The Complexities of Food and Beverage Logistics

Guest Post By Dr. Oliver Hedgepeth, Program Director, Government Contracts and Acquisition at American Public University

The food and beverage business is more complex than the average person suspects. Have you ever checked the country of origin label on the items you buy? This will give you some idea of the logistics involved in your food.

In some cases, our food and beverages are flown in from Asia, often via Anchorage, Alaska for a refueling stop.  When I lived in Alaska, having over 600 such jets land each week was normal.

I owned part of a transportation company from 2006 to 2010. We often delivered to a local Wal-Mart distribution center. One stormy night delivering a truck load of frozen meatballs was the first up-close encounter with the food and beverage industry.  As I waited for the truck driver to unload the pallets of food, I looked around the huge warehouse where mountains of food were catalogued and stored ready for to pack into other waiting delivery trucks. The scene was a small city of activity.

The source of our food and beverages is one side of logistics in that industry. The other side has to do with recycling.  When I ran my trucking company, one night a rented trailer leaked air conditioner water on pallets of baby food. The food was not contaminated but could not be delivered to the intended customer. The food was donated to local food banks, churches, and homeless shelters avoiding the landfill for those thousands of small jars.

Food and beverages are controlled for safety and security in movement and storage and shelving. The Food and Drug Administration makes sure that consumers have access to safe food and beverages. When food is recalled or the sell-by date has arrived, reverse logistics comes into play.

At a Food and Beverage Committee meeting at a Reverse Logistics Association meeting a few years ago, I met a young entrepreneur who had a process to reclaim sugar from old drinks, sodas, and candy. The reclaimed sugar is then used in new products.

Other parts of food and beverage that are rescued or recycled that have nothing to do with taste.  A complex array of such things as white paper, computer paper, corrugated fiberboard, aluminum cans and foil, aerosol cans, metal cans, plastic translucent bottles, glass bottles, fats, oils and greases, and wood wastes (pallets) are also used and then must be recycled or disposed of.

Food and beverages are part of one of the world’s most complex cycles of a product life. The industry is about safely serving consumer and finding ways to reuse associated materials.

About the Author: Dr. Oliver Hedgepeth is the program director for Government Contracts and Acquisition at American Public University (APU). He is the former program director of Reverse Logistics Management and Transportation and Logistics Management. Prior to joining APU, Dr. Hedgepeth was a tenured associate professor of Logistics and chair of the Logistics Department at the University of Alaska Anchorage. His book, RFID Metrics, was published in 2007 by CRC Press and is in revision.

Logistics in the Limelight

The impact of global logistics is making headlines with the recent controversy in the US about Beck’s beer not being brewed in Germany.

Beck’s has been brewed in Germany and exported to the US up until recently. Feeling the pinch in market share a couple of years ago, the company quietly moved their brewing operations for the US market from Germany to the US.

One might wonder why any company would risk a global brand by making such a change. Beck’s has acknowledged a savings of $12 million in transportation costs. Unlike other operational savings, savings in logistics go straight to the bottom line. 

This becomes a huge coup for any company competing in the fierce beer marketplace, where market share can shift with popular tastes. Logistical savings can really impact an organization's profitability, which is something shareholders love to hear. Bottom-line savings of $9 million a year is probably worth the risk of a little controversy.

The Beck’s shift happened in 2012 and a recent class- action suit   is offering up to $50 compensation for misled consumers. This case of Beck’s moving their brewing operations to save transportation costs is an instructive example. Real transportation savings trump many organizational risks because the savings are direct and tangible.

We should expect more of these kinds of changes in the future. The only question now is, will Beck’s change their branding to become a domestic beer along the likes of Budweiser, Coors, and Pabst Blue Ribbon?