Being able to source a consistent supply of high-quality seafood is essential for retailers seeking to maximize or even just maintain activity in that sector.
But recent disruptions in seafood inventories (the COVID-19 pandemic and weather-related issues) mean that maintaining a reliable and efficient supply chain is not always easy.
Finding the optimal partners can be tough, particularly as finding suppliers that follow sustainable operating practices becomes more critical.
“The challenge for supermarkets is picking trading partners who can collaborate effectively and have more end-to-end visibility in terms of where they are sourcing products,” said Peter Bolstorff, executive vice president of the Chicago-based Association for Supply Chain Management.
Validating trading partners’ sustainability measures is particularly crucial as more shoppers are making eco-friendliness an important part of their buying criterium.
Fifty percent of consumers, for instance, say that sustainability claims or certifications have a major impact on their seafood purchase decisions, states the Power of Seafood 2022 report, published by Arlington, Va.-based FMI—The Food Industry Association.
Yet, Bolstorff said only about half of the 20-largest seafood producers from around the globe “are taking the concept of sustainability seriously,” and that ensuring each party along the supply chain follows sustainable measures can be difficult.
Verification of farm-raised seafood is especially challenging as retailers must also trace the sourcing of the feed that is passed along by feed producers, wholesalers, processors, and distributors, Bolstorff said.
“The fresh supply chain navigates the end-to-end differently than the frozen, and the farmed and fed chain will be wider and more complex because of the use of feed,” he said. “The more intermediaries, the harder it becomes to see transparencies and ensure traceability.”
More major seafood producers, however, are looking to streamline such processes by reducing the number of parties along the chain via vertical integration systems. Fishing companies in such instances, for example, might also serve as the wholesaler and processor, Bolstorff said.
“The more vertical integration there is, the more agile the company becomes because it is not relying on purchasing from the next party down the supply chain,” he said. “Vertical integration also typically results in a more sustainable supply chain as there are fewer parties along the chain that must be held accountable.”
While vertically integrated companies also may be more price-competitive because they are not building-in margins for each function, many seafood suppliers lack the volumes to support an integrated system, Bolstroff said.
Price, however, remains a crucial element when selecting the most appropriate trading partners, as does the willingness of a potential supplier to detail where their seafood was caught; the level of traceability along their supply chain; and if the retailer can trust that the data is accurate, he said.
Gaging a supplier’s adherence to the guidelines of the major standards and certification organizations, meanwhile, can help in the decision-making process, Bolstorff said.
Such organizations include the London-based Marine Stewardship Council, which is focused on ending overfishing around the world, and Utrecht, the Netherlands-based Aquaculture Stewardship Council, which certifies farm-raised seafood as being environmentally and socially responsible.
In addition, supermarkets should consider the reliability of potential suppliers, he said, which includes a company’s ability to provide products in the face of disruptions.
It is important too for retailers to work with distributors that have a reputation for sourcing products that meet sustainability standards while operating within a trustworthy supply chain, he said. “The key part is trust and verify,” Bolstorff said. “It is one thing for an organization to say, ‘this is how I do it.’ It is another to verify it.”
Indeed, validating sustainable practices is becoming an operational necessity, Bolstorff said. “Sustainability has been on the list of things for seafood companies to work on for the last 15 years, but over the last two years it has moved to the forefront,” he said.
Though top-tier supermarkets are meeting many of the supply chain challenges, smaller retailers often lag and many still need to adopt measures for sourcing sustainable seafood and handling disruptions, Bolstorff said.
Such actions, however, will require buy-in from top-level management, he said. “It starts with having the right people within an organization doing the proper things,” Bolstorff said. “The company leadership must commit to the investment.”
While having an effective supply chain is an essential component of a successful retail seafood program, he added that creating such chains remains a complex process. “The good thing is that there is a science behind it, along with a body of knowledge and set of practices that allow companies to better navigate the situation properly,” Bolstorff said.