Industry Insights · 10min read

Food Supply Chain Outlook 2022 | foodcircle

Discover potential structural changes, effects of pricing and inflation, further digitisation and automation as well as the advent of circular sustainability.

Although many supply chains started off in 2021 better equipped to handle the challenges imposed by Covid, the impacts of the pandemic remain widespread and severe. Recent Statista statistics show that up to 72% of businesses continue to grapple with the consequences of the pandemic as we move into 2022. 

While this may sound dire, thanks to technology, experts are predicting a shift in the upcoming year from “survive” to “thrive” mode. And the issues caused by border closures, port congestions, shipping cost surges (+300%) are predicted to persist well into the new year. Although consumer sentiment remains low in many industries, the future seems exceptionally bright for FinTech and FoodTech ventures. 

Thanks to Brexit, industries, and businesses across the UK were faced with the added challenges on import and export. And the UK’s food industry, in particular, took several hefty blows from which it has still to this day not yet fully recovered. 

Then there is the impending onset of climate change which is expected to have ripple effects around the globe. And not to forget the possibility of further (unforeseeable) supply chain disruptions constantly lingering over our heads. Some of the most recent studies indicate that we are looking at at least another two years of pandemic-related bottlenecks and shutdowns. Heightened geopolitical tensions and vaccine-resistant variants are cited as likely culprits.

If there is one thing developments this past year have shown, it is the urgency around building more resilient supply chains equipped to understand and respond to these manifold nuances. Below, we take a look at the food supply chain industry outlook for 2022.

 

Structural Changes in the Supply Chain

Supply Chain Brain predicts an exciting development -- the evolution of Supply Chains as a Service (SCaaS), which promises a massive boost in ROI by cutting out intermediaries and drastically optimising processes. In this setup, businesses are expected to increasingly opt for partnerships with one-for-all supply chain service providers who support them in everything from procurement and production to storage and logistics. These services are backed by cloud-based software.

Unsurprisingly, increased flexibility and agility are also among the top predictions for the upcoming year. Bastian Gerald from Supply Chain Brain aptly highlights, “The days of reducing inventory to the furthest possible degree may be ending; instead, organizations will need to respond to growing volatility in consumer behavior with “elastic” strategies — the flexibility to expand and contract capabilities to meet demand within a given time frame.” Furthermore, particularly when looking at demands on same-day orders, the smart delivery and fulfillment platform BRINGG expects to see an even stronger push towards fulfillment on a local level, which would also help clear out inventory.

 

Pricing & Inflation

The general consensus for food is that prices will continue to rise. Period. While the cost of commodities reached a 10-year high in October 2021, a turnaround of any sort is not expected for 2022 or beyond. On the contrary. Factors like rising energy prices, unpredictable weather, and inflation are all painting a bit of a grim picture. The latter, now accelerating at rates last measured in the ‘80s, is expected to linger for many years to come. Businesses along the entire supply chain and consumers in all sectors will need to brace themselves and get ready to pay higher prices.

 

Digitalisation & Automation

Inventory management is expected to come out a winner next year, thanks to continued developments in Supply Chain Management technologies. Both forecasting and visibility are benefiting greatly from more tech-savvy supply chain data. For food processors, yes, this means planning ahead and buying from suppliers, and leveraging this with their elastic strategies (see above).

But it’s not just inventory management that’s benefiting from digital enhancements. Data analytics, Customer Relationship Management, and accounting software are all examples of more cost-effective cloud technologies that are helping boost small and medium enterprises’ (SMEs) competitiveness and resilience all-around. 

Taking it one step further, the lack of availability of human resources over the past 1.5 years has also proven beneficial to automation solutions. In 2022, experts expect to see a spike in food contact robotics in the processing sphere.

 

Sustainability

Last but certainly not least, sustainability efforts continue to penetrate the supply chain from all ends thanks to increasing awareness of governments, businesses, and consumers alike. The concept of circularity within the supply chain is sparking new conversations about reusing, reselling, and recycling within this sphere. While challenges of diverting many materials from landfills exist, innovation and infrastructure are taking steps to explore the possibilities of closed-loop systems.

And there you have it. Some of the top supply chain developments to look forward to this upcoming year!

Imagery: (1) Chuttersnap, (2) Adrian Sulyok & (3) Steven Weeks via unsplash.com