Finding solutions when supply is challenged

Insights for navigating obstacles and meeting business needs.

In November 2022, Ingredion reported its progress towards its $160M investment to expand capacity of its specialty modified and clean label starches. The company, which had previously invested $190M in the last four years for other capacity expansion projects — including base material diversification, a new manufacturing plant in China and a new line dedicated to clean label starches — noted the impact of its investment to providing continuity of supply, offering local supply and production and helping manufacturers create products that deliver an exceptional eating experience.

However, supply remains a top concern for manufacturers. A 2022 global ingredient sourcing study1 revealed the ongoing supply and price inflation challenges and their impact on both short- and long-term initiatives. Some businesses reported a lack of confidence to innovate given the uncertainty around supply, while others have abandoned innovation entirely to focus on emergent manufacturing needs. One manufacturer stated: “How can I think and discuss new trends with our customers when I can’t ensure the availability of classic products?”

The consequences of not having supply are numerous and incalculable to a manufacturer. At the production level, all the components required for that formulation must be available at the scheduled time; otherwise, a delay may necessitate an additional shipment of any perishable or short shelf-life ingredients. Depending on when the ingredients are available and the timing relative to the other products on the production schedule, the facility may incur extra costs associated with recertifications and unplanned downtime. All these factors impact the cost of goods and profit margin.

Supply is also critical for swift distribution of finished products to foodservice operators, brick-and-mortar stores and online retailers. Apart from the implications to their partners, gaps in product availability can present disruption in market share and brand perception for a brand, particularly when brand loyalty is low in both online and in-store channels across all demographics. Here, the lack of supply impacts more than immediate sales and profit — future opportunities are affected as well.  

Similarly, there is an impact of pausing innovation. Innovation has a financial component. It offers the potential to compete against rival products in a category, and on occasion, be first to market. Sometimes, a manufacturer is expected to launch a product at the same time as another manufacturer. In all cases, speed to market is imperative and impacts a company’s forecasted growth plan. Innovation can be also transformative. Ingredients, on-pack claims, packaging and sourcing can all influence product quality, consumer perception and brand sentiment, which in turn can impact consumer engagement and influence brand value.

How can manufacturers address these short-term needs without sacrificing their longer-term strategy?

First, whether you’re reformulating or innovating, consider how to approach your project to maximise value. This includes all perspectives, from consumer well-being and environmental impact to reducing costs and improving efficiencies. Ask about new ingredients and formulation tools. If reformulation is on your list, look to an experienced partner and set realistic timetables. Manufacturers indicated they considered finding ingredient alternatives a task that they would need to consider over time given the complexity.1

If you’re considering clean label but haven’t taken the leap, consider the positive impact of clean label on revenue, profit margin and pricing. This resource page is for all audiences — including those who have already made the switch — and includes proprietary insights on how to propel your business forward based on your current clean label stage.

As you look to innovation, whether in retail or foodservice, discover support in developing nutritious, great-tasting products that satisfy formulation needs and increase brand preference. Discover the top trends likely to impact your category, and find partners who will collaborate with you to bring differentiated textures to new markets and create lasting brand value.

Last, here is a list of questions for manufacturers to ask their ingredient suppliers:

  • What steps have you taken recently to support current and future supply needs? What steps are planned in the near-term?
  • How can I be confident that you will be able to support my growing demand and starch needs over the coming years?
  • Do you have dual supply points and/or manufacturing facilities?
  • Do you offer local supply and manufacture, and if so, for what products?
  • What types of base materials and ingredients do you have, and what applications are they best suited for based on their functional performance?
  • What tools do you have that can support my formulation development and accelerate my speed-to-market?
  • How does your geographic footprint and supply chain strategy impact CO2 emissions?
  • What organisations have you partnered with, and how does this support my sustainability initiatives?
  • How can you help me address holistic value for my business?

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1 ATLAS, Ingredion Proprietary Manufacturer Study, 2022