The True Impact of 5 Ingredient Supply Chain Disruption Causes

When the pandemic shut down cafeterias, restaurants and hospitality industries across the country, many food and beverage manufacturers and their ingredient suppliers were forced to pull back operations and slow production in response to lower demand.

Some food suppliers and distributors instead focused heavily on retail and grocery chain sectors during lockdowns, shifting capacity away from food service. In many areas, markets came roaring back, catching some suppliers off guard. 

Nearly half of all companies reported significant disruptions in their supply chains as a result of COVID-19. Is the situation improving? Are certain ingredient supply chains experiencing more disruption than others?

Here’s a look at the latest data and insights on how to overcome supply chain disruption.

1. Labor & Logistics

Even prior to the pandemic, food manufacturers and other manufacturing sectors struggled with labor shortages. Workforce issues have escalated further since the pandemic began. A little more than one-third (38%) of manufacturers struggled to find candidates prior to the pandemic. Today, about two in three (63%) say they’re struggling to fill critical labor gaps, and the turnover rate is up 15% since the prior year.

Some manufacturers are missing production deadlines or requiring frontline workers to take on extra shifts to meet demand. The potential negative effects of employee burnout and even more turnover are worrying, with three in four companies expressing burnout as a concern. In conjunction, higher overtime expenses may force companies to raise prices or take a hit to their bottom lines. Adding to the strain is the logistics of maintaining worker safety via social distancing, PPE and other measures.

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2. Weather & Wildfires

Weather-related incidents have, quite literally, created the perfect storm. Whether devastating drought and wildfires in California’s growing regions, frozen pipes and power outages in Texas, or historic heat waves in the Upper Northwest, disruptive weather patterns are wreaking havoc on communities and food production.

For example, the drought, heat and wildfires in western growing regions have slowed production. While fires generally haven’t destroyed agricultural fields, the ash and smoke in some regions have blocked out much of the sunlight, stunting growth and, in some cases, even altering the flavors of some crops. Likewise, protecting workers from the effects of smoke and 100˚ heat has forced companies to reduce work hours and, in some cases, even evacuate workers from the region, delaying harvests. Some have had to destroy overly ripe crops as a result.

3. Sourcing & Shipping

If simply finding food ingredients weren’t challenging enough, getting them from point A to point B has added to the challenge. Some industries still feel the impact of the incident in March 2021 involving the Ever Given cargo ship that blocked the Suez Canal, a gateway for international trade. In addition to the cargo on the big ship, 400 other cargo vessels containing everything from crude oil and livestock to grain and dry goods were held up, freezing more than $10 billion in global trade each day.

Once foreign goods actually arrive at U.S. ports, there’s no guarantee they’ll reach their final destination in time. The trucking industry moves about 70% of all freight in the U.S., and the severe shortage of qualified long-haul truck drivers is forcing companies to offer big pay hikes to attract and retain drivers. Shipping and freight costs have skyrocketed, increasing prices for companies who need to pass those expenses along to consumers. 

4. Quality & Quantity

Consumer habits and buying behaviors shifted during the pandemic, reshaping demand for some food products. Many popular diets were put on pause as Americans returned to comfort foods and stocked up on nonperishables, and restaurants began offering limited menus in an effort to streamline their operations and minimize the number of ingredients they needed to keep on hand.

Prepackaged meals, frozen entrees and ready-made food products rose quickly in popularity, with takeout and delivery operations becoming the norm. Restaurants felt the pinch as they struggled to keep workers, paid more for packaging and had to give a cut of profits to delivery services. Maintaining quality and freshness for patrons throughout a product’s lifecycle added to the challenge.

5. Communication & Collaboration

Most food and beverage companies needed to shift from in-person meetings to communication methods like videoconferencing and virtual tours, with some being unprepared. Despite how advanced communication technology has become, it was all too easy to experience miscommunication.

The virtual communication methods brought on by the pandemic stressed the need for true partnerships among food manufacturers and ingredient suppliers. The ability to collaborate together as a team to address application challenges and quickly arrive at a quality solution allows organizations to increase speed to market, reduce development costs and improve results. These benefits can help to offset the impact of supply chain disruptions.

How Grande Custom Ingredients Group Can Help

These realities are forcing food and beverage companies to seek alternative ingredient suppliers who can help them overcome supply disruption issues today and in years to come. Grande Custom Ingredients Group is a reliable U.S. producer of quality whey protein ingredients, which is among the few industries that has had relatively little supply chain disruption or price volatility as a result of the pandemic, labor shortages or weather-related incidents.

Whey protein concentrates have a long shelf life, helping to mitigate risks of loss and food waste, and they’re a cost-saving alternative to multiple fresh ingredients like milk, cream, butter, eggs and cheese. Whey protein’s notable nutritional benefits and ability to improve the taste, texture and functionality of food formulations only adds to its appeal.

Access our case study below showing how one formulator improved their formulation’s quality while actually reducing ingredient costs. Just click the link below. And contact our team of dedicated food scientists to collaborate on your formulation. See for yourself how we’re addressing the modern challenges that many food producers face.