Kraft Heinz, Tyson among 9 companies to receive FTC order for supply chain data

Dive Brief:

• The Federal Trade Commission will order nine major retailers, wholesalers and CPGs to hand over data on supply chain challenges to “shed light on the causes behind ongoing supply chain disruptions,” the agency said Monday.
• The nine companies are Amazon, Associated Wholesale Grocers, C&S Wholesale Grocers, Kraft Heinz, Kroger, McLane, Procter & Gamble, Tyson Foods and Walmart. The firms have 45 days to respond to the FTC’s order. The FTC did not respond when asked why it chose these specific companies.
• The companies will have to provide internal documents related to supply chain strategies, pricing decisions and supplier selection. The FTC order asks for the primary factors disrupting procurement, transportation and distribution of products, in addition to the most affected inputs and suppliers, as well as steps to workaround disruptions.

Dive Insight:

Challenges up and down the supply chain have grabbed the attention of the public sector. The FTC is the latest agency seeking to unearth the causes of disruption.

The FTC’s focus as an agency is on consumers. The commission will examine how supply chain snags have led to rising prices for consumers, and whether anticompetitive practices exist in the marketplace that in turn affect consumers.

Much of the information the FTC will solicit is at the forefront of supply chain managers’ day-to-day operations and planning.

For one, the commission seeks information on the factors “disrupting [companies’] ability to obtain, transport and distribute their products,” the FTC press release stated.

Capacity constraints across freight modes have challenged firms’ ability to receive and move their products. On Monday, 78 container ships were waiting to unload at the ports of Los Angeles and Long Beach, according to the Marine Exchange of Southern California. Trucking capacity remains squeezed, with about 12 refrigerated loads posted on load boards for every available truck, and reefer rates surpassing $3 per mile.

And the disruption is not limited to transportation. Labor was Amazon’s chief capacity challenge in Q3, which meant redirecting inventory to fulfillment centers that had enough staff. The tradeoff: longer and pricier routes.

Some businesses are reporting signs of progress on the freight front.

“The port and transit delays are improving,” Walmart CEO Doug McMillon told President Joe Biden at the White House Monday.

The retailer has seen a 51% increase in throughput at Southern California ports, in part due to the shift to 24/7 operations. Walmart has been part of the 24/7 shift since the beginning, when it committed to “increase its use of night-time hours significantly … [to] increase throughput by as much as 50%.”

The FTC order will also require data on “the products, suppliers and inputs most affected.”

Dozens of commodities are in short supply, according to the Institute for Supply Management. Shortages have affected electronic components, semiconductors and several types of steel for upwards of a year. Packaging, pallets and resins have also been in short supply for months.

“Supply chain disruptions are upending the provision and delivery of a wide array of goods, ranging from computer chips and medicines to meat and lumber,” FTC Chair Lina M. Khan said in a statement.

CPGs, including the ones in FTC’s inquiry, have reported supply shortages on their earnings calls.

“Certainly demand and supply have not balanced globally,” P&G CFO Andre Schulten said on an earnings call in October.

Tyson Foods echoed that sentiment. “Customer demand during the fiscal ’21 outpaced our ability to supply products, but we’re working aggressively to fill that void,” CEO Donnie King said in November.

The order from the FTC is part of Section 6(b) of the FTC act, meaning the commission can conduct studies without a specific law enforcement purpose. The commission did not respond to questions about next steps or if it plans to solicit information from additional companies beyond the initial nine.