Globally, we are in an environment where there are unprecedented challenges and tremendous pressure in the food supply chain. The Coronavirus disease (COVID-19) pandemic, conflict, immigration policies and climate issues are just some of the factors at play. As they pertain to the cold food and beverage industry, logistics issues are mainly driven by what's happening worldwide. They are not unique to one country. A million things have to go right in the supply chain and only one thing has to go wrong to cause a ripple effect of disruptions. Currently, companies are swimming against the tide.
To that end, multiple factors need to be reviewed and addressed to solve these many issues, but companies will be able to better mitigate supply chain issues in 2022 and beyond by investing in four key areas — labor, technology, security and logistics.
First off, it is important to emphasize that investments in labor and technology are not mutually exclusive. Companies must ensure that people are sufficiently trained and have the necessary skills for the various jobs in the food logistics industry. The current mismatch between labor and the skills required is enormous. Additionally, investment in technology to solve problems is essential, but from a policy perspective, decision makers need to ensure that technological progress does not leave people behind and create a skills gap.
There are a staggering number of jobs that remain unfilled in the United States. From Forbes, 2.1 million jobs critical to the supply chain manufacturing industry will remain unfilled by 2030. Broader policy issues around migration and immigration also limit the job pool. Specific to the supply chain and food logistics industry, data provided by the American Trucking Association (ATA) shows that the industry could be short by over 140,000 truck drivers by 2026, increasing the driver shortage to over 160,000 drivers by 2030. There is a lack of workers in many other areas of the industry, and unfortunately, there are simply not enough people to hire and retain. The hiring process is expensive and time-consuming, especially amid a period of extreme turnover. According to the same Forbes article referenced above, Millennials and Gen Z — ranging from 18-41 years old — are growing to become the majority of eligible candidates. However, these generations show an innate mistrust or misperception of the supply chain and manufacturing industry. Leaders in the industry are experiencing a nearly 100% turnover on an annual basis. That is simply not sustainable.
The answer is not just an issue of higher wages, however. Despite pay increases, logistics operations still have difficulty hiring and retaining qualified workers. In addition, they are experiencing increased absenteeism among employees in part due to pandemic-related health issues, causing knock-on effects across the supply chain. Companies must rethink how they invest in people and ask themselves critical questions: How can we create a framework to invite and retain talent for jobs where labor is needed? How can we invest in making their business a great place to work and create an environment where our workers feel valued?
Along with rethinking investments in labor, now is also the time for the food industry to double down on its technology investments. If you work with cold chain logistics, food waste is critical because you're dealing with residual shelf life and perishability. Investing in Internet of Things (IoT) technology can increase the efficiency of warehouse processes to better inventory management and employee safety — a perfect example of technology and labor’s symbiotic relationship.
The IoT is a network of connected devices and people that collect and share data about how they are used and about the environment around them. In the food industry, it's a technology that can provide insight to companies that can then adapt and make changes to significantly mitigate supply chain issues.
According to an AgTech industry expert, companies are seeing 30-40% food waste levels post-harvest, and half of this waste occurs before food even gets to consumers. Utilizing IoT technology in the post-harvest fresh food supply chain, such as for freight monitoring, can improve food safety and reduce food waste. Real-time location tracking IoT provides real-time data regarding the product's location and the transportation environment, such as the temperature levels inside the vehicle, pressure, humidity and other factors that could compromise the product's integrity. Investing in this technology will alleviate risks in a significant way.
Security and logistics
While security is always a huge challenge for the supply chain industry, there are plenty of other factors and variables that have been added, such as conflict, consumer spending behavior, sky-high inflation, trade and open market access barriers — all leading to major supply chain issues. There is the unknown staring at us every day. How companies navigate these challenges will determine the future.
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