During the COVID-19 pandemic, food and beverage processors have learned a lot about their supply chains.
In some cases, those lessons have been positive, as their supply chains have held up and ensured delivery of materials and ingredients on time. But in other cases, processors have learned the hard way where their weak spots were and had to scramble to find another solution or a substitute.
“The food supply chain’s responsiveness to the pandemic was remarkable in many ways,” says Are Traasdahl, CEO and founder of Crisp, a supply chain management platform. “But it also illuminated how the status quo of incomplete and siloed information impeded agility, resilience, and shopper satisfaction. The challenges most difficult to overcome during the pandemic were those that required direct outreach to suppliers, external partners, and customers—and existing procurement and sourcing agreements did not facilitate meaningful data access or exchange in a timely manner.”
Those challenges manifested themselves in a number of ways, and weaknesses in one piece of the supply chain cascaded or didn’t cascade in different ways for every company. Which means it’s almost impossible to offer one universal solution for supply chain challenges and how to avoid them in the future.
But individual aspects of the supply chain can be analyzed with some clarity. Based on insights from industry experts, here is a look at three different areas of the supply chain and how their strengths and weaknesses can be evaluated and understood in a way that will help processors avoid future challenges.
No. 1: Keeping the cold chain intact
With insights from: Doug Thurston, vice president of sales, Cold Chain Digital Solutions at Emerson
Cold chains offer their own unique challenges in the best of times. While every aspect of the supply chain has to be carefully monitored to ensure freshness and quality of ingredients, cold chains make that task more complex due to the challenges of transporting ingredients that must be kept cooled or frozen.
That means delays in the cold chain cause problems to multiply exponentially. Cold chains not only have a number of steps in them, but the potential problems at each step exceed those of ingredients that do not have the same temperature requirements. If a supply chain container is held up a day or two it will likely not cause problems; if a cold chain container is held up for the same amount of time, the odds of it creating an issue are significantly higher.
“With the outbreak of COVID-19, the entire food supply chain was subjected to significant disruptions, including keeping up with demand as pandemic-related consumer fears drove historic spikes in sales,” says Doug Thurston, vice president of sales, Cold Chain Digital Solutions, Emerson. “This placed tremendous strains on the food supply chain and logistics processes, which often challenged the maximum capacity of food processing centers and distribution centers. Many produce providers trying to keep up with demand were asked to hold shipments—but fresh produce shouldn’t sit on trucks for extended periods of time.”
As Thurston says, the huge surge in demand disrupted cold chain operations in a number of ways. Suppliers and processors had to rush delivery and production to be able to meet up with demand, but if there wasn’t enough capacity at some point in the transportation process, material wasn’t moving as quickly as it normally would.
As demand normalized and people stopped emptying out the grocery store on a weekly basis, transportation also normalized. But the logistical challenges still lingered in a different way, as companies struggled to keep enough of a workforce to meet demand while dealing with quarantine requirements and illnesses among the workforce.
Looking forward, the cold chain will be an area of focus as processors look to learn from the current pandemic and prepare for similar disruptions in the future. Due to its relative sensitivity, small disruptions carry big consequences, which means better data and better management will be important for ensuring stability and reliability.
“It’s hard to speculate on what its lingering effects may be, but there are some areas where the pandemic may have permanently shifted the landscape,” Thurston says. “One is the adoption of temperature tracking and monitoring technologies. People are looking for insightful information they can glean from operational data, and that is what Emerson provides. We aggregate the data from our monitoring devices and turn it into something meaningful to help our customers make better cold chain decisions.”
No. 2: Allergen control during supply chain disruptions
With insights from Tim Whiting, VP Marketing, Label Insight
Allergen control is a critical aspect of supply chain management, and food and beverage processors have detailed procedures and processes that they require their own employees and their ingredient suppliers to follow.
But when things get hectic people get sloppy, and sloppiness with validation and verification of allergen control measures can have disastrous consequences. As suppliers throughout the chain scrambled to meet surges in demand and labor shortages, processors had to be extra diligent to ensure their allergen control requirements were being met.
That required diligence isn’t likely to go away in the future, says Tim Whiting, VP Marketing, Label Insight, which specializes in product attribute metadata. As consumers become more demanding of transparency and local or sustainable sourcing, processors will need to understand the new challenges of allergen control and how to best meet them.
“It’s likely allergen-related supply chain threats and other potentially harmful product ingredients will continue to emerge as both globalization and localization of supply chains proliferate,” says Whiting. “For companies to stay ahead of supply chain threats, they must integrate emerging technology solutions to enable better product transparency, traceability and tracking.”
As Whiting says, data is key to better allergen control and verification. Processors are likely to already have this in place in some form; properly labeled ingredients and finished products are the first piece of an effective allergen control plan. Tracking those ingredients throughout the supply chain and ensuring they stay free of contamination—were trucks properly cleaned between loads? Did this load of spices come from a trusted supplier that can verify it contains no traces of peanuts?—is a piece as well.
But when processors are scrambling because of a shortage or a failure somewhere in the supply chain, they need to have a plan in place to ensure their standards for allergen control aren’t slipping. Speed is important, but ingredient integrity is more important, because it doesn’t matter how fast you can get a load of ingredients if you can’t use it.
“To ensure allergen control processes are effective, companies should advance their ability to acquire, enrich, catalog and draw insight from product data to better understand ingredients that are not always apparent and can pose a risk to consumers with dietary restrictions,” says Whiting.
“Consumer expectations around product transparency within the supply chain are increasing dramatically, especially in regards to allergens, suggesting the ability of manufacturers to have and provide detailed information about their products is more prevalent than ever.”
3. Upstream challenges flow downstream
With insights from: Bill Michalski, Chief Product Officer, ArrowStream
When the COVID-19 pandemic hit, it had opposite effects on the retail and foodservice markets. While retail demand surged, foodservice demand plummeted, which led to scenarios where food and beverage processors had some plants that were running around the clock to meet retail demand while others were idled because they were dedicated to foodservice.
Restaurants and other foodservice customers struggled to adapt before figuring out the new normal, and those struggles reverberated throughout the supply chain. If end customers of one aspect of a processor’s business were idle while others were scrambling to meet demand, it threw off the infrastructure and planning that processors have spent years and significant amounts of money building and maintaining.
“You had chains who had never had a real carry-out business before, suddenly, you know, 90% of their business was carry out,” says Bill Michalski, Chief Product Officer, ArrowStream, which provides supply chain technology to the foodservice industry. “And then you had others that really just had to shut down and it was a very unpredictable set of circumstances. And then you had the same lack of predictability with their partners in the supply chain as well in terms of their ability to supply the products that were needed.”
These challenges manifested themselves in a number of ways. Of course, the foremost challenge for food and beverage processors was adjusting on very short notice to meet the new demands of their customers. Distributors also had to adjust very quickly to ensure they were able to meet the new challenges.
“From a distribution standpoint, I mean they were hit maybe as hard as anyone, because as soon as you have a major disruption of volume flowing through a distribution model, you start to lose all your economies of scale,” says Michalski. “So they were forced to make some pretty hard decisions in order to not only keep the doors open but help their end customers stay in business.”
But another aspect of it was that as restaurants shifted to carry-out instead of in-person dining, they suddenly needed more materials to ensure employee and customer safety while still protecting quality and freshness. So even if their supply chain was shored up for the food they needed, they still needed more gloves, more hand sanitizer, more carryout containers and so on. All of those different materials and ingredients created different challenges for foodservice businesses, their distributors and the manufacturers who supply them.
Michalski feels the industry has been able to adapt well overall. Looking forward, he says the industry has to look at ways to build in fail-safes to ensure it can get what it needs.
“What this has shown the supply chain in food service is that it needs to be nimble and responsive and able to get at data,” says Michalski. “So when you're working with a supplier, a contracted supplier, and suddenly they're not able to produce the product you need, the question is, how fast do you find out about that? How fast are you able to look at your inventory positions up and down the supply chain to understand if you have substitute products available, if you can rebalance inventories? How fast can you find alternate suppliers if there's not one that's already in your network?”
The future effect
As food and beverage processors, their suppliers, their distributors and their end customers try to learn from the current pandemic and prepare for potential disruptions in the future, the one thing they all have in common is a need for a complete and thorough understanding of their supply chains, where those chains are weakest and how to strengthen them.
There is no universal answer, because every food and beverage processor will learn something different. But the universal principles that can be applied to determining the answers are focusing on data, evaluating each step of the process and building redundancy and back-up plans into the supply chain.
As Traasdahl says, data collaboration will be key, because it allows for suppliers and customers at any point in the process to work from the same universal truths to understand what they need to provide to each other to avoid failings.
“Reliable on-time-in-full deliveries require data sharing, communication, and collaboration between supplier and customer,” says Traasdahl. “This way, a supplier can see connections between retail sales trends, their distributor’s on-hand inventory, and upcoming orders and plan ahead to meet demand.”
The steps needed cost money, of course, and processors will have to balance the costs with the benefits as they do anything else. But supply chain resiliency will be a major consideration going forward, which means the costs will be necessary in some places to guard against potential breakdowns in the future.
“The key to striking the right balance is digital visibility,” says Traasdahl. “Accurate pictures of demand that connect back to distribution and production allow for leaner supply chains that can more quickly meet needs while mitigating risk.”
For more information:
Emerson Cold Chain Digital Solutions, https://www.emerson.com/en-us/commercial-residential/refrigeration
Label Insight, https://www.labelinsight.com/