Bid Ops: Procurement challenges in Food & Beverage 2022
For the food and beverage (F&B) industry, the last few decades have exposed significant changes in the way it operates. In particular automation; the way organisations work with their suppliers; globalisation; regulation; and the consolidation of assets resulting in fewer, but larger plants have been some key milestones for the industry.
Despite all of this, Bid Ops – a leading predictive procurement software company – emphasises that nothing has challenged procurement quite like the COVID-19 pandemic. Many organisations were faced with backlogged global shipping, rapid rises in fuel prices, inflation, and extreme weather conditions.
“Every industry in the world expects to see how the COVID-19 outbreak will affect the manufacturing industry, and the food industry is no different from other industries. However, the difference in the food industry from other industries is to produce products that are essential for daily life,” said Oxford University Press.
The procurement challenges ahead for the food and beverage industry in 2022
1. Shortages
Also seen in 2021, food shortages will be a trend that continues into 2022. Climate change, extreme weather conditions, and global competition has resulted in limited resources for those in the industry.
The US is currently reporting the lowest grain harvest since 2002, with wheat yields down by 41% from 2020. “That issue alone will have ripples through the food and beverage industry in 2022, affecting the production of everything from bread to dog food,” commented Bid Ops.
Other challenges include the global shortage of aluminium resulting in empty shelves where canned fruits and vegetables should be.
“Shortages will continue to be a major theme in 2022, and they could come from anywhere in the supply chain,” noted Bid Ops.
2. Transportation
Supply chain transportation logistics will continue to be a nightmare for many in 2022. The ripple effect alone from the Suez Canal blockage continues to be felt.
Additional challenges for transportation include rising fuel prices, shortage of truck drivers, and changing regulations.
“Transportation has been especially problematic for the food and beverage industry because many raw materials and finished products are perishable. They need to be shipped and delivered quickly,” commented Bid Ops.
3. Staff retention
Labour shortages. A challenge that’s certainly not exclusive to the F&B industry, but one that is being felt significantly in procurement. The function was already faced with insufficient staff numbers to meet demands, but the pandemic and related events have exacerbated the problem.
With many coming to realise the importance of procurement and the supply chain in light of COVID-19, the competition for procurement professionals ahs increased.
Bid Ops said: “One of the most important challenges procurement in the food industry will face in 2022 will be a talent shortage. Losing a high-performance team member means a hit to productivity, a lengthy recruitment process, and onboarding costs.”
Preparing for the challenges ahead in 2022
While there is a myriad of challenges ahead for procurement in the F&B industry to face, Bid Ops highlights that there is a common thread - predictive procurement orchestration.
“Organisations that adopt Predictive Procurement Orchestration will be far better equipped to meet each of these challenges. Many of the issues procurement professionals will face next year boil down to speed. The company that is able to move more quickly will secure the contract for the raw materials that are in short supply,” commented Bid Ops.
“It will nail down the shipping contract before rates go up. It will source the packaging before inflation drives up the cost. Manual processes lack that speed. Most software lacks the speed. Advanced, AI-powered solutions like Bid Ops are the answer,” the company added.
