Food Supply Chain Management

Jane Eastham, Liz Sharples, Stephen Ball, Jane Eastham, Liz Sharples, Stephen Ball

• Publisher: Routledge
• Year: 2007
• eBook ISBN: 9781136402555
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

The key to the success of a company is their ability to co-ordinate the key supply chain i.e their key suppliers and suppliers of suppliers. 'Food and Drink Supply Chain Management' looks specifically at the supply chain in the food and drink industry to provide readers with an understanding of the areas as it is now and its growing importance, and where it is going in the future. 'Food and Drink Supply Chain Management' is the first to take an in-depth view into the supply chain function in the hospitality and food retail sectors. Authored by a range of expert contributors the text looks at issues such as: * New food processes and GM foods * Volume catering and JIT (Just In Time) and Food Safety * Relationships between companies and with stakeholders and responsibilities to these groups * The internationalisation of the food chain * The future of the food and drink supply chain and its management Examples and case studies from large international retail and hospitality organizations are used, such as: Bass, Stakis (Hilton), and Tesco, amongst others, to illustrate good and bad practice.

1

The Supply Chain

1

The catering and
food retail
industries: a
contextual insight

Jane F. Eastham, Stephen D. Ball
and Liz Sharples

Key objectives

• To define the catering and the food and drink retail industries
• To explain the blurring between the two industries
• To identify similarities and differences between the two industries
• To provide an overview of the size, scale, structures and operating formats of the catering and the food and drink retail industries
• To identify and discuss the key issues that have affected the food and drinks supply chain related to the catering and the food and drink retail industries

Introduction

Put simply, consumers have two basic options when purchasing and consuming food and drink. One is to eat and drink outside the home in a hospitality operation. The other is to purchase food and drink from food retailers, which is fresh or partially prepared, for consumption in or away from the home, but outside a hospitality operation. This basic distinction conceals many exceptions such as: the purchase of ready meals from delicatessens, takeaway meals from fish and chip shops, Chinese, Indian or other takeaways, hot pies or filled sandwiches from a baker's shop or garage forecourt. The boundary between catering and food and drink retail is therefore fuzzy and the division between the two industries is becoming increasingly blurred as a result of technological developments and the activities of operators. These factors are explained further below. This chapter takes the stance that because of this blurring, issues facing the food supply chain of each of these industries, cannot be considered independently. This stance underpins the rationale for the consideration of these industries jointly throughout this book.

The purpose of this chapter is to provide the contextual backdrop for the rest of the book. The UK scene is emphasized in particular. However, given the global nature of both industries reference will also be made to the international perspective.

Defining the catering and food and drink retail industries

Ideally in order to examine food and drink supply chain management, in the context of the catering and food retail industries, the constituents and boundaries of each need first to be defined. Unfortunately, this is less than straightforward, as there are no single, universally accepted definitions or interpretations for either of these industries.

Inconsistencies particularly lie in the classification of subsectors and their constituents. Different sources such as government agencies, market intelligence consultants and other experts use different criteria. Jones (1996), for example, uses a sectoral classification for the foodservice/catering industry in order to focus on the customer's needs and how the industry responds operationally to these needs. Market intelligence agencies reporting on the retail sector, may variously classify according to store size, customer usage, and ownership. This leads to inconsistencies in data provided.

Retail defined

Market pressures and changing life styles have brought about new formats. In the 1970s food retail establishments could be divided into multiples, co-operatives (Co-ops) and independents. Changes in shopping patterns and preferred retail formats and the emergent dominance of the major retailers in the marketplace, have resulted in the appearance of, on the one hand, new retail formats e.g. convenience stores, and on the other, the diversification of non-food retailers into the food retail sector. As major retailers have moved into other retail sectors as a means of increasing market share, other retail sectors such as petrol stations and licence retailers, have adapted to supply the growing convenience market. Food retail can be now classified according to usage. Shopper surveys (Mintel 1999a) demonstrate a clear increase in secondary shopping activity. Whilst the main weekly shop may still be conducted at an out of town or edge of town location, increasingly there is a demand for local en-route units. Likewise, treats may be purchased from specialist producers or vendors. At its simplest this means that we can identify three venue types: major shopping venues, secondary shopping venues or convenience, and specialist shops. Main weekly shops tend to be carried out at multiple retailers, particularly the Big Four, i.e. Sainsbury, Tesco, Asda and Safeway, although a smaller proportion of consumers utilize discounters, e.g. Netto. Secondary shopping takes place at convenience retailers, which are constituted of a wide range of formats including forecourts, Co-ops, symbol groups and licensed retailers.

Catering defined

In contrast, the catering industry is simply considered to cover all undertakings concerned with the provision of prepared food and drink ready for consumption away from home. It also includes establishments that provide a take-away and/or delivery service where the food and/or drink are prepared within the establishment but consumed elsewhere. Yet, likewise, convenience stores, major retailers and independent retailers increasingly provide a similar service.

The industry can be characterised by its diversity comprising many types of food and beverage outlets in a range of different sectors. It is possible to distinguish the different types of outlets in various ways. For instance, distinctions can be made according to: size, core products (menu items sold), branded or unbranded. Catering can be also classified according to whether catering is the main activity of the undertaking as, for example, in a privately owned restaurant, and those where it is a secondary activity as, for example is the case of catering in a school.

Traditionally catering activity has been divided into either that associated with ‘profit’ markets or ‘cost’ markets. The former includes such profit-orientated establishments as restaurants, fast-food chain outlets, cafes/takeaways, pubs, leisure and travel catering outlets while the latter includes catering outlets for business, education and health care. This system of classification may have its shortcomings; recent developments have blurred the division between profit- and cost-orientated establishments, for example, some hospital catering is now carried out by profit centred contract caterers. It is generally understood, however, that in the main most establishments fall into one of these categories and it is this system that is used by most market research organizations.

Separate or overlapping industries?

The distinctions between catering and food and drink retailing are becoming blurred for a variety of reasons.

Changes in food processing and packaging (Lawson 1987)

Take sandwiches for example. The advent of vacuum packaging has enabled these to be sold in food retail outlets as well as in hospitality operations. Corporate high street retailers such as Boots and Marks & Spencer have dominated the sandwich market. The purchase of commercially prepared meals for consumption at home, or away from the home, which minimize the need for preparation, are a key contributory factor towards the blurring of catering and food and drink retailing. Technomic, a USA consultancy firm, relates this blurring to the desire for convenience (see Figure 1.1).

Figure 1.1 Blurring definitions – the growth of ‘convenience’ (Technomic 1997, cited in Haines and Turner, 1998)

The operator

Often organizations may be considered hospitality entities, e.g. quick service restaurants or public houses but their operators call themselves retailers.

The location

Some retailers are located adjacent to hospitality operations thus offering themselves as alternative sources of food for immediate consumption.

An overlap of interests

This has led to an increased investment by retail, hotel and leisure groups in setting up their own foodservice operations either independently or through agreements with established restaurant chains. Retailers have become increasingly aware that their revenues can grow through foodservice as a result of retaining shoppers on site for longer and attracting more cus...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of Contributors
• Foreword by Richard Lamming
• Preface
• Part 1 The Supply Chain
• 1 The catering and food retail industries: a contextual insight
• 2 Food and society
• 3 The scope and structure of the food supply chain
• 4 Concepts of collaboration: supply chain management in a global food industry
• 5 Current practice: inter-firm relationships in the food and drinks supply chain
• 6 Stakeholders, ethics and social responsibility in the food supply chain
• Part 2 The Management of the Supply Chain
• 7 Strategic supply and the management of relationships
• 8 Logistics and information management
• 9 Relationship marketing
• 10 Human resource management in the extended organization
• 11 Supply chains: issues in management accounting
• Part 3 Supply Chain Perspectives Internationalization of the Supply Chain
• Perspective 1 Internationalization of the hospitality industry
• Perspective 2 Internationalization of food retailing
• Supply Chain Perspectives Contemporary Issues
• Perspective 3 The case of GM food
• Perspective 4 European trends in food safety: implications for the hotel sector
• Perspective 5 European developments in Efficient Consumer Response
• Perspective 6 The marketing of seafood in New South Wales, Australia: the impact of deregulation
• Perspective 7 Supply chain restructuring in economies in transition: a case study of the Hungarian dairy sector
• Supply Chain Perspectives The Future of the Supply Chain
• Perspective 8 Future issues in European supply chain management
• Perspective 9 The future of the food supply chain: a perspective looking up the chain
• Perspective 10 E-shopping: the Peapod grocery experience
• Perspective 11 Changes in supply chain structure: the impact of expanding consumer choice
• Glossary
• Index