Leveraging Data to Address Supply Chain Challenges and Food Insecurity
In recent years, the global pandemic has exacerbated and illuminated the challenges manufacturers face when consumer demand and supply chains change unexpectedly. While manufacturers of all kinds and sizes feel the impacts of these changes, disruptions and their implications are not equally distributed.
Feeling the Weight of Supply Chain Issues
Fortune 500 companies with global reach, a plethora of facilities, and stores of inventory do not feel the impacts of disruptions in the same ways as small and medium enterprises (SME). While large enterprises often manage billions of dollars in products, they have impressive tech stacks to better predict and adapt to supply chain disruptions, minimizing and outright avoiding the impacts of small disruptions. Using predictive technology powered by artificial intelligence (AI) and machine learning (ML), these organizations can leverage their extensive networks in the face of looming disruptions to adapt as needed. As such, these organizations are impacted most significantly by the major global disruptions, like the shortage of semiconductor chips that is expected to cost automakers $210 billion in lost revenue in 2021.1
For SMEs on the other hand, even minor supply chain disruptions pose significant threat. Recent data from the U.S. Census Bureau shows that almost half of SMEs in the U.S. anticipated needing to find alternate supply chain options in the last six months.2 A growing number of SMEs also report experiencing domestic supply chain disruptions and having trouble finding alternative domestic suppliers. Unlike large enterprises, SMEs don’t have the capital to pay the rates for air freight or other short-notice alternatives to circumvent supply chain delays. Moreover, suppliers address the needs of large enterprises first and foremost, pushing SMEs to the back of the line when delays and disruptions limit supply. This leaves SMEs with increased delays and little option for adapting.
To compound this, small and medium food manufacturers are impacted to an even greater degree, given the perishable nature of their materials.
Small and Medium Food Manufacturers (SMFEs) Among Hardest Hit
Prior to the pandemic, food producers were primarily concerned with food safety, quality, and integrity. More recently, the heightened vulnerability of actors in food supply chains and the dramatic increase in food shortages caused by changing demand and supply chain irregularity has shifted concern from quality to food security.3 If, for example, a food manufacturer requires 8 different raw materials to form the ingredients for their food product, and 2 of those raw materials are delayed, not only will they be unable to manufacture their products to meet demand, but the remaining 6 ingredients may be wasted as well given the limitations of their shelf-life.
According to USDA Economic Research Service, 40% of food waste occurs before products reach retailers or consumers.4 Already, 30-40% of the U.S. food supply is wasted each year, but with factors like war, the climate crisis, and supply chain disruptions, this number is being exacerbated globally. Wheat, for example, which is a key source of nutrients for billions of people and an ingredient in an incredibly high number of consumer food products, is facing a global shortage. Numerous factors, like the war on Ukraine and heavy rains in China, have impacted the ability of the world’s biggest wheat suppliers to meet continued demand. Supply shortages like this, combined with pandemic-related labor shortages and ongoing supply chain disruptions, is also driving up the price of food to record highs.
The good news is, by addressing supply chain challenges with data, we can also reduce the heightened food insecurity that has been driven by compounding factors like inflation, climate change, and political unrest.
Addressing Supply Chain Issues with Data
Addressing food insecurity and waste begins with visibility. The ability to monitor supplier reliability in real-time, identify alternate suppliers, and better-manage inventory, rests on the transparency afforded by data tracking and sharing.
Stratizant created FullConfidence to do just that. Rather than retroactively managing supply chain disruptions which are costly, time consuming, and wasteful, FullConfidence leverages AI and ML to help SMEs predict disruptions and identify alternate suppliers based on reliability, thereby minimizing the impacts of delays and disruptions. For SMFEs, this means less raw materials being wasted, which in turn, ameliorates the food insecurity being felt around the world.
Sources:
Scott, Graham. 2022. Why The Chips Are Down: Explaining the Global Chip Shortage. Jabil. https://www.jabil.com/blog/global-chip-shortages.html
Ashcroft, Sean. 2021. Manufacturing SMEs ‘Hardest Hit’ by Supply Problems. Supply Chain. https://supplychaindigital.com/supply-chain-risk-management/manufacturing-smes-hardest-hit-supply-problems
Helmi Ali, M., et al. 2021. Supply Chain Resilience Reactive Strategies for Food SMEs in Coping to COVID-19 Crisis. National Library of Medicine. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8554876/
Nuce, Melanie. 2022. Supply Chain Data is Key to Solving Global Food Crisis. SupplyChainBrain. https://www.supplychainbrain.com/blogs/1-think-tank/post/35363-addressing-todays-food-supply-chain-crisis