Covid-19 & Supply Shortages: The Match in the Powder Keg

Customers and procurement professionals along our Nation’s supply chain are asking the same questions:  What caused so many supply shortages? When will we get back to normal? Was Covid-19 the straw the broke the camel’s back? The short answer is yes, or more accurately, Covid-19 was the match in the powder keg.  The supply challenges we are working through came about as the pandemic took hold, and many were exacerbated by the onset of Covid.  The causes were numerous.  Experts say it was more than Covid-19; it was a “perfect storm,” of unprecedented events that are causing the challenges we now face.

The food industry has not been spared.  Over the past 18 months, supply chains in our industry have been stretched to their limit.  With consumers eating at home more than before the pandemic, demand at the grocery was greater than forecast. The strong demand came at the exact time when food manufacturers, like all other industries, were facing labor shortages and plant shut-downs due to the virus.  Our return to restaurants and schools rebounded the demand for food service products at a rapid pace. Manufacturers have been hard-pressed to keep up. Restaurants have been forced to change their menus, sometimes daily, because it remains difficult to obtain their customers’ favorite products.

Our industry is up against long lead times and shortages of ingredients including starches, tapioca, and emulsifiers.  In some cases, the ingredients needed were used to battle the virus, including white vinegar which is also used for hand sanitizer.  Other shortages exist in large part due to freight constraints plaguing the nation, including a shortage of truck drivers, and labor shortages at ports due to Covid.  Experts warn that long lead times for ocean freight will continue, as the US exports less product than we import, thus we have a surplus of shipping containers that will take time to ship back to the originating countries for more goods to be imported.

Adding to the difficulties, several catastrophic weather events occurred during the pandemic, which destroyed key crops and worsened a complicated situation.  In California, 2020 marked the worst fire season on record.  Also last year, there were thirty named hurricanes including two that hit the Gulf Coast in the same week.  In August, a powerful storm known as a derecho laid waste to millions of acres of crops from Iowa to Indiana, causing an estimated $7.5B in damage.   Then, in early 2021, another devastating winter storm, and resulting deep freeze, caused a $600MM loss in citrus, livestock, and horticulture crops in Texas.   These events shut down many important food and chemical manufacturing operations in the US.

This “perfect storm,” of circumstances has made it necessary for many manufacturers to adhere to allocations and limit supply as a result.

What Is Skidmore Doing to Mitigate these Challenges?

“Things are still very fluid,” Julie Eubanks, Skidmore Supply and Procurement Manager explained. “No one is sure when things will be back to normal.”

“We may have to prepare ourselves for a new normal, whatever that may look like in the future. Forecasts are more important than they have ever been.  Our suppliers want to know what we need so they can make their plans,” Eubanks said.  “We have added Supplier Relations Specialist role to assist with allocations, forecasting, and supplier communications going forward. We are meeting with suppliers regularly to understand where we stand regarding their allocations to Skidmore.”

Ron McMinn, Skidmore Vice President of Sales and Marketing, outlined many of the steps Skidmore is taking to protect our customers, “We are working closely with our suppliers to ensure our customers are getting what they need to keep their operations going.  We have organized a dedicated team that meets daily to review every order to make sure our customers’ immediate needs are being met.  For products that are in short supply, we are not taking on any new business. To further protect current customers, every ingredient that is on allocation is “flagged” in our ERP system.  This flag prevents the item from being processed and released until a member of the allocations team has approved.”

“We understand that delayed and short orders are not how we want to run our business.  However, if we work together, we will get through this unprecedented time and become stronger on the other side.” McMinn added.

Skidmore is committed to working with our suppliers to provide transparency to our customers. We work to fulfill orders and provide supply chain updates as they come in.

The Match in the Powder Keg

The reasons for the ingredient shortages we are facing are numerous.  Covid may not have been the cause for all that we face now, but it was certainly the “match in the powder keg” in many instances.  While we adjust, respond, and plan for the different world we are now living in, one thing remains true:

Skidmore appreciates every customer and supplier. We value the strong relationships we have built over the years. Our team is proud to be a partner that solves the toughest ingredient challenges we all face. We are committed to protecting your interests and helping you grow your business for years to come.