Procurement Uncertainty Makes It Harder for Distributors of Animal Feed Raw Materials

At some point, feed producers will no longer have enough room for uncertainty to keep their procurement process stable. The issue here, however, seems to revolve less around logistics than about assisting customers in dealing with fluctuating conditions without affecting production schedules.

For instance, feed production requires steady access to ingredients. If the sourcing of these ingredients becomes unpredictable or changes suddenly, feed producers might need to revise their purchasing strategies, check inventory or consider a new supplier. In most cases, distributors of animal feed ingredients end up playing a pivotal role in all these processes since they lie in the middle of the supply chain.

Distributors' duties, however, expand well beyond delivering products. As feed producers look to secure their sourcing, they now seek information about which materials they can procure and if there is a need for alternatives.

This is especially true for feed manufacturers who work according to strict production schedules. In case there are any delays regarding ingredient availability, formulating and managing inventory could become problematic for these businesses.

Distributors themselves have to find a balance between making sure that the product remains available for their customers and keeping inventory costs low. Managing inventories properly means constantly monitoring customers' demands and changing supply situations.

It is therefore not surprising that maintaining steady relationships along the supply chain plays a key role here. Most feed manufacturers prefer reliable ingredients since formulation can become a problem when the sourcing changes all the time. Thus, those distributors who have dependable sources of materials might be more relevant for the producers' procurement strategies.

What makes things even more complicated is the variety of materials involved. In different cases, various ingredients could be subject to unique sourcing conditions, logistics and other aspects.

There are also some shifts in procurement discussions. Nowadays, buyers pay attention not only to prices but also to the reliability of the suppliers. The competitive cost of an ingredient might lose its attractiveness when it comes to sourcing issues and delivery terms.

One way to deal with that problem is improving communications with customers. In particular, they want more information on potential constraints in advance so that procurement decisions could be adjusted accordingly.

These changes create a new dynamic in the market, emphasizing the need for planning over reaction. Both distributors and feed producers can benefit from early sourcing decisions since this would reduce the pressure on both parties.

Thus, distributors of animal feed raw materials continue to play a vital role in the supply chain. At the same time, however, they become more significant in the context of procurement uncertainty. With continuous production becoming crucial for feed manufacturers, visibility of the supply situation starts to matter as much as material itself.