The global supply chain has struggled since the beginning of the COVID-19 pandemic. Whether your business needs computer chips or potato chips, there has been a series of bottlenecks at various points along the supply chain that continue to persist.
Stockpiling inventory might be one solution for electronics. But it’s not a viable business model for perishable items like eggs, milk, and beef. And the low availability of many staple ingredients means more frustrated consumers and lost revenue for suppliers.
While 2022 isn’t expected to be anything that the industry views as “normal,” it sure won’t be as traumatic as the past several years when it comes to supply chain troubles. Pain is an excellent motivator. Believe it or not, the food supply chain has come a long way as it works to reduce the impact of recurring disruptions and achieve more agility.
Here are seven predictions for the food industry supply chain in 2022.
1. Transportation and driver shortages will continue.
Transportation has been one of the biggest stress points in the food supply chain in recent years. The problem has been fueled by the explosive growth of eCommerce, requiring fast shipment of goods throughout the country.
The average age of an over-the-road trucker is between 45-60 years, depending on the source. But the average annual turnover rate of major U.S. trucking companies is a stunning 90%. Unless some changes are made in the trucking industry, the food industry is likely to experience continuing transportation issues.
Fortunately, some of these shortfalls can be addressed through accurate demand forecasting and proactive planning. Companies that remain flexible and leverage real-time data will get access to the most reliable labor and service.
2. Worker shortages will decline.
Facing worker shortages is a problem that goes beyond the trucking industry. There has been widespread reporting of nationwide labor shortages, with restaurants getting the most attention. But this issue has also impacted the agricultural and food processing sectors. Fewer workers mean fewer people to grow, harvest, and process food products.
Worker shortages are expected to decline for several reasons. First, more companies are mandating COVID-19 vaccines, which is reducing infection rates and sick days. Second, many companies are recognizing the need to improve worker wages and conditions. For example, Tyson announced in 2021 that it would begin making healthcare and child care more accessible to its workers.
3. Automation will streamline processes.
In 2022, the food supply chain industry will see increased adoption of automation solutions that will equip growers, processors, and warehouses with the technology they need to keep up with changing consumer demand and various supply chain challenges. Given the increasing complexity of consumer demands and issues facing the supply chain, adding intelligent productivity solutions can help companies be more productive with fewer workers.
Automation solutions like wearables, robotic processors, and automated stock pickers can allow humans and machines to work together to reduce material handling costs, eliminate errors, increase safety, and create a more efficient overall food supply chain.
4. End-to-end supply chain technology becomes vital.
Automation is one trend we’ll see in the food supply chain moving forward. Another is a move towards more transparency throughout the supply chain. This requires an end-to-end technology commitment by every stakeholder. This becomes more accessible as companies continue to consolidate, as explained earlier.
Transparency throughout the supply chain involves collaboration and data-sharing among participants. For example, food items might have RFID tags, giving producers and customers real-time data about the item’s location, temperature, humidity levels etc. This level of data gives companies the information they need to make more informed business decisions about food safety, inventory, and the overall business.
5. Government takes a bigger role in supply chain improvements.
Nearly 55% of Americans in a recent survey blame the government for the current supply chain bottlenecks that have led to product shortages. But experts say that the supply chain challenges are the result of a combination of pent-up consumer demand and the effects of a pandemic. Even so, the government can play a role in easing supply chain troubles, and it has been doing so.
In the past year, the Biden Administration met with business leaders and ordered some U.S. ports be kept open 24/7. Also, in 2021, the U.S. Department of Agriculture announced a $4 billion investment in the food supply chain, which will support areas of food production, processing, and distribution. The American Rescue Plan Act also authorizes a $100 million dollar loan guarantee fund, which companies in the food industry can access for things like cold storage expansion and food supply chain technology.
6. More companies will choose to consolidate.
In an effort to reduce competition and strengthen their resources, many food industry companies are choosing to consolidate, a trend that is likely to continue into 2022. In the logistics space, we can expect to see increased mergers and acquisitions activity as larger players in the industry acquire smaller ones, and smaller ones merge to become more competitive.
Instead of a 3PL with one or just a few warehouses, there will be more of these providers with 25-plus locations as they add to their geographic territories and real estate. Companies that have the most territory and technology solutions to transport goods efficiently will be able to outshine the competition.
7. Conservation measures get a higher priority.
The pandemic might have caused many companies to put their environmental and sustainability initiatives on the back burner for a period. But that doesn’t mean these items have disappeared. Consumers want to work with sustainable companies, and climate issues remain front and center for the agricultural industry. There will be a renewed focus on water conservation efforts as well as a prioritization of ways to minimize the use of fossil fuels.
The food industry made it through the past several years with a series of operational adjustments and creative pivots. While some supply chains issues will persist in 2022, there are ample opportunities in the year ahead to address inefficiencies with technology solutions and other creative strategies.