Pet supply

How can the pet food industry deal with the supply chain impasse?

Many of us can sympathize with a recent article title in FreightWaves: “New Year, same supply chain mess.” Indeed, few industries – and certainly not the pet food industry – are immune to the supply chain disruptions plaguing the United States and many other countries.

Brief recap: “Perfect storm” of supply chain issues

There are global container and chassis shortages and imbalances. Ports on the US West Coast, in particular, are congested with empty containers awaiting transport to Asia and imports awaiting land transport. Incoming ships often have to anchor for several days before they can moor to unload. Unusually long dwell times for loaded containers have led to an increase in cargo thefts from unused containers.

Once imported goods escape port bottlenecks, the situation is not much better. Rail capacity is exceeded on many routes. For years, road hauliers have faced a shortage of drivers, which has worsened since the start of the pandemic.

Meanwhile, thanks to the continued shortage of semiconductor chips, truck makers have a 14-month backlog. As a result, carriers with aging fleets face increased breakdowns.

In addition to labor shortages at ports, warehouses, and distribution centers, nearly every industry faces shortages of skilled workers.

Weather delays amplified logistical delays. For example, in Canada, the railways serving the Port of Vancouver were closed for three weeks before the holidays due to flooding and landslides in British Columbia.

Together, all of these factors created the “perfect storm” of 2021 in the supply chain, and then the first week of 2022 greeted the mid-Atlantic states with a massive snowstorm.

We have all seen many articles on the causes of supply chain problems. These seem to be the most frequently cited issues:

  • The pandemic has caused massive changes in demand and supply chain logistics.
  • Government stimulus funds have fueled extraordinarily high consumer demand.
  • Overreliance on “just-in-time” delivery models has left shoppers short of goods at critical times.
  • Port and rail infrastructure is insufficient to handle the boom in freight traffic and container storage.
  • Companies have seen their growth hampered by various personnel issues, such as employee illnesses, COVID-19 restrictions, departures of experienced people and labor shortages in many sectors affecting manufacturers and the entire supply chain.

Impacts of supply chain issues on the pet food industry

Our industry mirrors the supply chain issues of the macro economy. Like Dana Brooks, president of pet food instituterecently noted, “Manufacturers face challenges at every node of the supply chain, from ingredient sourcing to transportation and employee shortages.

At the start of the pandemic, when many hotel businesses and other businesses related to human food production were shut down for public safety reasons, manufacturers lost a key source of pet food ingredients.

Simultaneously, people working from home, including me, have turned to pets for companionship. According to American Pet Products Association12.6 million households adopted a new pet between March and December 2020.

Today, pet food manufacturers continue to face ingredient shortages, long lead times, and huge price increases in processing equipment, ingredients, and transportation.

Labor shortages hit as business boomed. The pet food industry requires a wide variety of skills, almost all of which are in short supply. This forces us to explore new ways to attract and retain talent.

The situation in the pet food industry reminds me of the arcade game Whack-a-mole. Manufacturers must plan for supply, production and sales while dealing with shortages, delays, rising costs and rising demand. Retailers need to explain to pet owners why the price of a pet’s favorite food has skyrocketed or is out of stock.

The news is not totally gloomy. Much is being done to reduce supply chain bottlenecks. Some examples :

  • Ports and ocean carriers are working to clear empty containers.
  • “Inland ports”, linked by rail to major ports on the east and west coasts, are being established to alleviate congested port areas.
  • Target and other major retailers charter ships to ensure their stores are stocked.
  • Truckers are pushing to ease restrictions on drivers.
  • Employers are trying everything from signing bonuses to engagement strategies to make jobs more attractive.

How can pet food manufacturers and retailers cope?

Experts predict that current conditions will last until 2022. I expect pet adoption rates to remain at high levels, which will require more pet food capacity in the industry .

Today more than ever in the pet food industry, supplier relationships have become extremely important. It is essential to have partners who work with you to obtain essential supplies.

Consumers know that shortages are ubiquitous, so candor is essential throughout the supply chain. Manufacturers, distributors and retailers need to be open and transparent with their customers.

Retailers can consider diversifying brands and finding other suppliers. Another option is private labeling. Private Labels They used to be worn by cost-conscious consumers, but now they are increasingly being formulated for high-end pet food shoppers.

Manufacturers can seek domestic alternatives to foreign suppliers. Lead times for imported packaging often exceed 16 weeks, and imported ingredients also have long lead times.

In response, Alphia is now sourcing more domestically. We find that US packaging suppliers, for example, have much shorter lead times. On the ingredient side, domestic sourcing is more difficult as some ingredients are mainly produced in specific countries, such as New Zealand lamb.

If stocks of key ingredients are limited, manufacturers may introduce new formulations with alternative ingredients. Another option is to outsource part of the sourcing and production to a partner.

Like many other companies, Alphia tries to avoid Los Angeles and other backed up West Coast ports when possible. We have diverted some shipments to ports in Houston and the East Coast.

Necessary: ​​good forecasts and planning

In the roller coaster world of COVID-19, no one knows what lies ahead for the economy. We don’t know when our business will return to normal, and we don’t even know what “normal” will be in the future.

In these turbulent times, the importance of good forecasting and planning cannot be underestimated. We can assume that the current situation will continue until the data tells us otherwise. We can plan the actions we will take if further disruptions occur. Most importantly, we can strive to continue building strong relationships with our key customers and partners.