“Navigating Supply Chain Challenges in the Food Industry: Insights from Brandon Hernandez on Resilience and Adaptation Post-Pandemic”
As the coronavirus pandemic affects every corner of the world, food manufacturers are striving to operate at full capacity to ensure everyone is fed. Challenges arise from shelter-in-place orders, closed ports, and workforce shifts, especially when ingredients are sourced globally. Brandon Hernandez, Co-Founder of Whole Brain Consulting, has been actively working to streamline food production for manufacturers. This has required manufacturers to exhibit significant agility as they adapt to new ingredient sources and processes. Food Dive spoke with Hernandez about how companies can navigate ingredient transitions and which changes may persist beyond the pandemic. The following is a condensed and clarified version of that conversation.
BRANDON HERNANDEZ: One notable trend we are observing, particularly in the supply chain, is the concentration of supply sources becoming increasingly problematic. This isn’t an outright issue; it stems from a drive to minimize costs. For instance, organic quinoa is sourced from various locations, but the most affordable option has typically been China. This focus on price leads to the aggregation of supply chains around the cheapest commodities, which is part of the current situation.
More importantly, brands and manufacturers, including co-packers, are revisiting their business continuity plans, recall procedures, and approved supplier protocols. We are witnessing a significant shift where raw material suppliers and manufacturers are re-engaging with these protocols, realizing their importance beyond just paperwork. As a result, we can expect a diversification of the supply chain not seen in a long time.
As companies emerge from these challenges, there will likely be a move away from single-source ingredients. One of the first inquiries we received was from a co-op in Los Angeles linked to New Zealand, asking what resources they could provide. New Zealand has an abundance of agricultural products and is prepared to supply at competitive prices.
As China and India begin to recover, I anticipate a shift towards sourcing from South America, particularly Bolivia for its fertile land, and Argentina and Brazil for specific items. This will foster a diversification that hasn’t been seen in years, creating healthy competition among global suppliers.
HERNANDEZ: One of the major challenges will be sourcing spices, as India has been a key supplier of herbs and spices worldwide. While there is still a significant stock of these products in the market, the future will depend heavily on India’s ability to ramp up its agriculture and supply chain processes. Questions remain about shipping containers, as many are currently stuck in California or China, which complicates logistics.
Regarding other hard-to-find ingredients, we have not yet seen a notable shortage across the board. There are some concerns regarding chocolate and alternative milk ingredients, but we aren’t at the panic stage. Manufacturers are simply strategizing, considering secondary suppliers and networks to ensure stability.
HERNANDEZ: The pandemic has intensified existing difficulties rather than creating new ones, especially for larger distributors that are facing fluctuating demand. Consequently, manufacturing sites have struggled to determine shipping priorities, focusing primarily on staples like beans and rice. This has led to a need for the supply chain to stabilize demand before it can effectively respond.
HERNANDEZ: The timeline for addressing shortages depends on product shelf life and existing stock, but generally, we can expect to see clarity within 90 to 180 days. Six to nine months will be critical in determining where manufacturers need to pivot their processes.
HERNANDEZ: The pandemic has highlighted issues such as food deserts in the U.S. that were already problematic. For instance, the top four to five animal protein providers dominate 70% to 75% of the market, while in the EU, the top 15 only make up 20%. This consolidation has created vulnerabilities in the meat supply chain.
HERNANDEZ: There must be a realignment back to supporting American farmers, especially in light of potential tariffs on China. Repatriating manufacturing would take seven to eight years, so it’s essential to explore partnerships with Canada and Mexico to facilitate quicker access to supplies and resources.
HERNANDEZ: Unfortunately, larger consumer packaged goods (CPG) companies may be best positioned to adapt due to their resources. However, if they can establish efficient supply chains, it could ultimately benefit smaller companies as well.
HERNANDEZ: A competent supply chain manager can typically respond to sourcing requests within two to thirty days. If procuring a challenging commodity, it may take 60 to 90 days due to compliance requirements, but once established, the flow of ingredients can be steady.
HERNANDEZ: No ingredient, whether animal-based, vegetable-based, or spices, is impossible to source. The landscape is changing, with co-packers now more open to various clientele, diversifying their offerings beyond traditional sectors.
Manufacturers are currently reallocating resources to meet demand, with a trend toward turnkey models where they manage sourcing and raw materials. This allows brands to focus on specialized ingredients while benefiting from economies of scale.
I remain optimistic that there is a light at the end of the tunnel. While some brands may not survive, the foundation for a healthy, resilient food system is being established. The industry’s ability to pivot in such a short timeframe is commendable.
In this evolving landscape, there’s also a growing emphasis on nutrient-dense ingredients, such as bariatric calcium, which are gaining traction as consumers look for healthier options. This trend highlights the importance of adapting to consumer needs and preferences in the post-pandemic market.
