THE LESSONS FROM HISTORY – HOW TO NAVIGATE GLOBAL SUPPLY CHAIN DISRUPTIONS

Disruptions in the global supply chains have been a ubiquitous problem of late and have accounted for a large part of the post-pandemic turmoil a ecting businesses. However, this is not the first instance in modern history where such issues have led to widespread uncertainty. Looking back, we can see recurring problems in the supply chain, stretching back to both World Wars and more recently the impact of Brexit and the war in Ukraine. One other constant is that these issues have been mitigated through innovative thinking and supply chain resilience, which serve as useful lessons for today.

LESSON 1: DIVERSIFYING SUPPLY CHAINS

WWI and WWII serve as good examples of mass disruption of supply chains on a global scale. While some of the cargo may di er from what businesses are shipping and distributing today, one key parallel can be drawn between then and now. The USA’s entry into the war, and allied Europe’s supply chains represented a key turning point, and also showed the impact of sourcing supplies from alternative production lines that may be less a ected by regionalised disruptions. If we look at issues facing today’s supply chains, brought about mainly by COVID-19 and the war in Ukraine, we can see the value in securing supplies from alternative lines of production. One way to strengthen a supply chain is diversification. Supply chains that rely on one provider alone lack resilience and by making proactive contingency plans and sourcing alternative providers, companies can overcome potential disruptions with more confidence, as evidenced by Britain’s outsourcing of supplies to the USA and Canada in WWII, rather than solely relying on Europe.

LESSON 2: PREPARING FOR DISRUPTION

Another past example that serves us today is the outbreak of the SARS virus in 2003 which had a significant impact in the Asia region. While the disease proved to be a significant challenge, its lasting impact is something that has led to an increasingly resilient regional supply chain, something that benefitted businesses in the area during the COVID-19 pandemic. SARS caused a need for businesses to have back-up plans in place for such disruptions such as establishing parallel sites, shi ing operations, and investing in IT to enable remote working. All of this adaptability helped when the world was altered irreparably by the outbreak of COVID-19 in 2020, giving those businesses with contingency plans in place a leg up.

LESSON 3: ENSURING REGULATORY COMPATIBILITY

Wars and pandemics are far from the only hurdles that supply chains have to contend with, though. Regulatory changes can have a similarly profound impact, requiring companies to go back to the drawing board and rethink their global supply chains from the ground up. These changes also show us the vital importance of checking the levels of compliance, credibility and regulation in our supply chains ahead of time, in order to improve resilience and adaptability.

Previous examples of major regulatory changes impacting supply chains include the UK’s Modern Slavery Act 2015, which clarified what legally constituted modern slavery and explained how entities that were found culpable would be punished, rea irming the need to make sure businesses are dealing with ethical providers. Organisations can’t engage in murky practices, partnering with subpar suppliers, and hope to get away with it. They should instead expect to be regulated at some stage or another – and should therefore set up clean operations right from the outset.

LESSON 4: PRIORITISING COMPLIANCE

In order to deal with regulatory disruptions ahead of time, companies must place compliance at the centre of their supply chain operations. They must ensure that they only work with suppliers who align with today’s ESG regulations and commonly accepted standards. By implementing supply chain compliance solutions, company’s can ensure they work with the right suppliers, verify a potential supplier’s credentials, dig into their capabilities, and ensure they’re the right fit for their organisation’s needs.

Supply chain disruption is an ever-present thorn in organisations’ sides. However, businesses will enhance their own supply chain resilience by learning from how both companies and countries overcame similar disturbances in the past. They can source alternative providers ahead of time, maintain visibility, and use instant reporting to foresee and manage supply chain disruption.

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The latest Contract Catering Tracker shows sales are substantially up year-on-year and are approaching preCOVID levels. However, it also acknowledges the impact of record levels of inflation hitting the contract catering businesses hard along with the challenge of servicing hybrid workplaces. How can suppliers adapt over the coming year to deliver a ordable, sustainable and nutritional sustenance to clients and consumers?

THE CLIENT’S VIEW

STEPHANE DAVAINE, FRONT-OF-HOUSE MANAGER AT WEALTH MANAGER RBC BREWIN DOLPHIN

2022 was a relatively positive year, which saw a steady return of face-to-face meetings a er a short period of adjustment. We le a few years of working from home behind and moved towards agile working - a format we are witnessing many large organisations adopt.

This adjustment was certainly not achieved overnight, and it’s safe to say that we are still not back to pre-COVID levels of o ice-based working. In fact, an argument can be made that the pandemic accelerated a new way of working that we could see on the horizon and that a younger generation was demanding. For quite some time, younger generations have been looking for a healthier work-life balance and swapping long commutes five days a week, for more time with loved ones.

Stephane Davaine

The technology is now more widely available to support remote working in ways that a few short years ago were unthinkable. It is a learning exercise, and perhaps agile working will establish itself as the way forward, or at least for the foreseeable future, if productivity levels remain high and it continues to deliver positive results on other fronts, such as wellbeing and mental health.

Agile working has brought a lot of challenges for suppliers and their service teams, and placed enormous pressure on our buildings, with the new pattern of Tuesday to Thursday being the preferred days for people to be in the o ice. This of course translates into everyone coming in with a need for a desk as well as space for their teams. They also want collaboration and meeting spaces, and client entertaining and networking across fewer days than before. This all creates a spike in demand during those days, pushing hospitality and facilities teams to their limits, and challenging labour pools.

2023 will bring fresh challenges for suppliers, not only to adapt to this new reality of a three-day o ice-based working week and condensing the delivery of services into a shorter weekly span, but also combating worrying inflation and sta ing shortages, and di iculties with supply chain.

Sustainability, flexibility, and proactivity will be key elements suppliers to address this year to overcome these challenges and continue to deliver outstanding services to customers and clients.

Working with suppliers based in the vicinity will not only support local businesses and communities, but also promote a sustainable approach by reducing your carbon footprint. The importance of having a defined sustainable strategy is key not only for the environment but also for consumers.

Suppliers need to be fluid in their approach to identifying opportunities and trends, such as support initiatives like ‘meat free Mondays’, promoting plant-based ranges, and introducing simple, seasonal o erings that can deliver good value for money, with consumers more likely to shop around for better o ers, deals and quality.

We should take the opportunity a orded to us in the last few years to keep driving innovation, creativity, and originality, to ensure our businesses remain sustainable, profitable and relevant in this new era.

THE CATERING CONSULTANT’S VIEW JULIAN FRIS, DIRECTOR, NELLER DAVIES

Sales have been higher in restaurants where people have decent food, proper service and interesting concepts. This isn’t a great revelation but it’s hugely important in the new competitive landscape. The market has moved and we are seeing fluctuating trends across the board. Where we could once predict consistency, trends are more volatile these days so flexibility of the o er is vital.

The public sector workplace is thriving as people are in the o ice for the whole working week. Whether it’s the education, healthcare or defence sectors, we are seeing both satisfaction and uptake increase across the board in the sites that we are working on. In business and industry (B&I), we have seen the market move and stabilise more since COVID but it’s increasingly becoming more vulnerable particularly with industrial action, hybrid working and other unforeseen disruptions.

We were seeing more highly subsidised o ers to get people back in work although that’s now levelling out. Free food loses value for some so it’s important to find that balance to help reduce waste and cost.

With the current challenges at play, suppliers need to think about innovation and bringing in di erent ways of processing food, perhaps looking at dark or cloud kitchens or a central production unit (CPU) vs a traditional on-site production kitchen model.

The shortage of skilled catering sta means it becomes more viable to have one chef managing kitchens for a number of businesses. This is where the CPU is potentially becoming a more attractive proposition.

Suppliers also need to think about menu engineering, where they can make the most of what is available rather than what they want. This distinction is important with the current supply chain issues, largely due to post-Brexit, the war in Ukraine and COVID related impacts.

Businesses need to look at using dead space and under-utilised spaces to maximise return. This can be achieved by turning them into events or collaboration spaces, bringing in more revenue while creating better working environments.

Suppliers and clients can get ahead of the game by taking more calculated risks to use spaces more e ectively. This principle applies across all parts of the sector but subject to security implications as we have discovered with some Government buildings and high-profile companies in the pharmaceutical and IT sectors.

A constraint on catering is the ever-burgeoning safety legislative burden, albeit borne out of highly sensitive issues such as Natasha’s Law or listeria in NHS sandwiches - these showed that sometimes not going the whole way on statutory compliance can actually be detrimental to business health.

Any caterer has to balance out their profitability against the additional cost of meeting requirements which could be even more di icult during these times - although technology and better training & awareness can help.

This could mean only larger companies can cope, with the risk pushing out smaller operators, who we are trying to encourage to grow. When that happens, either SMEs get bought out, which reduces competition, or they leave the market. Finally, I think many chefs have had enough of red tape which has been a major contributory factor to the skills shortage.

THE CONTRACT CATERER’S VIEW ANGUS BRYDON, MANAGING DIRECTOR, BM

We are absolutely seeing continuous sales growth across our B&I contracts, and although employees are in the o ice on fewer days, they are spending more time in the buildings when they are there, and spending more on those days than they used to.

We are also seeing more highly subsidised o ers at certain locations to reward people coming into the o ice. Catering and food are now seen as a huge employee incentive.

To support the new hybrid working environment, we have worked with clients to deliver a di erent model of B&I catering to what we had before. This whole period has been about adaptability and flexibility.

While we previously served quite distinct breakfast and lunch segments, the trend has shi ed towards all-day grazing, so we’ve changed our o er to address that. We’re seeing an increase in footfall but also an emerging all-day culture in our workplace restaurants. There’s a constant churn of people now. It is true to say that we are being challenged by inflation, but we’re working on minimising the impact of that on our clients in partnership with our suppliers, diverting our supply chain slightly where needed and proactively managing our client’s money. Product availability is obviously an issue and that problem doesn’t appear to be going away anytime soon, so it’s important to manage the sales mix. We’re exploring how we can menu engineer to ensure the best value for both the client and end consumer.

inflation, but we’re working on minimising diverting our supply chain slightly we can menu engineer to ensure and end consumer. hybrid working is the labour force. There have to be mindful of rotas and sta ing. We have to be

A major challenge that we face with hybrid working is the labour force. There may be higher demand with more people in on a Tuesday-Thursday, for example, so we have to be mindful of rotas and sta ing. We have to be responsible with the client's money, to which end we’ve been o ering sta training and tailoring resources to make things happen on down days (i.e Mondays and Fridays).

The journey that we have been on as an organisation, in which we have managed to retain a high proportion of clients and even grown beyond pre-COVID levels, is because we have acted as a trusted advisor to clients. I would say this is always the best approach so that we retain flexibility to adapt to shi ing trends and market conditions while also delivering a quality B&I catering service that ticks all the boxes for our clients, consumers and the planet.

THE SERVICE SUPPLIER’S VIEW

CHARLES ABRAHAM, FOOD PLATFORM DIRECTOR, SODEXO UK & IRELAND

The impact of hybrid working, for many, has provided choice and flexibility but for service providers it presents a number of challenges. Where pre-pandemic catering teams knew roughly how many people they need to cater for on a daily basis, today the change in working patterns means numbers fluctuate and there is less consistency, perhaps with higher peaks of demand and lower troughs than before. Therefore, food service providers need to become better at using data to forecast demand and ensure that operationally, both in terms of workforce and food they can adapt for quieter and busier days.

The role of food in society and culture is o en central in bringing people together and that too applies to the workplace. As clients consider how to incentivise and make the workplace appealing for their people to return, food service providers can support this by providing the right food o er as part of an overall workplace strategy. Furthermore, as consumers we have all become used to using apps and digital channels to purchase goods and services and for food service providers there is an opportunity for them to use technology to o er a consistent and engaging consumer journey.

We all know that many people take what they eat very seriously and for food service providers, understanding and acting on the importance of nutrition, health and wellbeing, as well as having strong environmental standards are important pillars for any o er, and it is crucial that they are provided with choice when it comes to deciding what they would like to eat.

The fluctuation in service demand, rising food costs and environmental concerns has also put a greater focus on waste. Looking and understanding the drivers of waste is key to tackling it and technology can help with all of these factors. We have been using our WasteWatch programme for a number of years and are accelerating its deployment across client sites to aid our catering teams in monitoring waste in their kitchens which is helping them manage the cost of delivering food services to the standards expected.

Our supply chain team, dietitians and chefs work closely together, regularly reviewing our menus. This work has led to more recipes being developed using less red meat and a higher proportion of plant-based proteins, addressing the increasing consumer demand for healthier, more sustainable foods and as part of our commitment to reduce our carbon footprint. It is the combination of their expertise and skills that enable us to manage the impact of the rising food costs while continuing to serve tasty, healthy and sustainable dishes.

THE FM CONSULTANT’S VIEW

JOE PARFITT, MANAGING PARTNER AT LITMUS PARTNERSHIP

Since businesses reopened, hybrid working - the flexible work model that supports a blend of in-o ice, remote, and on-the-go workers - has been widely adopted. Never before have workplaces looked so di erent. Couple this with increasing levels of inflation, energy and sta ing issues, and it’s challenging to still provide a ordable, nutritional choices on menus.

Relationships with suppliers and service providers have never been more important. Working together collaboratively to navigate these challenges and come up with solutions is essential. Customer best value is the key driver and must be achieved – not only in a monetary sense but in all areas of service – getting the balance wrong now will make the di erence between staying afloat or potentially sinking.

The current market conditions mean it can be di icult for any organisation to understand if they are receiving value for money with regards their catering service providers. Businesses only know what their suppliers and service providers o er; they don’t know what others are paying or what’s included in their service agreement. Without having this broader sense of what ‘good’ looks like, it’s impossible to know.

This is where benchmarking comes in. Businesses could commission an independent benchmark of their product basket to ensure their supplier is delivering competitive value. Once that’s done, they can also engage with the supply chain to discover what product switches are possible without sacrificing quality or a ecting their allergen risks. The benchmark could also cover overall operating costs to understand whether an operation is running within accepted tolerances.

Similarly, there is a lot that suppliers can do to adapt and help their clients navigate through the coming year. Absolutely key to everything is operating with an open and honest dialogue. O en, particularly when the climate is tough, we see communication dry up as conversations can feel di icult. However, the reality is that with current market conditions we’re all facing obstacles and challenges that are much better shared - and solutions found.

It’s also important to keep clients updated about how supply chain challenges are a ecting the industry, and what is being done to mitigate these challenges. Some tari increases or drop in gross profit could be negotiated, but it’s important to engage with clients to regularly collaborate, and so avoid surprises.

Menus can be re-engineered to reflect what is both readily available and a ordable. This is a process that can be done jointly with the client and service providers. This is likely to require a more dynamic menu planning process than a traditional menu cycle allows, but it presents an opportunity to surprise and delight consumers if the o er is well communicated. Increasing the relative volume of plant-based dishes on the menu is also a good idea as it reduces unsustainable meat options and lowers cost.

Utilising sales data will inform trading strategies. So, interrogate the data to understand what is popular, profitable and at what times of the day and week resource is needed. Making changes to operating hours, how sta are deployed and the product mix can make a real di erence to how e iciently the operation is run.

Technology also has its place and I think we’ve all heard the benefits of implementing pre-ordering systems, loyalty promotions and so on. But innovation is about more than just tech – employee development, engagement and empowerment can lead to the best ideas and attract and retain the best people; which in the current climate is incredibly valuable.

Email: sara.bean@kpmmedia.co.uk