Food providers feeling pinch
Supply chain woes create headaches for restaurants, grocery stores, institutions
Area food providers are scrambling more than eggs as they cope with supply problems.
Recently, Doug Simon, owner of The Casino at Lakemont, needed frozen peas and had to visit three stores to find the six bags he needed.
He said suppliers have limited delivery days, with some actually having to shut down delivery service in the last two months. Others are closed on specific days of the week.
“I heard that one of our suppliers shut down specifically because of a COVID outbreak at one of their facilities,” Simon said.
As a result, Simon is never quite sure if he’ll be able to secure the products he needs.
“It’s very, very difficult right now to maintain profitability,” Simon said. “Our bottom line has been completely disrupted because the amount of business we’re doing is still significantly down from where we were.”
Bob Hasse, president of McAneny Brothers, a full-service convenience and grocery store distributor that supplies various locations throughout five states, detailed similar issues. He said that McAneny Brothers measures its inbound still rate, which is the amount of product they actually receive from the manufacturer compared to what was originally ordered. The rate has been sitting at 75%.
“Throughout the pandemic, it’s been an issue, but for the past three or four months it’s been really bad,” Hasse said.
McAneny Brothers has tried to find comparable products to make up the difference, with varying levels of success.
“It takes a lot more to try to find a product in this environment today,” Hasse said. “You have to be aggressive to secure inventory.”
Places like The Village Pantry in Tyrone, a grocery store that sells items in bulk, have not been hit as hard by supply chain disruptions. Its main problems lie in trying to secure beverages and fresh meat, according to owner Stephen Burkholder.
“The pricing has been greatly affected, especially those requiring human labor like boneless meat,” Burkholder said. “The problem with meat supply, there are so few suppliers across the U.S. that if Imler’s is having trouble getting stuff in, then so are we.”
Not even school districts have been spared the struggle of supply shortages.
According to Altoona Area School District School Board members, the impact of COVID-19 has limited their food deliveries to just once per week.
To preserve the food, district administrators were forced to approve the installation of a 400-square-foot walk-in freezer at the district’s Furrer Building. The walk-in freezer project is currently out for bid, and the board approved the project at a cost of no more than $60,000.
Administrators said about $34,750 of the costs will be covered by the Giant Feeding School Kids Program, and the remainder of the expenditures will come from the cafeteria budget.
“It’s sad, but this is what we have to do to feed our children,” school board member Ron Johnston said. “We have to store all of our food in this walk-in freezer now because we’re only getting one delivery a week.”
The Hollidaysburg Area School District has fared no better. According to Betsy Snyder, the district’s food service director, the district has been challenged with product shortages, discontinued items, price increases, distributor cancellations and staff shortages.
“This disruption of unusual circumstances has prompted us to take advantage of the USDA waivers that allow more flexibility in the procurement process and regulations,” Snyder said.
Despite these issues, their food service department has been able to make substitutions and maintain the ability to offer students at least three meal choices at breakfast and lunch each day.
‘A supply issue’
The root of the supply chain problems stretch back to the beginning of the pandemic when many companies began reducing their supply in anticipation of a drop in demand. However, in some cases, demand didn’t drop significantly, and it actually came back stronger than expected, Linderman said.
To combat this discrepancy in the short term, companies are looking for alternative suppliers.
“They actually have the demand, but companies can’t provide it,” said Kevin Linderman, professor and chair of supply chain management of the supply chain and information systems department at Penn State University.
Linderman said, “This is a supply issue, not a demand issue.”
Experts are now predicting disruptions and shortages in the global supply chain will continue into at least the middle of 2022.
“The hope was actually that we would be going into recovery mode right now, but it looks like we’ll be going into next year with supply issues,” Linderman said.
One key factor affecting the global supply chain is the continued labor shortage in much of the world.
“As we are now trying to recover, as everyone is trying to recover, we don’t have enough workers,” Linderman said.
Labor shortage blamed
He gave the example of truck drivers who, before the pandemic, averaged between 48 and 59 in age. Many of them decided to retire early during the pandemic, while others are nearing retirement now, and there are not enough people to replace them, Linderman said.
“A lot of people rethought their lifestyles and what they wanted to do,” Linderman said. “The aging workforce has aggravated the problem even further.”
Others mirrored that sentiment, with Burkholder saying products requiring more human labor are harder to get in, while Hasse said the labor shortage is the No. 1 issue they hear from their manufacturers.
According to Simon, the skill of those who do take the open positions has been less than satisfactory.
“I do think that anybody in the manufacturing industry would probably agree with me that they’ve lost long-term qualified employees and that what they’re replacing them with is less skilled, less experienced personnel,” Simon said.
He recounted how last week he bought a piece of top round beef, which needs to be cleaned and trimmed of excess fat before use.
Typically a piece will weigh 20 pounds before cleaning and 15 after. This time, however, he paid for a piece that was 33 pounds that only yielded 20 pounds of meat after cleaning.
“You may have seasoned butchers that are no longer in the workforce,” Simon said. “Waste on that product has increased significantly.”
As a result, Linderman thinks that companies are going to think more strategically about risk in the supply chain.
“In the pandemic, a lot of companies found that they were exposed to a lot more risk than they realized,” Linderman said. “When they increased efficiency, they reduced their resiliency.”
More companies will likely consider reshoring their manufacturing to the U.S. and that more production will occur domestically, Linderman said.
“I think this will probably rewire the global supply chain and we’ll start to rethink where we make stuff and how much we’re outsourcing,” Linderman said.
However, it’s not just an aging workforce exacerbating supply chain disruptions but a striking one.
According to the Wall Street Journal, more than 1,000 Kellog’s employees are striking for better pay, benefits and working conditions while General Mills is facing increased labor, transport and supply-chain costs.
CNN also reported that Tyson, the top meat seller in the U.S., is having problems meeting demand due to a number of factors, including factory positions going unfilled and roosters not meeting breeding expectations.
Mirror Staff Writer Rachel Foor is at 814-946-7458.