Strain on Supply Chain: War in Ukraine

The effects of the war in Ukraine have affected many things within the supply chain. It has affected gas prices, increased metal prices, and increased feed costs for cattle. Working as a merchandising analyst this summer with the Bacon team has showed me just how important feed costs are to the end product. Ukraine produces more than a fifth of the world's wheat and is the fifth leading supplier of corn in the world. Farm raised pigs eat a grain based diet consisting of wheat and corn.

The war in Ukraine has put a serious strain on the world's supply of wheat and corn, valued commodities for farmers to be able to feed their livestock. This has impacted prices, the amount of pigs they are able to raise, how many they slaughter. This is all succumbing together in the summer months as well, when pigs are not as big and the litters are smaller. This is leading to packers and suppliers slowing production for their products. It is increasing the amount they are paying per head, which in turn is increasing how much they charge to buyers.

I have seen first-hand the effects that higher costs have on the bacon business. My project this summer is focused on helping Walmart manage their profit margins better for their private brand bacon business. A project that some may look as insignificant, but it has shown me the importance of knowing your costs. Knowing your costs and finding ways to be more efficient, benefits the supply chain and benefits the consumer. The margins for bacon roll into the P&L, which then rolls into a bigger P&L, and so on and so forth. Each and every category that is used with Walmart rolls into that bigger P&L. So, knowing your costs and making your supply chain more efficient is key to making a better business.

Making a better business makes a better marketplace for customers. With better understanding of your costs, you can make more informed decisions that impact customers. Walmart's mission is to help people save money and live better. They want to make their customers lives as easy as possible by giving them everyday low price. Walmart is using their interns and their merchants to better manage their margins. My project is just one of many that are trying to build Walmart's business into a place where people can rely on great prices for quality goods. Walmart is trying to be a force for good in these unprecedented times.

This is all to say that everyday people are being affected. Packages of bacon are increasing in price. This is just one example of this strain. The supply chain can be disrupted in an instant and daily necessities that people count on can skyrocket in price making it harder for people to buy. Supply chain managers and buyers must find better ways to make the lives of everyday people better. Events like the one in Ukraine can happen at any time. The supply chain must be able to adapt and be unfazed by the events going on around it. This will obviously take many many years, but the world of supply chain can begin that journey now

The supply chain is sensitive. Visibility is a key element to making a supply chain efficient. Finding better ways of negotiating costs with packers, suppliers, and buyers can drive prices to more adequate levels. Nonetheless, the supply chain needs more efficiency. It needs better technology. The end consumer is the one impacted. The supply chain must evolve to meet their needs. The goal should be make people's lives better and we can do that by beginning that journey to efficiency now.