While there is no silver bullet solution for the supply chain problems the industry is forced to deal with, Produce Blueprints experts’ collective wisdom coalesces into six priorities for alleviating supply chain pain.
Razor thin margins, price fluctuations, and high levels of product waste tend to drive a cost control mentality in the produce industry.
Companies leaned out their operations to the point of having little margin for error. The lean strategy works well when supply chains are running uninterrupted and creates only short-term pain when a minor glitch occurs.
Unfortunately, a major disruption produces significant supply chain problems that affect sales for an extended period of time.
Such was the case during the first six months of the pandemic when limited safety stocks of basic materials were depleted and access to alternate suppliers was difficult to secure.
For example, lead times for packaging ballooned from four to twelve weeks as companies struggled to find suitable alternatives.
A different approach is to adopt a more balanced perspective where supply chain activities are viewed as value-adding and essential for competing in the marketplace. This gives supply chain professionals more latitude to temper that intense cost focus. They can make decisions that prioritize service to ensure transactions can be completed as promised.
“It’s a tradeoff between resilience and profit margins,” says Doug Fisher, vice president of Insights at ProduceIQ BB #:368175.
“Sometimes you need to bite the bullet and get the product into stock and hang onto it even if it costs a bit more money. I would rather have what I need and make less money than not have what I need and potentially lose customers.”
This short-term pain for long-term gain perspective also applies to technology investments, transportation services, and labor wages.
Prioritizing only cost will lead to outdated systems that cannot generate the capacity to serve customer demand. Instead, strive to balance objectives.
Alleviating the supply chain pains of the last two years has not been an easy proposition—it required creativity, energy, investment, and a willingness to embrace chaos.
Yet chaos can be viewed as an opportunity to refine strategies and restructure networks for greater supply chain agility via the six priorities discussed in this article.
Deploying these measures can help provide stability in the current environment and create resiliency for future disruptions, especially when in aligned with other key initiatives intended to cultivate talent, deploy automation, and support key customers.
Lastly, underpin these strategies with strong relationships across the supply chain—because no organization succeeds in this environment on its own.
This an excerpt from the Supply Chain Solutions Department from the May/June 2022 issue of Produce Blueprints Magazine. Click here to read the whole issue.