Tips from Our Supply Chain Team: Navigating Shortages
If you haven’t already, now is the time to form a multi-year strategic plan for price increases. The higher costs we are experiencing today are not going anywhere soon and will have ripple effects for years to come. Take the time to make a plan now for how this current and future state will alter your business and your customers’ world. Be proactive with cost of good and price changes, plan for them, rather than being reactive. This might mean improving your forecasting methods to better plan for the future and make sure your ingredient inventory is where it should be.
User your multi-year plan to then plan further ahead with your suppliers. Additional visibility into your forecast will create a strong partnership where you can provide updates throughout the year. You can never over communicate!
Get creative, widen your network. Who you know can be key right now. Reach out to contacts, catch up with old colleagues, make sure your network is strong. The next time you have a specific need, reach out the professionals in the industry you have a connection with. The might know someone with a solution to your puzzle! At the same time, be willing to be a resource to your peers and customers.
Make time for R&D work. Certain ingredients or pack sizes can be hard to get right now. Ask your R&D or chef teams to block out a limited set of time each week to consider reformulating recipes to sub out these difficult ingredients. Example, if honey shipments are not regular for you right now, can your recipes work the same with agave?
If your resources are limited, it’s time to rationalize. With labor shortages, raw material issues and general capacity constraints, you can’t do it all. Be smart with what you have, take time to understand your SKU’s profitability and prioritize items that make the most sense. Once you know what to focus on, you can spend 100% of your time sourcing for those products, rather than trying to do it all. Your time is precious, treat it that way.
Have a backup, focus on domestic sources. It’s not always cheaper, but having a domestic source for raw materials can provide security for your supply chain and bring you peace of mind. On this same note, if you foresee issues with an ingredient in the future or don’t see your source for an item as secure, start working on a backup now.
On this same note, if you have the storage space, start building a smart safety stock of ingredients. If storing ingredients is not possible because of space or cash flow, spend time instead understanding changing lead times. Across the board, lead times are continuously increasing and still uncertain. Create a cheatsheet of all important lead times from different suppliers and then build in your own buffer to account for any changes. If a supplier says the lead time is two weeks, place orders like their lead time is 4 weeks.
If certain resources are short, explore the cost of new technology. Adding different equipment or new technology can be a big cost. However, it could be worth your time to calculate the ROI on the item to improve your process and alleviate a labor or raw material constraint you are feeling. Automate where you can, both in your sourcing flow and in your food production areas. Some technologies can quickly pay for themselves and provide reliability to your process.
Take time to step away. Everyone needs a break and non-work time to stay mentally sharp. Avoid creating an unsustainable environment for yourself or your teammates. Take time to check in with your team, from your chef to your buyer. Ensure they are feeling supported and aren’t on the verge of burn-out.
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