By Joshua Smart of HUB International
The global supply chain landscape is undergoing profound transformation. The conversation has shifted to navigating inflation, tariffs, geopolitical uncertainties, labor shortages, climate-related disruptions and technological advancements. Business leaders must prioritize supply chain resilience, leveraging strategies that mitigate risks and optimize operations to maintain a competitive edge.
Food processing companies that successfully address these challenges will rely on a combination of risk assessment, strategic partnerships, innovative technology and contingency planning.
Here are eight strategies to help those in the packaged goods industry solve supply chain challenges and improve operational efficiency:
1. Nearshoring for greater stability
One of the most significant shifts in supply chain management is the growing trend of nearshoring — sourcing goods and services from neighboring countries rather than relying on long-distance suppliers. In 2024, Mexico surpassed China as the top importer of goods to the U.S., driven by efforts to reduce reliance on Asian imports, lower transportation costs and minimize geopolitical risks.
Nearshoring offers multiple benefits, including:
* Shorter lead times and faster delivery
* Reduced exposure to global shipping disruptions
* Improved quality control and easier supplier collaboration
* Compliance with evolving trade policies
Businesses should evaluate their supply chain models and explore opportunities to bring production closer to home while maintaining cost efficiency.
2. Strengthening supplier diversification
Supplier dependency is a major risk for food processing businesses. Relying on a single supplier—or multiple suppliers concentrated in one region, like China—can create vulnerabilities in case of disruptions such as natural disasters, labor strikes or economic downturns.
Strategies to mitigate supplier risk include:
* Establishing relationships with multiple suppliers across different geographic locations
* Vetting vendors thoroughly, including reviewing their insurance policies and financial stability
* Negotiating contracts that include clear terms for risk-sharing and indemnification
* Creating a contingency plan for rapid supplier transitions if necessary
Diversifying suppliers ensures that businesses can adapt to changing market conditions and maintain continuity even when disruptions arise.
3. Building strong supplier relationships
Supply chain resilience is not just about contracts and technology — it’s also about fostering strong relationships with suppliers. Businesses that engage closely with their suppliers can better navigate disruptions and maintain continuity.
Key approaches to strengthening supplier relationships include:
* Transparent communication and regular check-ins
* Joint contingency planning and risk assessments
* Fair contract negotiations that benefit both parties
* Long-term partnerships that encourage collaboration and innovation
A strong supplier network ensures that businesses can quickly adapt to changes while maintaining trust and reliability across the supply chain.
4. Leveraging advanced technologies
Technology continues to reshape supply chain management, providing greater visibility, automation and predictive insights. Businesses that embrace digital transformation will have a competitive advantage in navigating supply chain challenges.
Key technologies improving supply chain resilience include:
* Artificial intelligence (AI) and machine learning (ML): These tools help analyze supply chain data, predict disruptions and optimize inventory levels
* Blockchain: Improves transparency and traceability by securely recording transactions, reducing fraud risks and enhancing trust between stakeholders
* Internet of Things (IoT) and sensors: Provides real-time tracking of goods and raw materials, helping companies respond swiftly to supply chain disruptions
* Cloud-based supply chain management platforms: Enhances collaboration across different supply chain touchpoints, improving decision-making and efficiency
* Automation and robotics: Reduces reliance on manual labor and increases production efficiency, even in hazardous or high-demand conditions
Businesses that invest in the right technological solutions can improve supply chain visibility, increase agility and enhance overall risk management.
5. Enhancing cybersecurity measures
As supply chains become more digitized, cybersecurity threats pose a growing risk for food & beverage processors. Cyberattacks such as ransomware and data breaches can cripple supply chain operations, leading to financial loss and reputational damage.
To strengthen cybersecurity within the supply chain:
* Conduct regular security assessments and penetration testing
* Implement multi-factor authentication and encryption for sensitive data
* Require suppliers and logistics partners to meet cybersecurity standards
* Use blockchain technology to enhance data integrity and transparency
* Develop an incident response plan to quickly address cyber threats
Proactive cybersecurity measures help prevent disruptions and ensure secure operations in an increasingly digital supply chain ecosystem.
6. Conducting stress tests and scenario planning
Global supply chains face uncertainty from inflation, economic instability and climate-related events. Stress testing supply chain operations helps businesses prepare for unexpected disruptions and develop proactive risk management strategies.
Scenario planning includes:
* Analyzing geopolitical risks and trade policy changes
* Assessing financial stability under different economic conditions
* Simulating potential supply shortages and response strategies
* Identifying alternative suppliers and transportation routes
Businesses that regularly conduct supply chain stress tests will be better equipped to respond to disruptions and minimize operational setbacks.
7. Investing in contingent business interruption (BI) insurance
Despite the best planning, supply chain disruptions can still occur. BI insurance provides financial protection when a company cannot operate due to supply chain failures beyond its control.
BI insurance covers:
* Lost revenue due to supplier disruptions
* Additional costs incurred to secure alternative suppliers
Working with an insurance broker who understands industry-specific risks can help businesses secure tailored coverage and minimize financial losses in the event of supply chain failures.
8. Preparing for market rebounds
Even when a crisis disrupts the supply chain, businesses must plan for recovery. As demand rebounds, those that can quickly ramp up production and optimize logistics will gain a competitive advantage.
Strategies to prepare for a market rebound include:
* Maintaining flexible production schedules that align with available resources
* Adjusting pricing strategies to reflect changing costs
* Strengthening relationships with key customers to secure long-term business
* Investing in supply chain analytics to predict demand fluctuations
By anticipating recovery trends and preparing for increased demand, food & beverage processors can position themselves for growth in a post-disruption market.
Supply chain challenges will continue to evolve, influenced by economic shifts, technological advancements and global uncertainties. Businesses that proactively implement strategies such as nearshoring, supplier diversification, advanced technology adoption and cybersecurity enhancement will be better equipped to manage disruptions and maintain operational efficiency.
Those that stay ahead of industry trends and leverage innovative solutions will not only mitigate risks but also gain a competitive edge in an unpredictable market landscape.
Joshua Smart ([email protected]) is the North American practice leader and chief sales officer for agribusiness, food and cannabis with insurance brokerage HUB International. He is responsible for leading the strategic initiatives around growing and supporting the Agribusiness segment. He provides risk management and cost containment strategies that parallel client’s business goals and priorities.
