August 2022

Whether it's a fruit-flavored lollipop, old-fashioned taffy or a king-size chocolate bar, Americans love their candy. And with the average citizen indulging in a sweet treat at least two to three times per week, according to data from the National Confectioners Association, it takes a lot of work to keep their sugar fixes satisfied. Indeed, the industry employs close to 58,000 people working in various capacities to keep the candy supply chain flowing.

But as with a number of other industries, the candy sector is in the midst of labor shortage, unable to produce as much product as they have in the past and at the pace of consumer demand. Paired with other challenges — including higher operating costs and problems receiving necessary materials on time from their suppliers — candy makers are rethinking their processes and retention strategies to adapt to the realities they face in an effort to improve productivity.

Among those confectioneries that has seen better days is Atkinson Candy, a Texas-based family company specializing in caramels, peppermint sticks and peanut brittle, among other hard and chewy candies. Speaking to Food Dive, Eric Atkinson, who serves as the company's CEO, noted everything changed for the company after COVID-19, particularly in terms of manpower. Prior to the pandemic, it would take them no more than two week to deliver orders to their customers, such as retailers and wholesale distributors. Ever since, they're lucky to have the orders in buyers' hands within three months. Frustrated by the delays, many of those customers wind up going elsewhere. Referring to customer dissatisfaction and the resulting loss in sales, Atkinson noted "it's like listening to fingernails on a chalkboard."

Supply chain issues are one of several problems candy makers are battling.Supply chain issues are one of several problems candy makers are battling.

Small candy makers are struggling the most
As with much of the business world during the lockdown, it's primarily small and mid-sized organizations that have experienced the worst of the fallout; large enterprises have gotten along fine, even improving their revenues despite their supply chain challenges. Because smaller businesses have fewer resources and cash flow relative to the big players — not to mention a smaller workforce — they've borne the brunt of the pandemic's impact, said Carly Schildhaus, a spokesperson for the National Confectioners Association, in an email to Food Dive.

From raising wages to offering sign-on bonuses, small candy makers are resorting to various strategies to persuade workers into staying. Daniel McCarthy, an assistant marketing professor at Emory University, told the online publication that employers also need to be forward-looking with how they manage their expenses to ensure that they remain profitable while raising wages and adjusting to inflation. He also noted that candy makers should exploit what advantages they have relative to other industries. One of which is their costs — it's not as expensive to produce.

"The good thing that they have going for them that other larger [industries] would not is the fact that the [cost for their product] is so low," McCarthy explained. He added that since candy bars are inexpensive, a 20% increase in what's charged likely won't phase buyers to the same degree as a similar percentage increase would for other industries.

Candy makers are also lowering their costs by buying alternative ingredients when churning out candy in lieu of staples they usually use but are hard to find or are more expensive due to supply shortages. They're also snatching up ingredients more quickly than they in the past to shore up their inventory and avoid delays.

Autonomous vehicles will be part of the long-haul trucking industry's future, but a group of leading manufacturers and developers have asked Californian lawmakers to relax regulations that relate to testing self-driving trucks on public roads now. In an open letter to California Governor Gavin Newsom, the companies said that their attempts to both harness innovation and provide a solution to the skills gap within the trucking industry were being "explicitly prohibited" by the state's Department of Motor Vehicles.

According to Fast Company, the group – which includes Waymo, Uber, Volvo and Aurora – is concerned that autonomous semi-trucks and delivery vehicles that weigh more than 10,001 pounds are unable to be effectively tested on California's roads and highways. The Golden State has a global reputation for tech innovation, the authors of the letter said, and the evolution of autonomous trucks is being impacted by an inability to prove their value on crucial transportation links within the supply chain.

"Without regulations to permit this technology, California is at risk of losing our competitive edge," the letter said. "As the industry deploys new pilot programs, builds critical infrastructure, and creates the 21st century jobs California's businesses need to grow, investment is limited to other states that allow deployment of autonomous trucks. In effect, it has been ten years since the initial 2012 enabling legislation, and over this period, there has been no movement for autonomous trucking regulation."

The future of trucking
Citing research from the Silicon Valley Leadership Group Foundation, the letter went on to point out the financial benefits of autonomous trucking technology and the growing shortage of experienced truck drivers. By addressing this regulatory stalemate, California could not only expect to see an additional $6.5 billion in economic activity but also play a significant role in reducing the number of truck-related incidents that happen on American highways.

Autonomous vehicles  are the future of truckingAutonomous vehicles are the future of trucking.

Irrespective of the fact that this letter to Governor Newsom could be seen as self-serving, there is a defined need for the trucking industry to take advantage of the latest tech innovations. Back in October 2021, the American Trucking Associations predicted that there would be a shortfall of around 160,000 drivers by 2030, with the pool of available and experienced truckers shrinking dramatically in recent years.

And while autonomous trucks have long been seen as the answer to the stresses that humans endure behind the wheel, there are some well-publicized concerns that using artificial intelligence in an operational domain such as a highway or urban environment could be a danger to public safety. There is also the question of job displacement within the supply chain itself, but drivers would still be involved in the process. However, their role would likely to be more supervisory and related to taking over when the truck reached, for example, a transfer hub or distribution facility.

In fact, a recently released study cited by Axios said that up to 90% of highway trucking could be done by autonomous vehicles in the not-so-distant future. As an added bonus, the physical strain that long-haul truck driving has on the human body would be alleviated, with the expectation being that the industry would be become more attractive to people who prefer not to drive hundreds of thousands of miles a year.

During the pandemic, when buying activity was frenzied and personal savings were substantial, the modus operandi for retailers was pretty straightforward: If you have it in stock, customers will purchase it — whether in store or online. Product shortages were a common sight throughout much of the country, due in part to supply chain bottlenecks, so stocking up wherever possible made sense.

But with the COVID-19 lockdowns lifted and life largely back to normal, retailers appear to have overestimated consumer demand, with their inventories far exceeding the once torrid pace of sales.

From big-box retailers like Target and Walmart to consumer product parent companies like Procter & Gamble and Unilever, several household-name businesses are pulling back on their purchase orders in light of how much inventory they already have that hasn't yet sold. Helen of Troy, whose brands include Vicks, Braun, Honeywell and Drybar, intends to focus its efforts on reducing what inventory exists through discounts while adjusting earnings expectations.

Julien Mininburg, who serves as the CEO of Helen of Troy noted on a recent earnings call that market realities will force the company to re-examine its outlook for 2022, and perhaps beyond.

"Now that we ourselves are reducing [inventory] and they're reducing theirs, it'll lead for an opportunity to re-normalize for both and it'll be for the benefit of all over time," Mininburg noted, referring to several of Helen of Troy's largest buyers, like Walmart, Amazon and Target. "It's just painful on the path from here to there."

Retailers aim to reduce their inventory that is piling up due to slower sales.Retailers aim to reduce their inventory that is piling up due to slower sales.

Inflation eating into household budgets
The uptick in inventory is largely due to the surge in prices charged by businesses in just about every industry. With inflation raging now at more than 9%, according to the Consumer Price Index estimate from the Labor Department for June, retailers are charging more to offset the higher costs they've incurred. This has led to many Americans pulling back on some of their discretionary purchases, opting to buy more for their needs rather than wants.

Although the pullback has been slow, it's starting to be borne out in the data. In June, for example, retail sales nationwide rose from May but slowed considerably compared to previous months, up just 0.6%, according to the National Retail Federation's estimates. Unadjusted on a year-over-year basis, sales rose 5.8% on a three-month moving average. That's down from 7% year over year through the first half of 2022.

Sales have also tempered for big box giants like Target and Walmart. In response, their respective inventories have swelled. In a press release, the Target Corporation announced its plan to focus on "inventory optimization," including markdowns, canceling orders and eliminating excess inventory by various means.

Walmart, meanwhile, is working through inventory issues of its own. Speaking to Fortune, Walmart COO John Furner said that around a fifth of the 32% spike in the company's inventories stems from poor inventory management — and it will take time for conditions to normalize.

"It's probably another couple quarters until we manage the inventory down to where we want it," Furner said during Walmart's annual employee meeting held in Fayetteville, Arkansas, where the company is headquartered.

One way the organization intends to winnow its inventory is by minimizing price increases as much as possible, particularly on household staples like canned tuna and boxed pasta.

With the price of gasoline still uncomfortably high for most people, more Americans aren't just seriously considering hybrid and all-electric vehicles as their next cars; they're actually buying them. Indeed, during the second quarter, nearly 196,800 electric vehicles were sold nationwide, according to Cox Automotive. That's a 66% increase from the same three-month period in 2021. Most electric vehicles cost substantially more than traditional automobiles, but the ability to avoid the pump has been a worthwhile incentive.

But if the breakneck pace of people buying EVs continues, there is the looming threat of a shortage of a rare earth mineral needed to manufacture batteries, further stressing an already strained supply chain.

That mineral is graphite. Primarily consisting of carbon and used for lubricants, brake linings and steel, graphite is also needed for the anodes that enable a lithium battery to operate and store energy. But as Supply Chain Dive recently reported, there are a small handful of graphite mines around the world, and the uptick in demand is beginning to create a severe imbalance.

Gregory Bowles, executive chairman for Ottawa Canada-based producer Northern Graphite Corporation, told the online publication that lithium, nickel and manganese are typically the rare earth minerals people think of when it comes to those that are needed to make batteries. But graphite is every bit as essential.

"Graphite has kind of been the poor cousin of the battery minerals and doesn't get the attention of the other commodities," Bowles explained. "But we're getting very close to an inflection point where demand overtakes supply and this is going to be first-page news."

Graphite is one of several rare earth minerals used to manufacture ion batteries.Graphite is one of several rare earth minerals used to manufacture ion batteries.

China produces most of the world's graphite
While the United States is rich in natural resources, particularly energy-related commodities like natural gas and crude oil, it has next to nothing in the way of graphite. In fact, according to data from the United States Geological Survey, barely 1% of the world's graphite produced in 2021 originated from North America. And the graphite that did derive from this part of the world was primarily manufactured in Canada and Mexico. The vast majority comes from China, accounting for almost 80% of global output last year. The centralized nature of where graphite mines are located has the potential to compromise the graphite supply chain for automakers.

Daisy Jennings-Gray, a senior price analyst at Benchmark Mineral Intelligence, noted that another complication is the fact so few parts of the world have the equipment needed to make graphite usable. China is where most of the downstream processing of graphite takes place.

"The supply is getting tighter and tighter and the downstream demand for graphite is accelerating really, really rapidly," Jennings-Gray told Supply Chain Dive.

Lawmakers and the White House are aware of this issue and are taking measures that can shore up graphite production. This includes a $3 billion proposal that the Department of Energy announced in February that is designed to bolster domestic battery manufacturing.

Additionally, Alabama is poised to become the first state in the country to host a graphite manufacturing plant. Construction of the $202 million graphite processing plant is underway and the facility is slated to open for business in 2023, according to