The domino effect refers to a circumstance in which one event gives rise to another chain of related events. Though a single disruption may seem insignificant at the time that it occurs, the happenstance could result in the collapse of the entire system. Similarly, a supply chain acts as a network in which each component needs to function properly for the entire network to work.
With participants of a food supply chain located across the United States, there is often a lack of communication that results in food insecurity and public health concerns. Furthermore, a global pandemic has forced the entire food supply chain to adapt and evolve.
With newer technologies and a push to streamline all activities, many of these concerns will be addressed. However, there are still several pain points that are plaguing supply chain management and creating difficulties for consumers.
Read ahead for an overview of the five big problems facing the food supply chain, and how participants across the globe are working to resolve them.
5 Problems Facing Food Supply Chains
The food supply chain is an elaborate but essential food production system required by the global community to maintain sustainability and food security.
Though people typically take their food supply for granted, they forget that just one disruption in the chain can lead to shortages, poisoning, or increased prices. This often affects the most vulnerable among the population, including low-income individuals and small grocers/restaurants.
As consumer demand for traceability and fresh food has escalated, technology systems are evolving to meet these needs. Recognizing the unique challenges facing the food supply chain and processing plants has allowed for high-tech solutions that escalate food delivery without losing quality along the way. Participants are utilizing different technology systems to keep the food supply fresh and prevent food waste.
While solutions are in place to streamline the global food supply chain, there are still several problems facing the food systems industry, particularly due to the coronavirus pandemic. Some of these include-
1. Farming-Labor & Shortages
The first and most important step in the supply chain is farming fruits, vegetables, meats, and other items. Several farming operations need a certain form of labor such as crop producers to complete their jobs. Because many workers have been infected with COVID-19, the farming industry is struggling with a shortage of labor that can perform specific work activities.
Restrictions and regulations have also made it more difficult and costlier to farm, as some processing facilities have required workers to social distance and be tested regularly. As farming operations tend to be located in rural areas with few available workers, it has been more difficult to find people to fill roles under these conditions.
Furthermore, there has been a grain price drop due to a decrease in oil demand around the globe after the COVID outbreak hit. As a result, it's more difficult to sell grain and maintain a profit considering all of the expenses needed to reap and harvest it. As immigration has decreased as a result of new restrictions, farms aren't hiring as many migrant workers.
Migrant workers cost less to employ than native-born workers, further putting a financial strain on the country's farming operations. As a result of worker shortages, restrictions, a migrant shortage, and price reductions in food items, there could be a long-term shortage of products and price increases for producers and consumers post COVID.
2. Poor Communication Between Supply Chain Participants
As technology has evolved, there has been vast improvements for participants in the supply chain to communicate. However, there are still many challenges involving a lack of communication that plague the industry as a whole.
The supply chain and food system is fragmented. Each company has its own unique logistics system, information-sharing policies, and government laws (or lack thereof) to follow. Because of this, participants in the supply chain sometimes have a difficult time communicating with one another.
This causes everything from a delay in deliveries to an increase in contamination to spoilage. If all participants can find a method to improve their communication by utilizing an optimized technology system, many of these issues can be resolved.
3. Growing Regulations
As the supply chain grows and evolves, there has been some need for more regulations to ensure workers are paid and protected and that food is safe for consumption.
Unfortunately, the regulations used to protect people from harm have also caused an immense amount of harm. For example, the ELD mandate requires carriers to log their drivers' hours. This had led to firings, increased prices, and greater inefficiencies.
Other regulations have made it more difficult to import goods or hire new labor. This slows down the supply chain, causing delays in deliveries and increased prices for consumers. Unfortunately, once regulations begin to hurt people, there tends to be a rise in shortages, contamination, and spoilage.
Ironically, the nature of the government is to implement new regulations to solve the problems caused by the regulations. This leads to bigger challenges that further disrupt the entire supply chain.
Participants around the globe will have to find ways to manage these regulations more efficiently to avoid further draconian measures that prevent companies from doing their jobs.
4. Growing Demand & Groceries
Grocery stores are seeing an increase in demand as consumers are panic buying due to the virus. While this has been good for the bottom line, it also creates a whole new set of concerns and challenges.
Groceries have to streamline their workflows to protect workers, keep everything sanitized, and constantly restock and reorder items. Though there is technically not a shortage of products, the panic buying has caused an artificial shortage and increased demand.
Supply chain participants need more materials quickly so they can manage the restocks required by groceries. A grocery store struggles to maintain a happy workforce, sometimes offering new incentives and bonuses to keep their staff on board for long hours.
E-commerce has helped to bridge the gap to a degree, as many online retailers sell some of the big items usually found at grocery chains. That being said, the COVID crisis has certainly affected the grocer and consumer side of the supply chain to a significant degree.
5. Restaurants & Inventory Management
A lack of visibility, communication among participants, and COVID-19 have caused several problems for restaurants. Many restaurants and their suppliers don't have the technology that allows for a real-time view of their inventory supply and demand.
Poor inventory management creates a fractured relationship between the restaurant owner and his/her supplier(s). This results in over/under-ordering, spoilage, waste, and supply uncertainty, affecting customer satisfaction and the restaurant's reputation. Utilizing an optimized inventory management system can help a restaurant gain full visibility over stock and resolve many of these bottlenecks.
COVID-19 has put many new restrictions on restaurants that are sometimes impossible for them to manage. As restrictions evolve regularly, many restaurants have closed permanently while others are restricted to takeout. Either way, most are losing profits in countries all over the world.
This affects servers, cooks, and other restaurant workers who are now at reduced hours or unemployed. Fast food restaurants are the only ones who have managed to see an increase in profits as more consumers are taking advantage of the drive-through option.
This also causes a loss in profits for the meat processing plant and other participants in the supply chain who see a decrease in orders and an increase in prices. With a vaccine approaching and restaurants using outdoor space to seat customers, this will hopefully improve in the near future.
In conclusion, here are the key takeaways to know about problems with the food supply chain-
- Because each step of the supply chain affects every other step, all participants need to streamline and optimize their responsibilities.
- As consumer demand for traceability and fresh food has escalated in the food industry, technology systems are evolving to meet these needs.
- The main problems facing the supply chain include farming labor issues and shortages, poor communication between participants, increasing regulations, growing demands for grocers, and stress put on the restaurant industry.