The Biggest Challenges For Manufacturers When It Comes To Supply Chain
For most food brands and manufacturers, supply chain and logistic concerns are top of mind. Disruption to supply chains that began in early 2020 have continued to escalate, adding new delays and costs that will get worse before they get better. Monitoring the challenges and planning ahead to accommodate them is key.
According to Wilson, the first challenge with supply chains right now is labor. It’s hard to find employees, and for the employees that are working, many of them report being unhappy with the work environment.
The second challenge for food brands and manufacturers is transportation. There’s not enough drivers or shipping containers. Large retailers like Costco and Walmart have even started to charter their own boats to less busy ports in order to keep delivery on track for just a portion of their overall inventory.
The third challenge is the energy shortage. Asia and India, the countries responsible for the manufacturing of many of these goods, are facing energy supply issues. This is going to impact basic materials availability and the cost of manufacturing in those countries.
How Should F&B Manufacturers Stabilize Their Supply Chain
According to Wilson, food manufacturers and brands should be thinking about their needs further out. Big food does an excellent job of this. Small to medium-sized companies may have a harder time planning far ahead, but they need to start.
“Just In Time” isn’t going to cut it anymore. Wilson advises that companies may need to change their infrastructure (software, expertise) and practices in order to plan farther ahead. That would also require many companies to change their financing models to incorporate and accommodate for longer payment terms. It’s important to stay in close communication with your partners about this.
How Nuherbs Structures Its International Farming Partnerships
So how has Wilson’s company managed to keep its own supply chain stabilized in the face of unprecedented challenges? Nuherbs has long standing relationships and contracts with over 300 farmers internationally. They pay their farmers in advance in order to have ingredients available in the quantities and of the quality Nuherbs customers expect. Their processing, warehousing, and transportation relationships are longstanding, so Nuherbs is at the head of the line to have their needs met. This has allowed the company to stabilize their ingredient availability for their clients. Wilson has even made it possible to hold the ingredients stateside so that Nuherbs customers can pull upon what they need, when they need it, without waiting for a container ship from China to arrive.
Development of Functional Foods
As brands and manufacturers explore the development of functional foods, it’s important to not just view it as a trend, because it’s now a significant market. From a product development and manufacturing standpoint, companies need to consider the delivery format. From beverages to bars, the ingredients that are being used need to be fit for purpose, as well as bioavailable.
Now that manufacturers are adding ingredients normally found in solids into liquids or gelatins, they must consider how the ingredient will translate to a new medium, if it will at all. Will it be shelf stable or function the way they want it to function? Developing new products will require carefully planned R&D, and deep expertise.
Formulating with Western & Eastern Herbs
As many Western herbs and botanicals are becoming less widely available, many brands and manufacturers are formulating with Eastern herbs with similar properties. And now more than ever, no matter what herbs or botanicals companies are formulating with, they need to look at their ingredients from a sustainability standpoint. There may not be the quantities available that a company may need, or an absence of quality material. Case in point, Elderberry: it’s become widely popular but it’s starting to become less available, and often adulterated. Now, brands are turning to Echinacea, Astragalus, and other lesser known but effective immune support herbs.
Stigma: Growing Herbs and Botanicals in China
There’s a lot of uninformed assumptions when it comes to China as a source for quality ingredients. Wilson explains that it’s not the point or origin that dictates quality, it’s the systems, practices, and training put in place for the people doing the work. Training people properly, and setting specific expectations, is what’s critical to delivering a quality ingredient. For Nuherbs, they set standards and educate their farmers to be able to meet the certifications required internationally.
Many people think China is really polluted. While it’s true that some places are, many places aren’t. In fact, 94% of the population lives in places that are not classified as polluted or over developed.
When it comes to farming across the world, looking at where things are grown, what the proximity to cities are, the level of knowledge and commitment of the growers, and numerous other factors go into what constitutes quality.
What’s Coming Next
When it comes to herbs and botanicals, 2022 is going to be very stressful, so plan ahead. Strains on energy supplies are here, and growing in China and India, the source of many materials. Also, the Winter Olympics are happening in China, just after Chinese New Year. This will disrupt business; if your companies rely on industry outside major cities, factories are going to be shut down.
Companies have about two months to get goods out of China before these events cause new delays, otherwise the strain is going to be very hard on the supply chain.
And how are externalized costs going to be internalized? For example, climate change. What impact is it going to have on your manufacturing processes because you have to change how you do what you do. This isn’t a problem for the future, the effects of climate change are already here.
- 0:33 - Meet Wilson
- 1:42 - 3 Biggest Supply Chain Issues
- 4:30 - Stabilizing Your Supply Chain
- 6:23 - International Farm Relationships & Ingredient Availability
- 8:08 - Developing Functional Foods
- 10:53 - Formulating with Western and Eastern Herbs
- 11:45 - Sustainability and Harvesting
- 12:50 - Stigma Surrounding Herbs and Botanicals Grown Internationally
- 16:03 - 2022 and Beyond: What’s Coming Next
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