As news of Covid-19 has grabbed the world’s attention, our grocery stores, usually bursting with every item we expect, have quickly been left bare by shoppers panic-buying toilet paper, water, rice, beans, pasta, bread and frozen foods. Images circulated online of empty shelves in late January, leading buyers to queue up ahead of stores’ openings and run essential items dry on e-shopping sites like Amazon Fresh. Compared to the same week in 2019, sales of US sales of dried beans grew 37%, rice 25% and pasta 10%.
Now, as April begins and shoppers continue to bulk-buy, grocery chains have jumped into action. Retailers have united with manufacturers, warehouse workers and supply chain operators to implement emergency policies to meet these skyrocketing demands. But even amid the uncertainty − and despite the seeming scarcity − experts across the food system are looking to reassure us against what could be shoppers’ ultimate fear: that an overburdened food supply chain could lead to a food shortage.
“I can definitely understand people’s concern. Whenever they go into the grocery store, they’re used to seeing everything… but fundamentally, when you think of food production and distribution, food is produced at a high rate right now,” says Lowell Randel, vice president of the Global Cold Chain Alliance (GCCA) in the US.
What a crisis like the novel coronavirus reveals about the food system, more so than its weak points, is actually its flexibility and strength under pressure. The supply chain relies on several industry-spanning mechanisms that are designed to adapt when natural disasters strike – or when food sectors need to pivot during seasonal production spikes. In other words, we’ve been here before.
“This one’s a little different because it’s prolonged and it’s everywhere… [but] when a hurricane is approaching the country, consumer behaviour is exactly the same [as right now],” says Fred Boehler, CEO of US-based supply chain firm Americold Logistics. Behaviour patterns may be the same, but when food demand is amplified to unprecedented scale across entire nations, many factories must shift to “full capacity” – a state of maximum production rate typically saved for emergency situations like this pandemic.
Adjusting to shoppers’ changing demand in the wake of Covid-19 has been a herculean task, but experts agree that doing so is well within the system’s control – and not cause for alarm.
Squeezing the balloon
According to Boehler, a misunderstanding about the state of the food supply chain is that it’s currently being strained to its breaking point. To understand the mystery of the empty shelf, you must first look upstream, beginning in the storerooms of those very supermarkets.
At any one time, “our grocery stores are carrying about 20 to 30 days of inventory on-hand in the store,” says Boehler. The shops receive that inventory from local “retail distribution centres”, where workers sort through products and organise specific orders for delivery − these centres also hold about 30 days of inventory. “Call it 60 days of on-hand inventory. It’s all owned by that retailer.”
Go back another node now to the “regional distribution centres”, situated in main cities, which supply the local retail centres. You guessed it: another 30 days of inventory. Finally, we reach the production facilities located directly beside the factories producing and packaging the food items. They take the product hot off the line and store it for shipping out to the regional centres. Thirty more days of inventory there.
These four nodes of the general supply chain are therefore in perpetual ownership of about four months of food, ready and waiting to be transported, ordered, delivered and stocked. In a world clear of pandemics and disasters, the food system would normally split its inventory between retail shops (i.e. supermarkets) and food services (restaurants and bars). But as part of the emergency measures taken over the past three weeks to reduce the spread of the virus, countries like Italy, Spain, France and parts of the US have forced restaurants to close their doors.
“Food services may have represented 50%, now they represent about 10%,” says Boehler. The food that would usually be shipped to restaurants is sitting in warehouses, while retail inventory orders have shot up simultaneously. Facilities are still shipping out the same amount of food, but their orders have radically shifted toward retail. “It’s kind of like squeezing a balloon,” he adds. “Less food services, more retail.”
Production mechanisms
To keep up with grocers’ requesting 20 to 25% higher volume, providers are falling back on alternative but reliable procedures designed to handle a marketplace in flux. Some production and shipping facilities have increased their operating hours to reach full capacity and churn out as much food as possible.
One flour mill in Hertfordshire, England hired enough staff to move from a five-day to a seven-day operation. This enabled the company to produce an extra 350,000 bags of flour a week, says Jose Arturo Garza-Reyes, head of the Centre for Supply Chain Improvement at the University of Derby.
Another mechanism, often used in parallel to longer operating times, is to cut down on the variety of different products being made – trading product range to focus on volume. Pasta companies, for example, can halt different varieties and sizes of pasta to only produce the core types, Garza-Reyes says. UK supermarket chain Tesco is supplying up to double its normal quantities of milk, bread, rice and pasta while simplifying its orders, such as refocusing milk production to two and four pints.
Manufacturers can also increase capacity by outsourcing some of their production to other companies nationally or abroad. “This is pretty much similar to what the UK government is doing by hiring private hospitals to boost the capacity of the NHS,” Garza-Reyes says.
Yet while most companies are capable of increasing production in drastic ways, for many of them, the effect of this increased food demand is a much quieter affair. Steve Gonzalez, founder of organic pasta company Sfoglini, which produces about 6,000 pounds (2,700kg) of pasta daily, has seen a significant bump in sales since shoppers began clearing shelves. He typically orders one or two truckloads of semolina flour per month to produce pasta in his New York factory, which is then sold by Whole Foods, Stop & Shop and other retailers. In March, he had to order just three – a nonissue for a company like Sfoglini with the bandwidth to adapt.
“The shelf movement is so fast,” Gonzalez says. Even still, “nobody’s freaking out. Prices are the same.” His suppliers haven’t reported any hiccups, and the grains used for making the flour he purchases are safely stored in silos between their biannual harvests. It only takes about two weeks from the time the flour is milled to the time Sfoglini pasta appears on shelves, he says, so his company’s changes – while relatively minor − have had to roll out quickly. “The benefit to us of being a smaller business is we’re not this big, overgrown, lugging dinosaur. We can pivot and adjust as we need to.”
These strategies – from the nimble adjustments within smaller companies to the more sweeping overhauls within the major players – have not stoked anxiety in the food supply chain, says Randel of the GCCA. The result is a system well in control of demand, even in the midst of a pandemic.
Workers wanted
The true source of the empty-shelf issue lies inside the retail shops themselves. “In other words, and in many occasions, supermarkets do actually have products in their storerooms, but they do not have enough staff to bring it to the shelves as fast as they are taken from them,” Garza-Reyes says. In response, major retailers around the world have begun hiring new workers to fill the gaps.
US-based Aldi will recruit 5,000 temporary and 4,000 permanent staff, and Albertsons plans to bring on 30,000. Tesco in the UK has announced it will be hiring 20,000 temporary workers and has increased its inventory deliveries to meet demand. Kroger, the largest supermarket retailer in the US, has reduced its operating hours “to allow more time for our employees to rest, clean and stock,” a company spokesperson says.
The global network of grocery stores is thus gradually recovering from the initial system-shock of bulk-buying seen around the world, even in the countries hardest hit by the virus. “That food supply chain is continuing to operate. You’re not hearing of people starving in Italy,” Randel says. “Grocery stores have remained open and food is available.”
Stockpiled high
Garza-Reyes says he expects the greater ‘empty shelves phenomenon’ to be temporary not only thanks to supermarkets making their flexibility count when adapting to demand, but because “there will be a point where customers have enough products like pasta in their storerooms that no more stockpiling will be needed.”
When that point is reached, and efforts within food supply chains and grocers align to catch up with shoppers’ demands under the Covid-19 outbreak, will there emerge a ‘new normal’ in the way the food system is organised?
Likely not, according to Boehler, who says that besides a temporarily shifted workforce, the systems in place up the chain are built to withstand more crises in the future.
Consumers can help reduce the collective fear of food shortages by shopping as they normally would, says Caitlin Welsh, director for the Global Food Security Program at the Center for Strategic and International Studies in the US. Workers simply need time to fill those shelves.
“People should take a deep breath, and shop for one to two weeks maximum,” she says. “If you don’t find what you need, come back tomorrow.”
SOURCE: BBC.COM
