Since the first year of the pandemic, supply issues have plagued the world, impacting the food industry as much as any other. Although labor challenges are often the primary cause of shortages and other supply chain issues, there is an argument to be had that many of the issues were brought to light because of the pandemic, not simply caused by it.
While COVID caused a significant number of layoffs as well as labor shortages due to illness or fear of exposure, many of those workers who had to stay home took their now-freed-up time to reassess their lives, deciding to change careers, stay home with children, retire early, or simply quit the workforce altogether, temporarily or long-term. Thus while COVID caused the initial layoffs, workers’ decision to not return likely revealed dissatisfactions (such as working conditions, pay, childcare costs, family focus, etc.) that may have gone unheeded otherwise – or may have led to other issues.
According to the U.S. Bureau of Labor Statistics, 4.5 million people quit their jobs in November 2021. It is the highest level ever recorded since the data were first produced in December 2000. In fact, while April 2020 saw the highest level of overall layoffs and discharges, the month recorded the fewest number of quits, but that number has shown a steady increase ever since. The levels have been so high, the era has been labeled as the “Great Resignation.”
While the resulting U.S. and global labor shortages certainly impacted the supply chain, the issues cannot be completely attributed to labor. For example, the Irish Prime Minister stated that multiple supply-chain breakdowns created by Brexit had been “masked by covid”; the serious port back-ups have certainly revealed deeper transportation issues; and the environment, itself, has played a part: In 2021 alone, the U.S. was affected by 20 disaster events for which damages/costs reached or exceeded $1 billion, including 1 wildfire, 1 drought, 11 severe storms, 4 tropical cyclones, 2 floodings, and 1 winter storm. (NOAA)
Given all this, while the world will eventually recover from the pandemic, we cannot ignore the labor and supply-chain issues that have arisen during the pandemic – but not directly from the pandemic. Thus, companies should be taking an in-depth look at global conditions beyond COVID that have affected their business and the industry as a whole, and assessing their programs not only to weather current issues but to help future-proof against recurrence – from whatever cause.
Some key recommendations would include a review of programs focused on:
- Just-in-time (JIT) deliveries. While JIT can help businesses better manage costs by not having a great deal of supplies in storage, the practice can be limiting during times of supplier shortages. On the other hand, carrying excess supplies not only can be a drain on a company’s resources, but also can lead to increased food safety and shelf-life issues. So, it is important that you consider all aspects of supply and storage to enable continued production during shortfalls while not impacting the final safety of products.
- Sole suppliers. Sole-supplier contracts can provide companies with savings and priority delivery. But if that supplier has shortages, lies in the direct path of a hurricane or other natural disaster, has excessive crop damage, etc., it can put you at a significant disadvantage in sourcing alternative options. For this reason, TAG advises that you build relationships and establish appropriate approvals with multiple suppliers, even if you choose to have primary suppliers in particular areas.
- Supplier assessments. Whether a supplier is considered to be primary or secondary – or even tertiary – your supplier approval program should extend to all. Even when a supplier is quickly added to fulfill a shortage, and during FDA’s temporary pause in enforcement of supplier verification onsite audit requirements, businesses need to conduct effective verification activities to ensure the ingredients that go into your food are safe.
- Labor. While we noted that labor shortages are not the sole reason for supply issues, it is a significant factor, both within the production facility and throughout the global supply chain. As such, it is essential that facilities review their internal workforce programs and worker satisfaction to determine potential improvement for areas of dissatisfaction. At the same time, the supplier approval program should include questions on the supplier’s labor force, with a goal of determining potential current and future issues that could, in turn, impact your production.
While the direct impacts of the pandemic have been all too real and evident, it is important that we realize the often less evident causes of some of the challenges of the last two years. As we emerge from the challenges of the pandemic, recovering from some of the above-noted labor challenges and supply chain shortages may take much longer. So, this is a good time to take a hard look at your supply chain risk control programs. Having a full understanding of your supply chain and its potential issues; plans in place should the worst happen; and a real understanding of your work force will all go a long way toward helping to ensure your business continuity even in the midst of a pandemic or other health, environmental, or economic disaster.