Food Supply Chain Disruptions to Address in the Next Budget Cycle
While Covid-19 pandemic placed unprecedented stress on the global food supply chain, from labor shortages to challenges in managing logistics, the industry has faced constant challenges over the past several decades. The challenges that plagued the supply chain in 2021 and 2022 are slowly easing out, and businesses are finally finding their footing in a post-pandemic world, new economic and geopolitical challenges are waiting on the horizon.
In this article, let’s look at key supply chain obstacles affecting the food and beverage industry to look out for this year and what steps you can take to avoid them.
Challenges facing the global food system
Weather and natural disasters
Extreme weather events such as hurricanes, droughts, and heat waves are projected to increase in frequency and severity over the next several years. As severe weather devastates critical food growing regions, the food supply chain will become increasingly unpredictable. Although US-based operations can often endure the short-term effects of natural disasters, this is not the case for other global supply networks. This can lead to a devastating ripple effect across all operations globally.
The US imports 15% of its food supply, including 50% of its fresh fruit and 80% of its seafood. Natural disasters can disrupt the food supply, which can snowball across the entire supply chain. For example, droughts can reduce the yields of crops. Food shortages can lead to increased costs for internationally-sourced commodities, driving costs significantly for wholesalers.
Other weather events like hurricanes may have minimal impact on long-term crop yield but can wreak havoc when it comes to logistics. These impacts are made worse when poorly managed MRO operations and maintenance increase the risk of unplanned downtime.
Political instability
In an interconnected network of complex shipment routes and import and export systems, political challenges can have surprisingly far-reaching consequences.
The best example is the ongoing war between Russia and Ukraine. Aside from the staggering human toll the war has taken, the conflict has severely affected the availability of raw materials such as metals, minerals, grain, fertilizer, and oil, all of which are essential to the food supply chain in one way, shape, or form.
This has caused prices of these raw goods and related products to skyrocket which has negatively impacted the bottom line of many businesses. Adding to the already bleak situation are rising inflation and high-interest rates that are fuelling fears of a global recession. If market leaders don’t attain supply chain resilience by finding reliable spare part suppliers, they will not be able to survive in an increasingly competitive market.
Labor shortages
The pandemic resulted in a massive labor shortage, and only recently have leaders begun to see employment numbers grow. Unfortunately, manufacturers continue to struggle with labor issues.
With fewer workers available, operations are forced to reevaluate their production strategies. This impacts not only distribution and production processes but also maintenance strategies. The result is troubling levels of production downtime and lost profits.
These rising costs and missed production opportunities are felt across the supply chain, from procurement teams to consumers alike.
How MRO can be a part of the solution
Avoid down time
Having contingency plans in place can help minimize downtime in the event of unexpected disruptions. Instead of relying on a single supplier for their supply needs, operations should develop robust contingency plans that allow them to find alternate options at a moment’s notice.
This is especially true for MRO maintenance teams, who risk production downtime if maintenance inventory is not adequately maintained or is lacking.
Managers can avoid these circumstances by investing in material management software. These next-gen tools are equipped with artificial intelligence (AI) and machine learning (ML) features that can help identify exact locations of parts anywhere in the enterprise in the face of any disruptions.
With these tools, procurement and operations managers can track indirect materials and MRO inventory in real time and quickly identify any bottlenecks or disruptions that may cause downtime. Using predictive analysis, the system also offers recommendations about network sharing opportunities to prevent disruptive events.
Increase efficiency without increasing operational costs
Companies stuck in the past can’t survive in the future. It no longer makes sense to stagnate with traditional, manual systems. They aren’t flexible enough to adapt to sudden disruptive events, but they’re also inefficient and inundated with errors that eventually translate to higher operational costs.
A cloud-based solution allows companies to consolidate MRO supply data into a centralized location, regardless of the number of systems of record in their organization. This makes it easy for businesses to identify inefficiencies without sifting through paperwork. The ability to respond to unexpected events well ahead of time reduces the chances of incurring additional costs without sacrificing efficiency.
Furthermore, using a system equipped with natural language processing systems allows businesses to automate and streamline various processes, such as inventory management and order management. This streamlines all operational efforts into a single process, making it possible to optimize processes end-to-end.
Create resilient MRO operations with Verusen
Supply chain volatility is the new normal today. With novel disruptions cropping up left and right, the smartest decision a company can make is to arm themselves with the right tools to navigate an uncertain supply chain landscape instead of being at its mercy.