KANSAS CITY, MO — Supply chain, a topic of conversation typically confined to those working within manufacturing industries, has now become a hot-button topic for many. Its disruption has impacted everyday consumer activities, with 79% of people noticing product shortages according to Momentive, an experience management company formerly known as SurveyMonkey. Within the baking industry, the American Bakers Association (ABA) noted nearly every bakery operation has seen price increases.
The consumer economy has always been at the mercy of the supply chain, but it’s one that has often worked tirelessly and quietly in the background … until now.
Although a spotlight has been shone on the consumer related fallout, it’s important to understand what’s happening on the ingredient supply side. What does the environment look like for ingredient suppliers, and how are they navigating shortages and disruptions?
This torrent of supply chain disruption has been the perfect storm. Dave Hufford, SVP of procurement and quality assurance and regulatory compliance at AB Mauri, a global supplier of yeast and other bakery ingredient products, described the conditions at hand.
“We have been dealing with a series of never-ending challenges since February 2020,” Hufford said. “That includes multiple global impacts associated with the pandemic, weather events, container shortages, extended lead times on most items, the impact of the conflict in Russia and Ukraine, avian flu, and heavy inflation, just to name a few.”
Storms, droughts and fires — all amplified by climate change — have dealt blows to the raw ingredient supply.
According to the UN Food and Agriculture Organization, the month of January alone saw a 4.2% surge in vegetable oil prices due to South American droughts and Malaysian typhoons. Additionally, the war in Ukraine has had reverberating effects with the country being the top supplier of sesame seeds and an important grower of crops such as wheat, corn, soy and barley.
What’s more, the baking industry, like many others, suffers from serious workforce challenges, with more than 12,000 jobs available on ABA’s career website.
“For our baking business, we buy between 1,000 and 1,500 different raw materials,” said Abby Ceule, senior director of ingredient solutions at Corbion. “It’s been almost exactly a year since we started to see the raw material delays and shortage start to creep up on us. It’s been a rolling trend; starches right now are a hot topic for our business. We’ve seen different issues with gluten, emulsifiers and different food assets at various times.”
The ingredients and commodities that were commonplace five years ago are now beginning to dry up.
“I’ve been absolutely floored by the sheer number of things that are extremely tight,” said Nesha Zalesny, a partner at IMR International, an industrial market research and consulting company in food hydrocolloids. “Even things as ubiquitous as xanthan gum, you cannot get it in the United States. That is really shocking.”
Even if ingredients can be acquired, delayed shipments propose an issue.
“We typically can source most ingredients, but lead times are much longer and more difficult,” said Edward Mlotek, VP of sales and marketing for global ingredient supplier Repco Bakery Solutions.
In addition to price increases and lead times, bakeries in need of ingredients may overorder to account for inventory loss and potentially delayed material.
“Overordering, like hoarding toilet paper during the pandemic, creates a feedback loop that stretches an already dwindling supply,” said Ben Reusser, Innovative Center manager for Cain Food Industries. “That will cause our suppliers to cap new business or not even be able to add any at all.”
This story has been adapted from the 2022 Innovations Annual issue of Commercial Baking. Read the full story in the digital edition here.
