Innovative Supplier Partners Help CPGs Navigate Supply Chain Challenges

Innovating in the face of market uncertainty is an ever-present reality for CPGs. And CPG brands that adopt strong supplier partners get more than a reliable source of ingredients. They also gain access to forward-thinking research and insights that make it possible to turn challenges into opportunities for innovation, even in uncertain and disruptive sourcing environments.

Take supply chain challenges, for example. Supply chain disruptions and ingredient shortages (or outages) have become universal obstacles that have leveled the playing field for many food, beverage and dietary supplements leaders today. In a recent survey by TraceGains, 58% of food industry leaders ranked supply chain disruptions as their biggest challenge.^[1] Nine out of 10 said they’ve paid more for ingredients and materials in the last two years, and 65% have increased their prices.^[2]

The brands that ultimately win on the shelf will be the ones that are staged to simplify operations as well as reduce expenses. They’ll leverage every resource at their disposal to out-maneuver disruption and get high-quality products on shelf and into the homes of consumers.

One winning strategy for CPGs today is to form a proactive plan to stabilize their supply chains. A comprehensive plan includes conducting a deep review of ingredients, reformulating strategically, arming your organization with industry-leading consumer trends and data, and buffering your brand’s supply chain and production stability – all steps that can be streamlined with an innovative supplier partner that puts you at the center of innovation.

Reformulate strategically, not reactively

Today, many companies are pushed to innovate after encountering disruptions like production delays related to ingredient availability. These delays have many food, beverage and dietary supplements companies reformulating as a short-term solution. In fact, the same TraceGains survey revealed more than 60% of food industry leaders said they have changed the recipes or formulations for at least six products in the last two years, with 37% saying they have had to modify 20 or more products.^[3] Additionally, 49% of respondents went as far as to halt production of specific items, with the same number of respondents indicating they were unable to meet consumer demand.^[4]

When we talk about reformulations in response to supply chain challenges, many companies jump to removing or substituting unavailable ingredients in the short term to get the product back on the shelf as quickly as possible.

However, a more strategic and long-term view may be to make permanent changes to your formulations so that you gain more control over production, helping to “future-proof” your product(s) from ongoing supply chain issues and avoiding potential future (both known and unknown) disruptions. What remains critical, however, to CPG brands of all sizes is that they are able to protect taste, quality, ingredient pricing and brand loyalty when sourcing these “replacement” ingredients.[5]

As our customers feel the impact of market conditions across their own businesses, we have been working to develop solutions that meet their unique needs. We are continuously seeking to uncover innovative solutions through the use of our network, distribution channels and supply chain synergies, in addition to traditional grain-based and alternative grain ingredient solutions.

For example, the price of eggs surged to as much as 70% year-over-year in early 2023.^[6] At Ardent Mills, we developed Egg Replace, which uses chickpea flour and other grains as a way to reduce or replace eggs in baked goods. Of particular interest to many of our customers: Egg Replace can result in a significant savings when it comes to ingredient cost. Exactly how much in potential ingredient cost savings are we talking about? As much as 50–65% annually when compared to using an equivalent amount of dried whole eggs (based on 2022 median monthly USDA pricing of dried whole eggs).[7]

In addition to potentially helping reduce ingredient costs, this solution is aligning more and more to consumer preferences. Projected year-end consumer adoption of (when compared to Q1 2023) eating habits described as “vegan” and “plant-based protein”[8] are both slated to significantly grow – 8% to 15% and 25% to 33%, respectively[9] – mapping this product directly to what consumers are actively seeking from brands. 

Buffer supply chain and production delays with an excellent supplier partner

We all know that delays can spark from a late delivery, product shortage or simply a bad transition to a new crop. Being agile in the face of supply chain disruption is a hallmark of winning brands, and often that agility comes, at least in part, in the form of reliable supplier relationships. This is especially true in a “post-COVID” era where almost 70% of CPG business leaders surveyed are planning to increase their supplier diversity over the coming years as a long-term way to address supply chain uncertainty.^[10] The 2021 BDO Manufacturing CFO Outlook Survey also reports that about half of middle-market manufacturers plan to identify alternative or backup suppliers to the same end.^[11]

To proactively circumvent supply chain and production interruptions, it’s critical for CPG brands to consider the quality of the relationship they have with their suppliers. At times, the most supportive option they’ll have is to be flexible and communicative throughout a shortage or delay. CPG brands must choose supplier partners that communicate effectively, think strategically and take a proactive approach throughout both the short and long term, recommending innovative solutions before challenges become problems. In short, a truly great CPG supplier is an empathetic one – placing the customers’ innovation requirements first.

Secure an innovative supplier partner that helps your products shine

Reformulating products and diversifying your suppliers can be helpful responses to an uncertain supply chain. However, these actions leave opportunity on the table to take your business to the next level, especially as new challenges appear. This constant need for iteration and innovation creates urgency around your need for an experienced, reliable ingredient supplier partner that can lend you more bandwidth when it comes to research, development and experimentation.

Consultative, relationship-focused supplier partnerships can help you make the best possible decisions for your business for the long term, not just for today. And that’s where Ardent Mills comes in.

Our approach to building strong, cross-functional partnerships with a single point of contact creates an experience that is best in class. You know exactly who to call to get help, whether you’re optimizing everyday operations, troubleshooting reformulations or kicking off special sustainability or traceability projects. This combination of support, visibility and synergy amplifies the great work your team is already doing.

Upgrade your supplier and take control of your supply chain

Sustainability often gets the bulk of the attention, relative to innovation, among CPG brands. However, innovating for other strategic reasons (such as to improve your supply chain) can help give your brand an undeniable edge, especially when supported by a supplier partner that puts you at the center of innovation. When your business is CPG, innovation is your business – and the right supplier partner can help keep you a step ahead of the competition.

In your search for a reputable supplier partner that can help support your needs consistently and at scale, consider Ardent Mills. Our approach to thorough research and development and creative innovation is both an art and a science – and so is our commitment to investing in the long-term success of our CPG partnerships.

Get in touch with an Ardent Mills Rep today! Call (888) 680-0013

^[1] Poinski, Megan, “Supply issues top CPG company leaders’ concerns, study finds,” Food Dive, July 18, 2022, https://www.fooddive.com/news/supply-issues-cpg-company-concern-reformulation-june-2022/627437

^[2] Poinski, Megan, “Supply issues top CPG company leaders’ concerns, study finds,” Food Dive, July 18, 2022, https://www.fooddive.com/news/supply-issues-cpg-company-concern-reformulation-june-2022/627437

^[3] Poinski, Megan, “Supply issues top CPG company leaders’ concerns, study finds,” Food Dive, July 18, 2022, https://www.fooddive.com/news/supply-issues-cpg-company-concern-reformulation-june-2022/627437

^[4] Poinski, Megan, “Supply issues top CPG company leaders’ concerns, study finds,” Food Dive, July 18, 2022, https://www.fooddive.com/news/supply-issues-cpg-company-concern-reformulation-june-2022/627437

[5] This statement does not imply any claims about a specific ingredient or product.

^[6] Wiener-Bronner, Danielle, “Eggs are 70% more expensive than they were a year ago,” CNN, February 14, 2023, https://www.cnn.com/2023/02/14/business/grocery-prices-cpi/index.html

[7] Based on 2022 median monthly USDA pricing of dried whole eggs.

[8] “Ethically sourced” included as a potential stretch proxy to address the appeal of an ingredient that is favorable to animal-care. Ardent Mills Proprietary Research, U.S. consumers 18+, April 2023.

[9] Projections take into account: % of self-reported intent to continue participating, self-reported intent to start and self-reported intent to stop. Ardent Mills Proprietary Research, U.S. consumers 18+, April 2023.

^[10] “Supply issues top CPG company leaders’ concerns, study finds,” Food Dive, https://www.fooddive.com/news/supply-issues-cpg-company-concern-reformulation-june-2022/627437

^[11] “2021 Manufacturing CFO Outlook Survey,” BDO Alliance USA, January 11, 2021, https://www.bdo.com/insights/industries/manufacturing/2021-manufacturing-cfo-outlook-survey