Food Industry Continues to Grow, but Supply Chain Inefficiencies Remain: ISM Report

According to the most recent ISM report, the food industry, the manufacturing sector, and the overall economy grew in September. The Purchasing Managers’ Index (PMI) decreased by 1.5 percentage points in September to 59.8%, indicating slowed growth for the manufacturing sector. Despite the slight dip, September marks the 25th consecutive month of growth for the manufacturing sector and the 113th consecutive month of growth for the overall economy.

Here’s what the food, beverage, and tobacco industry reported for September:

• Growth in new orders

• Growth in production

• Growth in employment

• Slower supplier deliveries

• Higher raw materials inventories

• Customer inventories too low

• Increased prices for raw materials

• Growth in order backlogs

• No change in new export orders

• Growth in imports

The average lead time for maintenance, repair, and operating supplies gained one day in September, while average lead time for production materials shed one day, resulting in totals of 34 days and 68 days, respectively. Commitment lead times for capital expenditures saw an uptick of three days.

Overall, things are on the upswing, including employment, new orders, and production, yielding optimism from industry representatives. However, supply chain inefficiencies are coming out of the woodwork. In the coming months, it will be critical for the manufacturing sector to identify supply chain shortcomings and formulate solutions for improvement.