The initial outbreak of COVID-19 in the United States rocked the supermarket world unlike anything else in modern times. Behind the frantic scenes of shoppers fighting over toilet paper, the grocery supply chain was being stretched and bent like never before.
“All of a sudden, we found ourselves in a situation where it was like 10 snow days, Thanksgiving and Christmas rolled up into one every day of the week, and then restaurants shut down,” recalls Mark Baum, chief collaboration officer and SVP of industry relations at Arlington, Va.-based FMI - The Food Industry Association. “Demand just soared. It was up double digits, even triple digits in certain categories.”
- The coronavirus pandemic has revealed vulnerabilities in the supply chain that the food retail industry must figure out how best to address.
- Demand planning and inventory management solutions, enhanced by machine learning, can bring greater visibility to the supply chain.
- Companies should also focus on stronger collaboration with suppliers and other partners, both within and outside the industry, and on developing a cross-functional workforce.
“COVID-19 really raised the importance of the supply chain,” observes Tom Madrecki, VP of supply chain for the Consumer Brands Association (CBA), also based in Arlington. “It went from being an issue that was maybe not front and center within the c-suite or within government to being the issue of the moment.”
Ultimately, the chain didn’t break, but some vulnerabilities were revealed — and exposed to consumers — as excess agricultural products ended up being destroyed, certain products became obsolete seemingly overnight and e-commerce programs were suddenly being used more than ever before, revealing a gap in different retailers’ levels of preparedness.
Now that the pandemic’s initial outbreak has passed, the industry has a brief window of time to reflect on what worked, what went wrong, and ultimately how to plan ahead for what’s next.
“I’m hoping retailers have either built or updated their ‘disruption playbooks’ to understand what they need to do going forward,” says Mike Griswold, a research VP with the consumer value chain team at Gartner, a global research and advisory firm based in Stamford, Conn. “A lot of them probably had some type of disruption playbook, but nothing of the magnitude to where they’d need to be limiting products and customer counts, and forcing the majority of people to do an online transaction. This is certainly the biggest disruption most of us have experienced in retail — and it’s not going to be the last.”
At presstime, the term "second wave" is being floated as several states are seeing worrisome spikes in cases and hospitalization rates. Some experts caution that autumn could be particularly bad, as seasonal flu begins cropping up alongside the novel coronavirus. While no one can predict the future precisely, one thing’s for certain: Retailers need to be prepared as much as possible and focused on building a more resilient supply chain to adapt to whatever comes their way.
Here are key areas that they can focus on to make their supply chains as COVID-proof as possible, according to Griswold and other industry watchers:
- Build in more agility and flexibility;
- Increase the frequency of supply chain modeling;
- Work to more quickly adopt new technologies that can aid in visibility, planning and beyond;
- Better collaborate with suppliers and other industry partners, and rethink supplier diversification;
- Focus on a well-protected, more cross-functional and flexible labor force; and
- Reconsider the balance of in-store versus online sales, with a specific focus on last-mile delivery.
Walmart’s Focus on Agility
During a recent webinar entitled “COVID-19 Supply Chain Risk Management,” conducted by Eyefortransport Ltd. and Reuters Events, several leaders representing various areas of the grocery supply chain shared their thoughts on better preparing for unforeseen conflicts in the age of the coronavirus.
Josh Buchanan, director of supply chain design and innovation for Bentonville, Ark.-based Walmart, noted, “In our processes of refreshing supply chain strategies annually for our international partners, we’re going to see that leaders reviewing those strategies are going to have [COVID-19] as a lens for the near future. There will be a value on agility in contingency planning.”
Buchanan noted that Walmart’s ability to work as one company has greatly aided the organization over the past six months. “A great deal of the learnings out of China essentially informed all our international markets and our U.S. markets,” he said. “There are a lot of technology and processes that can be implemented faster than anyone would have said was possible last year.” He cited examples such as the ability to onboard an associate in under 24 hours, as well as starting up a warehouse management system in a matter of days, as opposed to weeks or months, to get a new distribution center operational.
Buchanan also lauded Walmart’s suppliers for their collaboration, which he said has been “more fluid and dynamic than it’s ever been before,” including getting products through to put on shelves, changing order quantities and the channels that products move through, and adjusting both locally in different markets and globally.
Representing a different part of the business — primarily transportation, but also managing inventory — Gary Allen, VP of supply chain excellence for Miami-based Ryder, urged companies to get a better handle on data across the supply chain and work to transform that data into information and insights, via predictive analytics.
New Day for Demand Planning
Collaboration was also key to helping companies combat food waste, he adds. “In just one example, Land O’Lakes partnered with a retailer in Wisconsin, so that rather than dumping milk, they turned it into 10-pound bags of mozzarella,” he notes.
Cincinnati-based Kroger, already known for its sustainability commitment, made a similar move by redirecting some dairy farmers’ excess milk to food banks as part of its ongoing Zero Hunger | Zero Waste initiative. In late May, the company said it would expand its Dairy Rescue Program to support children and families during the COVID-19 pandemic through the summer.
In some cases, even competitors worked together to share resources, according to Jason McCourt, senior solutions consultant for Aptean’s U.K.-based Paragon Software Systems.
“This crisis highlighted the value of collaboration between competitors, and that’s something we believe may well be the future of transportation and retailer distribution,” he notes.
“Increasing urban restrictions, sustainability concerns and a host of other issues means it makes increasingly little sense to have one truck delivering half a load of Charmin and another one delivering Cottonelle to the same store," McCourt adds. "Maybe following this crisis, we will see more companies willing to collaborate for mutual benefit.”