PET Food Processing - October 2021 - 35

SUPPLY CHAIN
MOVING
TARGET
Pet food and treat manufacturers are navigating
the dynamic supply chain environment.
By Jennifer Semple | jsemple@sosland.com
G
Growth has been steady in the US pet food and treat
industry, but it could have been even better for many if
supply chain issues didn't continue to challenge manufacturers.
During Minneapolis-based General Mill's
first-quarter 2022 earnings call Sept. 22, Jeff Harmening,
chairman and chief executive officer, said revenues were
offset by higher-than-expected supply chain costs. At
the beginning of the year, General Mills expected inflation
of 7%.
" It's clearly going to be between 7% and 8% now as we
go on the year, " Harmening said.
Raw material vendors, internal manufacturing, copacker
manufacturing and its own distribution network
all are impacting General Mills' service levels, explained
Jonathon Nudi, group president of North America Retail
for General Mills.
" It's almost whack-a-mole right now, " he said. " So,
we have literally hundreds of disruptions in our supply
chains, and it really changes on a daily and weekly basis. "
Meetings at the senior level occur daily or weekly to
solve the issues, he said. Additionally, industry-wide
shortages in the labor market are impacting not only
manufacturing facilities and distribution networks, but
also raw material supply and external production capacity.
To offset the impact of these challenges, General Mills
is working with suppliers to extend lead times, use supplemental
labor and encouraging more full pallet orders.
In its second-quarter 2021 earnings call Sept. 1,
Chewy, Inc., Dania Beach, Fla., reported out of stock
levels - although they were improving - remained
elevated as a result of supply chain conditions in some
areas such as wet dog food, which is being affected by
industry-wide production capacity limitations. Mario
Marte, chief financial officer, said supply chain and labor
market challenges persist, and no one really knows how
long or to what extent these might prevail.
Pet Food Institute (PFI) submitted public comments
to the US Department of Agriculture (USDA) on June
21, detailing supply chain constraints seen by pet food
and treat manufacturers, including those exacerbated by
the COVID-19 pandemic. This was in response to the
Feb. 24 White House Executive Order 14017: America's
Supply Chains, with the focus of better understanding
and addressing supply chain issues seen throughout the
US economy.
The association pointed to several issues in transportation
and supply chain infrastructure, as well as how the
interconnected nature of the pet food industry's relationship
to other US markets caused supply shortages and
other disruptions in 2020 that have continued into 2021.
Ingredient and equipment challenges
Overall, ingredient costs have risen between 8% and 20%,
with significant increases for corn and soybean ingredients
used in most pet food formulas. Corn prices have
risen 67% this year; and meat, poultry and fish ingredient
prices are up 6.3%, according to PFI. These price hikes directly
impact formulation costs for pet food .
www.petfoodprocessing.net | October 2021 | PET FOOD PROCESSING 35
Evolving supply
chain challenges for
pet food and treat
processors has been
compared to the
arcade game '
whack-a-mole.'
©bong - stock.adobe.com
http://www.petfoodprocessing.net
PET Food Processing - October 2021

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