The seafood industry's longstanding “just-in-time” business model for supply chain management is over, according to a panel of experts speaking at the opening plenary of the National Fisheries Institute’s Global Seafood Market Conference in Palm Springs, California, U.S.A. on 17 January, 2023.
Supply chain difficulties during Covid-19 – which scrambled the industry’s ability to plan ahead – have continued to compound into 2023 and force the seafood industry to scrap the decades-old practice of just in time inventory.
“I think it’s dead,” Lineage Logistics Senior Vice President of Sales Dan DiDonato said.
In the past, companies could depend on a predictable supply chain which would allow them to purchase product as needed. The model allowed companies to avoid storage fees for excess product by minimizing the amount of time any product was in the supply chain. Now, the GSMC panel said, instead of “just-in-time,” it’s “just in case.”
“'Just-in-time' may be gone. It may be a concept that doesn’t exist for the immediate future, maybe forever,” Slade Gorton Vice President of Foodservice Sales and Marketing James Berger said.
At the 2022 GSMC, DiDonato told the audience that seafood companies needed to focus more on logistics as a part of their operations, and he reiterated that once again at this latest panel.
“I said this last year, but if you’re not thinking about logistics in your overall offering to your customers, and putting that front and center in your overall strategy, I think you’re going to have a tough time in 2023 and beyond,” DiDonato said. “Logistics has to be a part of the thought process, and it cannot be in the back office – it has to be front and center, it has to be part of your offering to your customer.”
As the industry has started to shift away from “just-in-time” to “just in case,” the pressure on logistics companies like Lineage Logistics has stayed at a high level.
That, Berger said, means seafood has a particularly tough time in the modern supply chain, even more so than most other food products, given the seasonality of the industry.
“Almost everybody in this room that imports seafood knows that there are certain seasons that we don’t have a choice but to take positions on things,” Berger said.
DiDonato offered Chinese New Year as an example of a seasonal demand requiring companies to plan ahead and take strong positions on product in order to be ready.
“Snow crab season, limited window. Lobster tail season, limited windows. So at that point now we’re being forced by the nature of the commodity to put the product into cold storage for longer and longer periods of time,” Berger said. “And at the end of the day, Lineage, for example, they don’t have the space to take on that inventory.”
That results in companies being forced to keep product for longer, paying for more storage. It also means any seafood company has to be increasingly wary of taking on the liability of a longer-term contract, as it could end up with a company being forced to foot the bill for high storage costs on product that wasn’t necessary in the moment but was needed as part of a “just-in-case” strategy.
Companies can still follow the just in time philosophy, the panel said, but any company doing so is one supply chain hang-up away from not having necessary product on hand at crucial times, for reasons outside of that company’s control.
DiDonato said as soon as any seafood company makes a deal with a customer, the next call should be to a the logistics company.
“We have to know that there’s freight coming our way,” DiDonato said. “And we have to know how much of it is coming. How fast is it going to move? How long is it going to stick around? We need to know that stuff, so that we can plan in advance. You just can’t make deals and then not tell us what’s coming, that’s the biggest thing that I have continued to try and educate our customers. You have to communicate with us, we are very critical to your operation, we have to be involved.”
Photo by Chris Chase/SeafoodSource