How to build a resilient supply chain for the food sector
The global pandemic has changed significantly the way food business distributed since March 2020. The food sector has witnessed many disruptions in its supply chain networks and financial losses during the pandemic. All key players in the food supply chain have been impacted such as farmers, producers, distributors, retailers, and other food-service-related companies.
For farmers, there has been a big shortage of manual laborers as the travel restrictions as well as higher pay for workers working during the Covid-19. In turn, this has resulted in a decline in the food supply and an increase in prices. In the same situation, food producers and processors also faced with a worker shortage and Covid-related containment measures as well as a surge in logistics cost. Indeed, as border travel restriction and occurring expenses, logistics companies are struggling to maintain stable rates for local transport and it’s extremely hard for overseas export of fresh foods.
Not surprisingly, go-to-market strategies for the food business have changed very much different than those before the pandemic. Generally, there are two key channels for food distribution, which are grocery stores and food-service locations including restaurants, hotels, and schools. After the Covid-19 happened, social distancing and regional lockdowns have forced consumers to stay at home, stocking up on groceries and essential things. As a result, revenues of the grocery channel has increased dramatically and a significant decline in that of food-service one, leading to considerable changes in the supply chain operation of both channels.
In addition, impacting from the pandemic, customers have become conscious about product origin and local-made ones. Also, shoppers prefer purchasing products on online channels and have final-mile delivery to their homes. This requires retailers to develop Omni-channels in order to meet customers’ demand, preparing for sustainable growth in the future. Furthermore, food safety is now a big concern for customers, leading to more rules and standards being applied in the coming time. Investigations from overseas governments on covid infection in food have brought many difficulties for food exports. Therefore, regional and local preferences would be a trend in near future, putting barriers to globalization.
Indeed, the supply chain has become so vulnerable during the pandemic. This urges supply chain managers to reshape their system. It’s undeniable that digitalization and technology plays an important role in tackling supply chain problems and improving supply chain efficiency. Using robots to reduce migrant labor or artificial intelligence to predict demand in advance is highly preferred by producers, distributors and retailers, not mentioned to digital solutions for e-commerce channel with multiple delivery options. Moreover, it’s critical to work with supply chain partners and have diversification in suppliers as well as build new innovative solutions together for long-term sustainability.
Currently, over 80 percent of companies review their supply chain globally. We are here to help! Let’s set up a no-commitment supply chain call and talk through some new ideas you could benefit from.
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- Ryan Burrowes, CEO of Warehouse Transport Group, email@example.com;
- Bill Organ, Director of Freight Forwarding, Warehouse Transport Group, firstname.lastname@example.org;
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