IFDA recently released an infographic showing areas of strain in every step of the foodservice supply chain. It is very important to understand these problem areas so that you can anticipate issues and adapt quickly.
Raw materials costs have soared due to increased demand and supply shortages. Those shortages can be attributed to shifting demand due to changes in consumer behavior, weather events destroying crops across the US, and labor challenges.
International unrest is affecting both the acquisition of raw materials and their overseas transport. The cost of shipping containers overseas increased by 500%. With ships transporting 23,000 containers each, that is a dramatic cost increase to absorb. Labor shortages in the US are slowing down the off-loading process of containers once they arrive.
Once containers are unloaded from ships, they are primarily transported by road, which is being further delayed due to the driver shortage. Material and production challenges within manufacturing has resulted in suppliers temporarily or permanently reducing their SKUs and focusing on items driving the greatest demand. Additionally, labor shortages and plant reconfiguration to accommodate social distancing requirements have slowed food production from suppliers as well.
The labor and driver shortages felt by suppliers are also felt by distributors. There are currently 17,500+ warehouse positions and 15,000+ driver positions open in foodservice distribution alone.
Distributors are reporting record low fill rates due to suppliers’ inability to accurately forecast and communicate demand. Special orders which used to take days to fill, now require weeks.
Additionally, the fact that distributors service a variety of customer segments means that they need a variety of solutions to these challenges. No single fix will work for all of their customers.
Foodservice operators are experiencing labor and training challenges that have never been seen before.
Foodservice consumers are contending with unavailable items, increasing costs, and inflation.
Ultimately, these challenges come down to three main causes:
- Labor shortages that are affecting the entire supply chain
- Forecasting and demand are in flux which makes it very challenging for suppliers to produce goods
- Inflation affecting fuel, wages, and raw materials costs affect operators working with already-tight margins
There are common elements of technology tools that can make your people more productive, and also attract new people.
- Easy to use – young employees do not want to learn old, outdated systems and frustrations over inefficient systems can lead to employees leaving or new employees choosing not to join the organization.
- Enables reporting without relying on IT – In today’s world, users should be able to easily get to data, automatically create pivot tables or put things into Excel, or be able to take the report writers that are available in a new modern system and easily filter or select data. No one should have to make a request to IT and then hope that they’ll get it done in the next week or so.
- Remote Accessibility & Mobility – Everything in today’s world has become mobile. One thing that the Covid-19 pandemic did was drive the need for remote work and the ability to access information on any device.
- Leading technology with ongoing development – Because the technology moves so quickly, many software companies that may have created a great program for the industry 20 or 30 years ago, don’t have the human or financial resources to continue to develop their solution with better and more complex technology being released every day. Having current technology that is constantly and consistently being enhanced and developed is essential to keep moving your business forward.
- Rapid order entry and industry functionality – With all of the slow-downs in the foodservice supply chain, it is essential that distributors are getting orders in quickly and accurately. Also, if the technology does not fit the needs of your business, your people will not be as productive. You will only get the benefit of the technology if the technology does what you need it to do.