2022 Supply Chain Trends for Food & Beverage Businesses

In a recent blog, we discussed 2022 food and beverage industry trends. Today, we’ll discuss the supply chain trends we’re seeing and how food and beverage businesses can use the right food manufacturing software to stay two steps ahead.

Supply Chain Trends for 2022

Trend #1: COVID-19 and Supply Chain Disruption

The ripple effects of the pandemic are still being felt even as we enter into its third year. Pandemic-induced lockdowns forced businesses to stop production, putting people out of work. Those who didn’t lose their jobs began to reassess their goals in life, sparking a mass movement referred to as “The Great Resignation.” Trade tensions with China, natural disasters, and the Suez Canal obstruction by the Ever Given added fuel to the fire, creating supply chain chaos.

For food and beverage businesses, the chaos has opened the door to a number of concerning issues:

  • Raw material, product, and labor shortages.
  • A rise in food fraud as people take advantage of the disruption and shortages to make counterfeit or low-quality products.
  • A shortage of food inspectors due to retirement, illness, or resignation with fewer college-age people ready to fill the gap. The lack of inspections is exacerbating the food fraud concerns.

Altogether, this is a supply chain trend that the food and beverage industry must monitor closely and address appropriately to ensure they’re providing consumers with a safe, quality product.

Trend #2: Growth of Cold-Chain and Off-Premise Food Service Solutions

During the pandemic, there was a sharp decrease in eating out as people were concerned about catching and spreading the virus and as restaurants were forced to close. Food and beverage businesses scrambled to adjust to changing customer behavior.

The changing customer behavior is continuing to trend towards retail. For example, at-home options or ready-to-eat meals that can be eaten on the go are still a popular choice. Retailers are offering meal kits, which provide consumers with the ingredients they need to make a home-cooked meal. “Ghost kitchens”—professional kitchens that supply restaurant-style meals without dine-in capacity and unaffiliated with a brand-name restaurant—were around before the pandemic and continue to rise in popularity. And consumers’ interest in healthy, minimally processed foods, which require temperature control, has not abated. In fact, interest in cold-chain food items is growing.

The movement from on-premise to off-premise food service, and the need to monitor cold-chain, temperature-controlled food items, are trends that will continue to rock the food industry, but the good news is that businesses offering safe cold storage and transportation have an opportunity to capitalize on the shift. They will, however, need to account for the different types of labor, methods of food processing, forms of packaging, and more, that accompany it.

Trend #3: Increase in Hybrid-Routing, Nearshoring and Omnichannel

Pre-pandemic, transportation fleets delivered supplies to distributors with a set logistics plan. With the shift in consumer and market demand and the supply chain disruptions, demand for flexible and fast delivery options has risen. Smaller, more agile distributors have popped up, instigating “last-mile delivery” and hybrid-routing procedures to meet the need for more last-minute deliveries. 

The supply chain disruption has also sparked a trend towards nearshoring or reshoring. This is the practice of sourcing supplies closer to the business and their customers. Buying resources closer to home gives businesses more control over their supply. In addition to having a predictable but flexible product source, businesses can order what they need, when they need it, reducing inventory and waste.

Oliver Elirani, Managing Partner at Ollen Group, writes, “Nearshoring ensures companies’ flexibility to accommodate the different customer demands. It’s easier to scale inventory and speed up delivery due to the reduced distance to the point of sale. It also makes it possible to order products in their raw form depending on the demand rather than buying the products to stock.”

And as retail and eCommerce fulfillment in the food industry has skyrocketed, the omnichannel retail approach—offering a seamless shopping experience online, in a brick-and-mortar store, or by phone—has become an expectation of every consumer. Businesses in the food industry must ramp up their direct-to-consumer efforts if they want to succeed in today’s marketplace.

Trend #4: Circular Supply Chain

The traditional supply chain model is linear. A New Food Magazine article written by Manoj Dora and Tez Padhee describes the linear supply chain model as “take, make, use, dispose.” However, the supply chain disruption, which has stoked fears over food scarcity and security, and the sustainability movement have influenced the linear pathway to take a more circuitous route. Dora and Padhee call it a circular economy (CE), naming the approach “reuse, recycle, remake, redistribute.”

In a circular economy, food that was once considered unusable and thrown into a landfill or donated to pig farms can be used by businesses in more creative ways, ensuring a supply chain with zero waste. For example, organizations like Imperfect Foods accept rejected products due to cosmetic concerns and offers their customers “unwanted—but perfectly good—food.”

Dora and Padhee also provide a list of alternative uses for food waste, including turning it into renewable energy and fertilizer and using it to feed animals. They also point out that surplus food could be donated to charities and to vulnerable communities.

Bottom line, this is one trend that benefits food and beverage businesses and the community.

Trend #5: Tech Use Soars

To stay afloat and respond to the supply chain chaos, food and beverage businesses have had to adapt their practices. Adaptation has included embracing modern technology, such as using analytics and data to inform their decisions, automation and artificial intelligence (AI) to overcome labor shortages, and multiple platforms, including eCommerce platforms, to digitize their processes. Thankfully, there is food business software that can help them manage their food manufacturing production processes and overcome supply chain challenges: FoodBusiness ERP.

How FoodBusiness ERP Can Help

Built in Sage X3 and developed from years of industry experience incorporating best practices from food and beverage manufacturers and industry leaders across North America, FoodBusiness ERP helps businesses manage their manufacturing, tracking, inventory, sales, finance and quality needs. It provides industry-specific functionality, including supplier document management, quality audit management, scheduling and planning and food manufacturing inventory management. In this single solution, food and beverage businesses can manage multiple suppliers, analyze lead times and costs and reduce waste with real-time visibility into inventory. To learn more ways to optimize food and beverage operations and maximize production and inventory management, contact FoodBusiness ERP for a demo. We’d love to chat.

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