Chen Assesses Supply Chain Outlook for Meatpacking Industry

Jimmy_Chen

LEWISBURG, Pa. — The meatpacking industry has slowed dramatically amid COVID-19 outbreaks at plants, and that may lead to future meat shortages. While Bucknell Freeman College of Management Professor Jimmy Chen predicts the industry may recover quickly, it could come at a cost.

“The meat industry is still quite labor-intensive, but to some extent, it has transitioned from batch production processes to assembly line production processes — so raw materials now flow through on conveyor belts or hangers,” says Chen, a supply chain researcher. “When the reduced number of workers causes a bottleneck, the production flow will be backed up. Unfortunately, the backed-up materials have a relatively short shelf life and high holding costs, so livestock suppliers and manufacturers have to make quick decisions to stop further losses.”

The good news, according to Chen, is that the meat industry supply chain tends to be shorter and simpler than most. Many entities are located within short proximity to markets due to the limited shelf life of the product, so he says the industry will be able to adjust and recover fast, assuming pandemic safety guidelines for meatpackers are improved and enforced.

In the meantime, Chen doesn’t see panic buying or people fighting over meat during the shortage.

“Unlike toilet paper, the meat supply and demand will be balanced quickly because consumers will probably reduce their meat consumption as the retailers raise the meat price,” he says. “To the retailers, the price markup is much more flexible for meat products than for toilet products. Meat is not like toilet paper, which runs on a razor-thin margin.”

Moving forward, Chen believes meat manufacturers are realizing that they should invest in automation and reduce the number of workers to better overcome future disruptive events.

CONTACTS: Chen, 814-441-7769, jimmy.chen@bucknell.edu; Mike Ferlazzo, 570-238-6266, mike.ferlazzo@bucknell.edu

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