Everyone, from the consumer looking for much-needed products, to the president of the United States, wants to give a big shout out to the hundreds of thousands of men and women stocking shelves, running registers, cleaning stores, working distribution centers, driving trucks and much more during the coronavirus pandemic that has swept the country over the last six weeks.
The bottom line is that without their efforts, and sacrifices, there was no way the supply chains could keep stores stocked with product during this pandemic.
“We are deeply grateful to our store associates for their tireless dedication during this critical time. I appreciate you highlighting them,” said Andrew Whelan, a spokesperson for Albertsons. “They are working long hours under difficult circumstances to make sure their neighbors have the food, medicine and essential goods they need. We couldn’t be more proud of them.”
Doug Baker, vice president at FMI - The Food Industry Association, also felt compelled to recognize those working tirelessly in retail these past two months. “We’re humbled by the way this industry comes together in a time of crisis, and we applaud everybody that is getting up every day and going to their jobs to support citizens in their communities.”
Indeed, it is this brave manpower that is keeping product moving through warehouses and into stores, cranking through shortages, delivering online orders, running plants 24/7. But how?
Through March and into April, shoppers have continued to apply pressure to the supply chain. Toilet paper is still gold. Retailers have new challenges to enforce “social distancing” in stores, getting shoppers to stand six-feet from one another, sanitize stores and hire more workers. Then there’s paying workers extra money and awarding extended sick pay.
But as more and more challenges continue to steamroll the retail industry, the greater the industry has been responding — all to keep the supply chain moving.
SUPPLY CHAIN STRATEGIES
As FMI’s Baker said, “the machines are running,” and at a round-the-clock clip, so it is not necessarily a supply chain issue but a demand issue. “It becomes a supply chain issue if you start having equipment issues, if you start having ingredient issues, if you start having labor issues,” he said.
Within that supply chain, private brand manufacturers and retailers are working together to execute the most efficient strategies to keep up with demand. Baker said strategies include suspending slower-moving items and pack sizes to focus on fast-moving ones.
“They’re doing us favors by simplifying their selections,” said Mark Singleton, vice president of Rudolph Foods, the world’s largest producer of pork rinds, including private label for several retailers. “Instead of eight SKUs, it’s asking for five SKUS,” he said, noting that it saves the company time on the line to not have to stop and change out film and bags.
But the global magnitude of COVID-19 is something else. “I don’t think anybody has a contingency plan for when everything just stops completely nationwide or worldwide,” said IHL Group’s Buzek, adding that on the other side of that, no company has a plan for when sales triple nationwide and worldwide overnight. “You have contingency plans for the Internet going down, a power outage. You generally don’t have contingency plans for something this widespread, this quick, where in four or five days the world completely changed.” What makes the COVID-19 pandemic unique is the disparity between demand in some industries compared with others. Hotels, airlines, fashion and dining are shut down, but retail — and certain categories at retail — is seeing unexpected sales volume. And the problem isn’t just domestic. “This crisis is unprecedented, due to its global scale,” said Lewis of GlobalTranz. “When the coronavirus struck China, the outbreak hurt Chinese exports to the United States. That meant fewer shipping containers were arriving at ports in California. The lack of outbound freight from California drives up inbound rates to California because carriers typically establish dedicated ‘lanes,’ or routes for more efficient shipping.”
He noted that this causes a ripple effect — a shortage of containers in the United States because China accounts for most of the inbound container traffic, which then puts more trucks on the road, which is more expensive than rail transport. Lewis said GlobalTranz has a cross-functional coronavirus task force to meet and manage this domino effect to help minimize the impact of the virus on the supply chain.
Despite some of the logistical hurdles on the backend — and hoarding on the front end — in some respect, the retail supply chain has been able to keep its cool when shoppers couldn’t. “There is no shortage of food in the supply chain,” said Whelan of Albertsons. “Suppliers have plenty of the essential food, medicines and goods that all our communities need.”
LOOKING FORWARD, AN E-COMMERCE MOMENT
Kroger reported that sales in March were up 30%, year over year. And that’s not calculating in fuel. The supermarket is booming, and with stay-at-home being enforced, e-commerce is having a moment.