Issues Faced At Each Stage In The Seafood Supply Chain

Issues Faced At Each Stage In The Seafood Supply Chain

The seafood supply chain starts with a fisherman’s first catch and ends with the consumer purchasing from a retail store, restaurant, or food service provider. While it may seem relatively straightforward, it’s a complex web of interconnected parts that must be properly coordinated for success.

Many stakeholders are involved with preparing, packaging, and moving products from a boat to the final point of sale. A well-functioning seafood supply chain comes down to trustworthy partners and sufficient tracking of sales and inventory data.

This blog post will explore challenges faced by seafood supply chain businesses, going over the hurdles and logistics of how a catch eventually makes its way to a consumer’s plate. 

What you need to know about the seafood supply chain

Before we get into issues commonly dealt with, let’s review notable aspects of the seafood supply chain.

There’s a difference in purchasing methods

Buyers along the supply chain typically purchase products either through a commodity chain or what’s known as differentiated products.

Commodity chains

When businesses buy seafood from a commodity chain, they receive products that come from various countries and fish farms. The seafood is sourced from multiple farms and countries, traveling long distances to the cheapest processor. During this process, the fish may be frozen, thawed, and then refrozen.

The commodity chain process prioritizes price, with sustainability not being a top concern since the product’s origin doesn’t necessarily matter. The goal is to sell large quantities of seafood to the end buyer. 

High-volume fish farms use commodity chains most often, selling products like cod, salmon, anchovies, crab, and tuna.

Differentiated products

The second type of purchasing is through differentiated products. This type of seafood is traceable and can be categorized by location, fishing method, fisher, certification status, and brand. The leading purchasing factor is quality. 

Differentiated products require a more comprehensive system to trace details like the product’s origin accurately. Oftentimes, that means enlisting the help of technology and software solutions.

Marketing plays a powerful role in brand recognition

Sales numbers depend greatly on the strength of the end buyer’s brand.

Fishers will often collaborate with retailers to establish a strong brand presence. 

Non-profit organizations and NGOs can also influence how businesses market themselves by bringing to the forefront topics that consumers care about, such as traceability, sustainable fish farming practices, and buying right from the source (at places like an artisan fish market).

Partnerships often come with benefits (but can also cause complications)

Strong relationships are key to being successful in the fishing industry. 

Many fisheries prioritize establishing and maintaining trust with the mid-chain stakeholders they work with, as they’re able to provide incentives like fisherman boat financing or discounts on ice and gas. However, this can also cause complications, as such incentives can trap fisheries in a single market. 

It’s important to establish mutually beneficial relationships. Weak partnerships can lead to delays, higher costs, and product spoilage. 

There are two types of supply chain structures

Seafood supply chains are classified into two types: vertical integration and independent entities.

Vertical integration

In a vertical chain, there’s a parent company that oversees the entire supply chain, including fishing, production, distribution, and selling. This is to ensure consistent quality assurance.  

The main disadvantage of this model is that it can be difficult to influence larger companies to change standard practices.

Independent entities

On the other hand, the independent entity structure involves many stakeholders. This type of structure works well for smaller supply chains, as it allows for collaboration to prioritize profit and sustainability. 

When the supply chain grows, however, it can be difficult to work towards a common goal or implement changes that align with the economy and market conditions. 

Common issues faced in the seafood supply chain

Let’s discuss the most common issues facing the seafood supply chain.

Cheap operations causing problems

Some buyers favor the commodity supply chain because it’s known as the more affordable option. Unfortunately, however, cheaper means you’ll have to pay in other ways. Negative ripple effects include:

  • A larger carbon footprint

  • Overproduction

  • Overfishing

  • Poor product quality

These types of operations also produce a lot of waste, as products travel thousands of miles before they reach the consumer. Reducing this kind of waste has proven to be difficult since there’s no requirement for global production to follow standards set out by domestic regulation and law. 

Poor traceability

High demand creates large supply chains that do not prioritize quality. Communication breaks down and mid-chain actors forgo transparency and traceability so they can bring the seafood to market faster.

This causes a myriad of problems, with accountability becoming difficult without an easy way to source products.

Lack of sustainability 

To meet supply and demand, large fisheries catch up to 3 million tonnes of fish in a single day, whereas smaller fisheries catch around 80 to 200 kilograms. 

Maximizing production means companies are quick to reduce sustainable supply chain practices and opt for fishing farms that typically have poor labor and sanitary practices. The cost of fish may be lower, but the expense of consuming the product is high for the climate, waterways, and human health. 

Solutions to common seafood supply chain challenges

Addressing issues in the fishing industry means implementing different decision-making processes that prioritize customer satisfaction and sustainability. 

You can, for example, provide end-buyers and customers with more options and offer greater transparency with information that allows for more agency and informed choice-making in purchasing.

End-buyers should consider working with multiple suppliers to secure products that are market-desirable, shopping directly from the source. Products provided should have prices that align with value and quality.

Silo: the best solution to address supply chain problems

Need a better way to oversee your business and your relationships along the supply chain? 

Silo’s Enterprise Resource Planning (ERP) software solution helps businesses like yours significantly increase efficiency and cut out excess costs.

Seamlessly track, trace, and manage orders all in one centralized location. With Silo, you can eliminate guesswork and increase visibility by accurately sourcing the details of your inventory. You’ll have all the information you need to make informed decisions.

Access to accurate data using our platform means you can price your products more competitively and eliminate efficiencies in your buying and selling practices. Gain insight into historical buying trends to determine what end-buyers want to see on shelves.

And, with communication breakdown being one of the biggest challenges in supply chain management, you’ll want a way to streamline the process of information exchange. Silo makes communicating with vendors, processing transactions quickly, and exchanging information internally with your team easy.

Looking for the funding to implement new measures and expand operations? Silo Capital is the solution. One of Silo Capital's most popular solutions, Silo Instant Pay, provides you with upfront capital by paying 90% of a customer’s invoice in only 3 days, freeing up cash for you to reinvest into your business.

Book a demo with Silo today to learn how Silo can help your seafood business thrive.

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