2021’s Supply Chain Trends to Watch

Plenty of Zoom meeting jokes were had as milk, chicken and baking yeast were among the items in short supply on store shelves during the early months of the COVID-19 pandemic last year. A combination of panic shopping and food facilities shutting down or curbing production sent reverberations through the supply chain.

“The trust in our supply chain was definitely shaken,” said Kevin Kenny, a global food safety expert and chief operating officer of Decernis.

But Kenny is more positive now, as panic shopping has dipped, due in part to the supply chain being more prepared than it was a year ago.

“We’ve all had a little bit of time to plan and to better what we’re doing,” he said. “You’re not going to see dramatic changes in the supply chain in the next six to nine months.”

But that doesn’t mean 2021 won’t be a year of alterations.

“When this is over, and when people get to a postmortem, there are going to be dramatic changes,” said Kenny. “I do not see everybody outsourcing to China anymore. I actually wonder whether they’re still going to outsource all the way over to Vietnam and India.”

For his part, John Keogh, principal advisor at Shantalla, Inc., in Toronto, thinks the supply chain will see more focus on already-emerging technologies such as blockchain and artificial intelligence (AI). He also sees more attention on consumer trends, such as people shifting to plant-based diets or eating healthier in general.

“We know that plant-based eating is increasing,” he said.

Kenny and Keogh give us their takes on what trends the food supply chain might see in 2021.

Direct-to-consumer isn’t going anywhere.

As the pandemic kept many of us at home, several companies, such as PepsiCo, set up or put more resources behind direct-to-consumer services.

Keogh, who eats a plant-based diet, experienced the benefits of this shift by ordering fresh food in bulk from Sysco, another company that pivoted to meet demand.

“They’ve done an amazing job for a company that had no experience in dealing with consumers,” he said. “Direct-to-consumer is a critical new change.”

Until more vaccines are distributed and infection rates drop, consumers will still be spending a lot of time at home, which means this need will still be there. In order to keep up, said Keogh, companies will need to step up their online game. One of the reasons he praised Sysco’s pivot is its user-friendly and intuitive website that made ordering a breeze.

He cited one simple move that retailers or packaged food manufacturers can make to improve their e-commerce: have high-quality digital images of the actual product and its ingredients.

“Retailers did not have images,” he said. “And when they put up images, they were either poor quality or you had an image with a poor description of the product, no ingredients available and so on.”

Having multiple suppliers will likely come back into play.

Several years ago, the concept of focusing on building a relationship with one supplier became a popular road to success, according to Kenny. The idea being, giving the supplier all your business is going to create a long-term partnership with someone you trust.

“Well, that didn’t work so well when that partner was suddenly shut down [because of COVID-19],” said Kenny. “You had no Plan B. And so, I think we’re going to have to rethink that a lot.”

Food fraud will continue to be a problem area in 2021.

Producers, suppliers and manufacturers are going to have to keep a closer eye on food fraud this year and beyond, especially, Kenny pointed out, in items that are perceived to be healthier.

“There’s this health focus that’s going on because let’s protect ourselves against COVID, etc.,” he said. “Suddenly, everybody wants to have oranges, orange juice, vitamin C, honey and there’s been a run on the real stuff. You need to be a little bit more choosy.”

He cautioned that higher-priced items could be susceptible.

“The more expensive it is to source, the more you’ve got to look very carefully at your testing and do a food fraud vulnerability assessment to know what you’re up against and know what to look for,” Kenny said. “Look carefully at: What is the No. 1 ingredient I need to be worried about? What is the No. 2 ingredient that I need to be worried about?”

Blockchain, AI and other tech tools will continue to evolve.

Keogh said part of the hesitance behind blockchain and other emerging technologies is the hype. Referring to it as disruptive isn’t entirely accurate and can frighten people off.

“We’re not going to have something magical overnight,” he said. “It’s not going to be replacing VHS tapes with DVDs.”

Instead, blockchain can be a foundational tool for traceability and invoice reconciliation. Keogh used the example of big retailers that impose penalties on suppliers who cause issues such as shipping too much or too little product.

“You can take a lot of cost out of the system and help to drive efficiencies by looking at use cases where you can eliminate these problems,” he said.

Keogh advised thinking about blockchain, AI and Internet of Things (IoT) like you’re sitting in a car. Blockchain is your rearview mirror, and it lets you see what’s happened by capturing transactions. Your instrument panel and door windows are like IoT, which let you know what’s happening in the supply chain in the moment. AI and predictive analytics are your G.P.S. or front windshield, which helps you see any obstacles ahead, giving you time to adjust, by using data from several sources.

“[That obstacle] could be anything that’s critical to the business,” Keogh said. “It could be a drought, it could be reports on food fraud, it could be political instability.”

The unknown will stick around.

The only consistent thing since the pandemic started last year is the unknown.

“In my lifetime, I’ve never been through such a challenging period — what is rock solid stable today is out of date tomorrow and needs to be completely reinvented the next day,” Kenny said.

And while that sense of instability will go away, it won’t happen quickly, and it’s hard to predict what the world will look like when some sense of normalcy returns. Before looking at food issues and the food industry, what will office culture look like in the future? Kenny said that if something like 40% of office workers work from home going forward, it will have huge effects on food services such as restaurants, coffee shops and more. For every hotel that closes, it can affect a caterer or food service that works with it, which then affects suppliers, manufacturers and growers.

“The toughest challenge we have is trying to do a postmortem when you’re in the middle of something,” he said. “What I’m absolutely convinced of is, starting with 2022, you’re going to see major, major overhaul of a lot of these supply chains based upon the lessons learned right at the moment.”

People eating plant-based diets will grow, and there’s room for innovation.

The plant-based Impossible Burger, and others like it took the food industry by storm a few years ago, and a 2019 study by Ipsos Retail Performance shows that the number of Americans eating a plant-based diet is up to 9.7 million.

And while more items such as the Impossible Burger make it possible for people to test the waters, Keogh says there’s space for more innovation in alternative proteins that can be delivered as a natural product.

“The more natural that we can get, the better. The fewer ingredients, the better,” he said.