As most are now acutely aware, 2021 was one of the most disruptive years on record for our supply chains, and 2022 doesn’t seem to want to let up either. We have all faced challenges posed by Brexit, Covid-19 and the Coup de grâce: a transport crisis!
Brexit’s ongoing impact on the dairy supply chain
2021 certainly had its fair share of challenges for the Dairy Supply Chain in particular. The year started with uncertainty around Brexit (you could argue that it ended similarly) and operating under the new rules and processes for imports and exports from EU to UK and vice versa.
We saw wave after wave of Covid, and national lockdowns as a result. And then…. the real problems started to kick in leaving the overall Supply Chain strained at many different points.
Bottlenecks at various points of the supply chain interacting with each other
Global shortages appear to be caused by several interconnected factors: COVID creates a shortage of workers, which has reduced production capacity around the world, distorted typical demand due to changing customer purchasing behaviour, and the fact that manufacturing and logistics systems are often operated at or near maximum capacity. Factories, ports, and trucking capacity are expensive, so they’re designed to continuously run at maximum capacity meaning there is little to no excess capacity. While running close to capacity makes production and distribution more cost-effective, it also means it doesn’t take much to overwhelm them. Because this is happening at more than one point in the supply chain, it becomes difficult to rebalance supply and demand. When ports are backed up with cargo ships, they often don’t have enough space for so many containers to be unloaded. Adding extra storage capacity for containers will require more trucks to transport the goods quickly, but there are not enough trucks to transport the goods, as so many trucks are holding goods for loading on ships.
Each bottleneck needs to be fixed and that exposes another bottleneck immediately. This process requires patience, careful analysis, and the cooperation of all stakeholders.
Labour shortages and their impact on the food supply chain
Labour shortages are being seen in all sectors. A national and international shortage of lorry drivers and workers for food processing plants has led to disruption for food outlets and warnings of empty supermarket shelves that are still prevalent today.
When we look across the water, to our neighbours in the UK, following worker shortages and transport disruption from Covid and Brexit, major retailers’ stock levels are at their lowest since 1983. A year in which the UK saw Margaret Thatcher win a general election, Jeremy Corbin, Tony Blair & Gordon Brown were newly elected members of parliament, mass unemployment, high inflation……and to top off the Misery, Liverpool won the old First Division.
To paint a clearer picture of how the global food supply chain has been disrupted, we need only look to the bigger companies, and the struggles they have faced:
- McDonalds had been forced to take milkshakes and bottled drinks off its menus.
- Nando’s announced the temporary closure of 45 outlets because of a shortage of chicken wings. Even KFC had a shortage of chicken!!
It all just goes to show that no matter how sophisticated we believe our supply chains to be, they too are fallible. There are many moving parts, it works as long as all the parts are present and are acting normally with respect to each other and it’s not a single link that failed in a linear system.
One slight reprieve is the UK Governments announcement to delay import controls for EU goods entering the UK… We’ll take that!
Dansko Foods’ approach to a challenging dairy supply chain
For an internationally operating company like Dansko Foods changes in the global supply chain, especially the dairy supply chain, have a big impact and we therefore have put in place various measures.
In 2021 we have expanded our wider Supply Chain team. Our newest member, Dhivya Vasudevan, has proven to be a pivotal part of our team, slotting in seamlessly since joining us, in what can only be described as a baptism of fire!
Our logistic lead Timmy Roche has also stepped up to the mark, making sure that despite all the disruptions to the transport industry, we have never had a situation where a trailer was not available to load our products. The same cannot be said for many.
What do our supply chains have to look forward to in 2022: price volatility, port congestion, rising freight costs, restructuring supply chains, labour and material shortages and inflation… Enjoy!
As a direct result of the above disruptions, we have had to revaluate our disruption & mitigation strategies. We have turned to sourcing from multiple service providers, in various locations, having excess stock built up for orders, and building in a spare capacity in our production to allow for staff shortages.
We have an opportunity to rethink our supply chain and to make it more resilient for our customers, suppliers, service providers and stakeholders.
We would like to thank our storage & transport partners who have worked with us to mitigate the issues we have all been facing, and we look forward to working closely with them through whatever else may come our way.
John Culhane, Supply Chain Manager.