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Labor Shortages Continue to Drive Supply Chain Woes

Massive supply chain disruptions continue to pervade the U.S. food sector, with labor challenges triggering shortages from raw materials and ingredients to packaged goods.

Some of the largest U.S. food distributors, including United Natural Foods Inc. and Sysco Corp., are having difficulty fulfilling orders, reported Yahoo Finance (Aug 24). Sysco further noted that prices for key goods such as chicken, pork, and paper products for takeout packaging, are climbing amid tight supplies.

Food manufacturers are also tangling with shortages in resin, aluminum, and other raw materials used for packaging, and many producers are giving priority to their most popular items.

Labor Challenges

Across most sectors, manufacturers are struggling to meet demand due to continued employee shortages. There was some expectation that states where enhanced unemployment benefits and COVID relief payments expired would see an increase in new hires or employees returning to work. However, the labor issue has persisted.

“In some cases, manufacturers can’t hire adequate numbers to fully staff lines contributing to reduced productivity.” Rick Williams, Operations Business Partner at JPG Resources told The Food Institute. “In other cases, employers experience up to 20% to 40% callouts on some shifts, impacting planning and production.”

The shortage of U.S. truck drivers is further exacerbating bottlenecks in the supply chain, with retention challenges playing a key role. Turnover rates are over 90% for large long haul carriers and over 72% for small carriers, according to the U.S. Department of Transportation.

Mitigating Out of Stocks

In the grocery retail sector, inventory on a wide range of categories continues to fluctuate. Due to limited guidance from suppliers, grocers are struggling to predict how complete or timely their deliveries will be, reported The Wall Steet Journal (Aug 22).

In attempts to mitigate supply chain issues, retailers can draw on their experiences over last year, Gary Hawkins, Founder and CEO for the Center of Advancing Retail and Technology told The Food Institute. “Many retailers have reduced and simplified product assortment in many categories, concentrating on keeping improved stock positions on a fewer number of items.”

Echoes in the U.K.

Businesses across the U.K. are grappling with similar supply chain and labor shortages.

In response to the country’s hiring crisis, Amazon began offering $1,373 sign-on bonuses for a range of warehouse jobs. Tesco and Asda are offering an equal sign-on bonus for truck drivers, reported Independent (Aug 24).

Supermarkets are also delivering to stores less frequently and prioritizing products, according to The Financial Times (Aug 24). Additionally, restaurants like McDonald’s and Nando’s have cut major menu offerings and shuttered stores in recent weeks due to product shortages.