Experts argue that sourcing a wide range of foods from a diverse supply base is key to overcoming a perfect storm of challenges facing businesses. Nick Hughes reports.
“What we’re experiencing right now truly is unprecedented. It’s not just one crisis it’s many [crises] and if there’s one certainty we have it’s that there [are] more to come.”
The words of Aoife Wycherley, head of supply chain and food procurement for Sodexo UK & Ireland, will surely resonate with foodservice professionals up and down the country whose job it is to keep the supply of affordable food flowing into kitchens.
Wycherley was speaking during a recent webinar on supply chain resilience, hosted by Sodexo. It followed a survey the contract caterer published in July showing that 85% of food supply chain heads (from 275 surveyed) say the pandemic has caused long-term damage to their supply chain from which they are yet to recover. Some 32% believe their supply chain will not return to optimum efficiency for a full year with 44% impacted by labour shortages and 38% by freight challenges. Over a third (35%) say they will be forced to continue increasing their prices due to the difficulties in managing their supply chain.
These are stark figures which highlight just how much strain the food supply chain is currently under following a number of shocks to the system – Brexit, covid and Russia’s invasion of Ukraine key among them – coupled with the kind of longer-term structural problems detailed by Henry Dimbleby in his national food strategy.
During the webinar, the challenges facing supply chains were given colour by Wycherley alongside speakers from fresh produce grower and supplier Watts Farm, and NGOs WWF and Wrap. But there were notes of optimism sounded too, including advice on how businesses could deal with some of the supply chain headwinds – for instance by establishing direct relationships with local suppliers and measuring and reducing food waste within their operations.
Beyond crisis point
It was the word crisis, however, that dominated the first half of the session; indeed Watts Farm director Ed Gray questioned whether the word adequately captured the gravity of the current situation facing businesses. “A crisis is a short-term problem that then resolves itself. We’ve got ongoing, rolling crises. It almost feels now that [a state of] crisis is becoming normality.”
Gray noted how inflationary pressures are being felt across the entire scope of Watts Farm’s operations; not just in the cost of key inputs like fuel and fertilisers but in packaging and labour too. The falling value of the pound against the dollar and Euro is further fuelling cost pressures because many inputs are traded in these currencies. Spiralling interest rates create yet another headwind since suppliers, as Gray explained, are often reliant on financing (interest rate changes therefore have a direct effect on costs). The cost crunch is already having a knock-on effect on demand. Gray said the company’s organic sales – often a good barometer of customer confidence – are down 40% in the past three months.
Price inflation is not the only challenge facing businesses. Adverse weather events like droughts and floods “used to be rare events” said Gray but are now happening “every year”. These events have a destabilising effect on the entire supply chain. UK yields of crops like potatoes are down by up to 40% this year following record high temperatures and drought. Vegetable crops whose growth has been stunted have also fallen foul of strict supermarket specifications regarding size resulting in some being ploughed back into the soil.
What we’re seeing, according to WWF director of food strategy David Edwards, is “the climate and nature crisis crashing into a political and economic crisis and exposing some of the vulnerabilities within the food system”. Edwards said that although food system challenges are sparking more interest in the need to build resilience, for example through a transition to more agro-ecological farming methods, “there is wariness and challenges around how you get off the high input treadmill without falling flat on your face”. Edwards said we are seeing these challenges “aggravated by more uncertainty from the government”, including a potential rowing back on public support for agro-ecology. “Doubling down on the (agricultural) status quo might get us through the next two years but it won’t get us through the next 10 or 20 years,” he said.
Waste focus
So how can businesses go about building greater supply chain resilience? There is no silver bullet solution but there are steps businesses can take to mitigate their exposure. Food waste is one example. “Supply chain disruptions have had a massive impact on food waste levels,” said Jen Emerton, head of account management at Wrap. Over one third (35%) of respondents surveyed by Sodexo admit to deprioritising food waste due to the ongoing challenges in the supply chain over the past year. Yet keeping food waste levels low not only saves costs but helps minimise carbon emissions in the supply chain. It’s a classic example of what’s good for the environment making good business sense too. “What we are seeing is the businesses who have made that big picture link between their sustainability initiatives and their overarching business risk and resilience management are [the ones] benefiting,” said Emerton.
Wycherley noted how Sodexo has invested in Lean Path technology to measure food waste in over 200 of its UK & Ireland sites. It is also promoting an internal ‘wasteful to tasteful’ initiative whereby chefs can opt into receiving a weekly box containing a random selection of fruit and vegetables that would otherwise go to waste.
At a farm level, Gray highlighted how Watts Farm is taking measures to find alternative uses for surplus foods. Foodservice operators like Sodexo are increasingly open to taking lower grade produce that would previously have been considered waste, while the business is also looking at how it can convert surplus fresh herbs and fruits into value added products like pesto and jams.
‘Nicety to necessity’
Gray noted too how Watts Farm is looking at investing in areas such as electric vehicles and on-site renewables, as part of a mindset that has seen net-zero move “from being a nicety to a necessity”. He added: “If you don’t invest in solar panels and reducing your energy use, in six months’ to a year’s time your costs are going to be higher than those businesses that have invested.”
Wycherley said Sodexo was using the current uncertainty “to double down on our sustainable standards [….] so that we can convert the challenge into an opportunity”. Diversifying the supply base is a particular strategic priority for Sodexo as it looks to build resilience to external shocks; SMEs currently account for three-quarters of its supplier base and for 44% of its spend.
Supply chain heads also share a desire to source more local, British food: 81% of those surveyed say the current supply chain crisis has emphasised the need to source more from SMEs; over a third (38%) are already doing so with 35% actively looking to source more food domestically.
Gray from Watts Farm argued that in order to avoid supply chain disruption foodservice businesses need to work closely with their supply chain partners; this should include a focus on sourcing seasonal produce. “In a changing world sourcing seasonally is always going to be the best strategy not just for nutrition, flavour and freshness but from a pricing perspective and a food security perspective as well,” he said.
Edwards from WWF highlighted how it’s not just the supply base that would benefit from greater diversity. “We should also look at the wider diversification within menus,” he said, noting how “commodity monocultures” are dependent on fossil fuels and fertilisers, and undermine soil health. “We can’t get away from the need to diversify the diet and menu, and essentially that means moving to a wider range of vegetable based products,” Edwards concluded.If crisis is the word dominating the thoughts of supply chain professionals at the moment; diversity is the word that perhaps best epitomises the way ahe
