The third dimension is responsiveness, which refersto the willingness of employees to offer prompt service andassistance to guests as and when needed. At the same time, employeesshould be knowledgeable and courteous in the manner in which theyexecute their duties. Lastly, exceptional customer service in thehospitality business calls for empathy, which essentially means thatall customers should receive individualized attention (AbuKhalifeh &Som 136).
Acrossall industries, the adoption of technological tools and processes hashelped to boost efficiency. With specific reference to the food andbeverage business, technology has proved useful in reducing costs andenhancing efficiency, for instance through the use of enterpriseresource planning in tracking food (Ejantkar para 6). Similarly, theadoption of technology has greatly helped companies in the sector inthe management of waste products. That notwithstanding, technologicaldevelopments have been identified as exerting pressure on food anddrink businesses, from a variety of perspectives. For example, it isrecognized that even though firms derive competitive advantagethrough automation, the food and drink business is rather anexceptional case owing to the fact that there is no standard form forproducts.
Citingthe example of the meat business, Rigby (9) states that it is noteasy to completely automate butchery operations due to the realitythat the animals that are sold in such facilities come in a varietyof shapes as well as sizes. Similarly, butchery operations includecertain activities like tasting samples in order to ensure that itmeets the expectations of consumers. Based on these facts, it emergesthat certain features of the food and beverage business cannotpossibly be automated. In consideration of the above dilemma, thechallenge falls on managers to decide upon the processes that will beautomated and those that will not. Regarding the latter, an evengreater challenge for managers is to identify and implement effectivestrategies and techniques that will ensure that the kind of servicerendered is of the utmost quality.
Withthe threat posed by global warming, it has become the responsibilityof every individual and organization to engage in safe practices inorder to minimize the release of poisonous substances to theatmosphere. Ejantkar reports that every chief executive officer todayis faced with the task of ensuring that organizations pursueenvironmentally-friendly practices. For the food and beveragebusiness, this is a major issue considering that many customers todayare demanding products manufactured through environmentally-friendlypractices. As a result, organizations have to adopt the ‘go green’model throughout the entire food chain, starting from the farmer tothe grocery store.
Inlight of the statement that the ‘go green` policy can only beeffected when every stakeholder, including suppliers anddistributors, are involved, it might correctly be said that managersof food and beverage organizations are faced with a big duty ofensuring compliance with environmentally-friendly practices. In otherwords, managers are expected to devote a significant amount of theirtime to the task of monitoring the practices that are used by farmersin growing the crops that supply the material to manufacture thefinal product. More precisely, the emphasis onenvironmentally-friendly policies imposes a burden on food andbeverage providers since they have to monitor the supply chain toensure compliance.
Apartfrom the challenges of monitoring and control, shifting to acompletely ‘go green’ model involves significant costs. AsEjantkar explains, going absolutely green means that companies mustswitch to energy-saving vehicles, which may mean that a company mustabandon trucks in favor of more efficient modes of transport. Eventhough there are simple solutions that help firms to engage inenvironmentally-clean business, the truth is that many organizationsare still struggling to identify such solutions (Ejantkar para 7). Inshort, finding and implementing simple, yet effective strategies inorder to respond the environmental demands that are placed oncorporation remains an elusive concept to many firms.
Manyorganizations have embraced technology and automation primarilybecause of its cost-saving feature. More precisely, automation isregarded as the main technique of getting rid of the labor content inorganizations, thereby boosting competitiveness by lowering laborcosts (Rigby 11). In light of this advantage, organizations operatingwithin the food and beverage sector are caught in between the dilemmaof embracing automation and ensuring that customers receiveindividualized attention and service. Much as players within theindustry appreciate the cost-saving feature of automation, attentionmust be paid to the nature of products and services sold within theindustry. Precisely, the industry mainly deals in perishableproducts, meaning that it is very important to involve well-motivatedemployees who have the willingness and capacity to persuade customersto purchase these products.
Concerningthe idea that automation is the secret to boosting businesscompetitiveness, this does not necessarily apply to the food andbeverage sector. This assertion is substantiated by the observationthat “humans are the most flexible machinery you can get and robotsreally can’t match them until you get to super high speeds”(Rigby 11). This statement simply means that even though the costs oflabor are certainly high, it is mandatory to hire an adequate numberof trained employees and to motivate them sufficiently, in order toensure delivery of quality service to customers, which is the key tobusiness sustainability and profitability in the industry.
Forthis reason, the dilemma facing managers is to strike a balancebetween automation and the adoption of manual processes. In responseto this dilemma, Rigby (11) posits that managers of food and beveragecompanies should exercise sound judgment so that they applyautomation together with technology judiciously, thus ensuring thatorganizations benefit in terms of regulatory compliance,competitiveness, and quality control. In simple terms, this meansthat there is no single recipe or proportion for the application ofautomation different scenarios call for varying degrees ofautomation. Nonetheless, managers must stay aware that automation andadoption of technology is a critical item that must be included inthe toolbox of every organization.
Inconclusion, the diverse range of products that make up food andbeverages, coupled with the increasing preference for healthy eating,provide considerable opportunities to companies already operating inthe food and beverage sector, as well as those contemplating joiningthe industry. Nevertheless, a number of challenges stand in the wayof attempts to exploit these opportunities. Some of the keymanagement issues facing the food and beverage industry today includeenvironmental concerns, food and safety requirements, technology andits implications for labor, as well as competition within theindustry. In summary, it has been learned that the food and beveragesector is a heavily contested business, which calls for managers toidentify winning strategies of remaining viable. Similarly, foodsafety requirements, automation, and labor generate substantial costimplications, which may affect the profitability of the business.
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Buttriss,Judith L. "Food reformulation: the challenges to the foodindustry." Proceedingsof the Nutrition Society72.01 (2013): 61-69. Retrieved fromhttps://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0029665112002868
Ejantkar,Sanjay. Thetop 5 food and beverage industry problems CEOs are facing.April 19 2016. Web. Retrieved fromhttp://www.aplicor.com/2016/04/19/top-5-food-beverage-industry-problems-ceos-facing/
Lampe,Sarah-Jane. “79% of food and beverage managers admit problems withsupplies and costs.” HotelBusiness,March 18 2013. Web. Retrieved fromhttp://www.hotel-magazine.co.uk/79-of-food-and-beverage-managers-admit-problems-with-supplies-and-cost
McKewen,Ellen. Challengesand trends facing food and beverage manufacturers in 2016.April 21 2016. Web. Retrieved fromhttp://www.cmtc.com/blog/food-and-beverage-manufacturing-trends-and-challenges-2016
Rigby,Mike. Foodfor thought: the changing landscape of the food and drink industry.2015. Web. Retrieved fromhttps://www.imeche.org/policy-and-press/reports/detail/food-for-thought-the-changing-landscape-of-the-food-and-drink-industry
Wood,Roy C. HospitalityManagement: A Brief Introduction.London: Sage, 2015. Print. Retrieved fromhttps://books.google.com/books?id=T_4aCAAAQBAJ&printsec=frontcover&dq=Hospitality+Management:+A+Brief+Introduction&hl=en&sa=X&ved=0ahUKEwiqgvq62oDRAhVmIsAKHX1xAWEQ6AEIMTAA