By Food South Australia CEO Catherine Sayer.
One of the emerging issues that is upon us as a result of Covid-19 is the challenge to the supply chain and freight.
The pandemic is having an impact from all angles. We import inputs such as ingredients and packaging and, once the product is made, we send through all channels interstate and overseas. The retail sector is a large part of that.
So, what is the issue? There are challenges around accessing containers and shipping times which then means that the lead time for ingredients and packaging is longer. In turn, this then means holding higher levels of stock which affects cashflow, and importantly, if there is any delay, production of food and beverage products can be delayed.
The freight system is challenged when Covid-19 cases appear in trucking and shipping ports. Where cases are appearing in ports, staff are having to isolate, leading to an abrupt reduction to the available workforce. Where possible, ships are being re-routed, which again causes so much disruption to the supply chain. The explosion of global online sales has added further pressure because the demand far outweighs the supply of containers.
So, there are supply chain issues everywhere that are not immediately able to be fixed.
The structural change to fix this situation in the medium term is to more closely align supply and demand. This will require moving past our current frequent use of lockdowns and progressing to more ‘normal’ purchasing behaviour around online sales and delivery. More ships are needed too, and as these are commissioned, more containers must be made available.
The upshot of all of this for the retail sector is that, until these changes occur, from time to time it may be difficult for suppliers to fulfil their orders through no fault of their own. I am hearing from food and beverage businesses that they are striving to offset this risk by holding more stock as they can’t rely on just in time delivery, which of course comes at a cost, but recognises the importance of supply to retailers and consumers.
We are indeed living in unusual times for all, and although our Covid-19 world has become more normalised, this particular challenge for retailers and consumers cannot be considered normal. I believe it remains important for everyone in the supply chain to play their part in supporting each other, to work together to get through this stage and take every opportunity to seek out ways to build resilience into day-to-day operations.
About Catherine Sayer
Catherine has led Food South Australia since it was established in 2010, passionately guiding the development of the industry’s peak body with a focus on industry growth and advocacy. She also is a member of, and chairs, several boards.
About Food South Australia
Food South Australia is the state’s peak body for the food and beverage industry, with a mission to support and sustain the industry in South Australia, helping businesses of all sizes to grow their markets, capability and industry connections. Food South Australia is independent, industry led, and membership based.
