Having safe food on grocery shelves and readily available in restaurants is a luxury taken for granted in most parts of the world. But this is only possible thanks to complex food supply chains that are capable of safely and quickly growing, processing, storing, and transporting food products.
The scale that this happens on is stunning. Roughly 23% of the food produced worldwide is traded internationally, and the value of food imports is about $1.5 trillion annually. The international food economy employs approximately 1.5 billion people and accounts for about 10% of the global GDP.
But the food industry supply chain has struggled since the beginning of the COVID-19 pandemic. Border closures, social distancing measures, and other disruptions have created serious issues for food-related businesses and the consumers of these products. Now that 2022 is well underway, here are some of those continuing challenges and how the food industry might approach recovery.
Challenges Facing the Food Industry Supply Chain
According to the World Bank, the United States is the world's top importer of food as well as the top exporter. This begs the question, why can't a country just handle everything domestically? The primary reason for this is specialization.
Most countries now specialize in producing certain types of food and rely on others to send them food that is cheaper or easier to grow or cultivate elsewhere due to climate or other conditions. This system has allowed people to experience and enjoy a more diverse and enjoyable variety in diet.
Most of the world's producers are smallholders, meaning they are independent farmers that connect middlemen who transport goods to local wholesalers, which then get packaged and transported to various points around the country or globe.
But what happens when there is the slightest disruption to this delicate process? We found out in 2020 when the COVID-19 pandemic hit.
Logistics and Transportation
Similar to the game of musical chairs, every piece in the food supply chain is dependent on the others. This means there are multiple opportunities for disruptions that can send ripples through the supply chain in both directions. When one partner down the line has a problem, everything else piles up.
So, when people are forced to quarantine in Asia, French beans, Canadian lentils, or Chilean cherries are left sitting on the docks, likely to spoil. At the same time, Chinese soybeans and pork products can't leave the country for export in those empty containers, leaving other countries with shortages.
Beyond logistics and transportation, the food industry supply chain will continue to face challenges in the coming year. One is changing consumer demands. For example, many consumers still prefer to eat at home instead of in restaurants as a safety measure. Food suppliers have found it challenging to shift their processes to meet these changing needs.
Food Waste and Safety
Because food is a perishable good, both food waste and food safety are primary concerns and challenges. Even prior to COVID-19, about one-third of all food produced worldwide was wasted or lost before it was consumed. With trade bans and border closures, that figure soared.
Recovery for the Food Supply Chain in 2022
Some of the most challenging times in our history often lead to some of the greatest innovations. The hope is that the troubles experienced over the past several years will result in more resilient and flexible food industry supply chains that better adjust to sudden disruptions or shifts in demand. Some of the ways the food industry supply chain is paving a pathway to recovery include:
The past several years have highlighted just how little supply chain partners actually communicated with each other. When those bottlenecks appeared in the supply chain, some businesses had no idea that something was amiss for days or weeks at a time. And the customers, whether they are restaurants, supermarkets, or consumers, also suffered due to these missteps. When stakeholders are more engaged, they can react quickly to problems and provide a better customer experience.
Farmers, processors, and transporters need to collaborate on supply chain issues relative to labor, logistics, warehousing, regulations, and other matters that impact the entire industry. When these groups create partnerships, they will be more likely to innovate and create lasting solutions to issues. At the same time, businesses should move away from exclusive agreements with a single supplier, which can cripple an organization when that supplier is unable to live up to its agreements.
Improved Systems and Practices
At a time when the entire industry is in flux and looking for ways to move forward, it's the perfect opportunity to review your supply chain practices and technology solutions for improvements. Businesses may wish to optimize inbound and outbound transportation routes, reduce the complexity of their supply chain, and improve transparency throughout the process.
Technology solutions like a warehouse management system (WMS) combined with RFID and mobile devices can make your inventory processing more efficient and reduce waste. Some of the same solutions can give you the visibility you need across the entire supply chain so that you know where food products are located, as well as collect vital data such as temperature and humidity levels.
Exceptional Scenario Planning
The effects of the pandemic may be waning. But that doesn't mean other events won't impact your business in the future. You can count on this happening. As the food supply chain continues to recover, businesses should engage in scenario planning to remain at the top of their game and keep the competitive advantage they need.
Whether a company is a food processor, a grocery store chain, or a third-party logistics provider, the food supply chain continues to post many challenges. Businesses in the food supply chain can alleviate these various issues by ensuring they have the right process and technology solutions in place to provide efficiency, cost savings, and transparency from farm to table.