'Omicron absenteeism' strains Conagra's supply chain


Sarah Zimmerman, SupplychainDive

Jan. 10, 2022


Dive Brief:


         Conagra is incurring higher costs as supply chain issues snarl production and the omicron variant constrains the availability of labor, CEO Sean Connolly told analysts Thursday.

         The packaged foods company is paying more in overtime amid a rise in "omicron absenteeism," said Connolly. "I think, itís entirely reasonable for all of us to project that the next month or so could remain strained within the supply chain as omicron runs its course."

         Labor constraints in addition to above-average inventory write-offs led the Slim Jim maker to absorb $21 million in supply chain costs in Q2, a filing from the Securities and Exchange Commission shows.


Dive Insight:


The fast-spreading omicron variant is compounding existing labor issues, raising costs and pushing companies to revert to some of the same tactics they used earlier in the pandemic to meet demand.


Conagra pulled back on merchandising activity to temper demand. The company is looking at focusing production on high-selling products, part of the playbook used by CPGs to reduce complexity and drive efficiencies when demand rebounded in 2020 following a pandemic-induced decline.


"As we saw early in COVID, there are steps we can take to maximize line efficiencies and throughput, things like SKU simplification, etc.," said Connolly...


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