by Kevin Atwill/editor
Even for an industry used to responding annually to disasters—albeit on more of a regional basis—the scope of the Covid-19 pandemic has forced the grocery supply chain to make quick adjustments.
In a telebriefing March 23 with The Shelby Report’s editorial team, Doug Baker with FMI-The Food Industry Association discussed how their members are flexing and demonstrating resilience.
Baker, in his role as vice president of industry relations for FMI, also specializes in crisis management and supply chain resilience, supporting members during natural disasters and national emergencies.
“The grocery industry is no stranger to disaster and early on I think that was really helpful,” said Baker, adding that “many of the best practices and protocols from those experiences” have been deployed during the pandemic.
“Also, unfortunately, because of the sheer geographic coverage of this and the type of crisis we are experiencing, we are also rewriting the playbook daily on emergency management. As an example, during natural disasters resources can be focused on that impacted area. We see that hurricane coming and resources can be focused, supply chains can be focused to those areas.”
The scale is much larger when the whole nation is impacted. During the response, retailers have been quick to share best practices on supply flow, consumer social distancing and other environmental practices. They’re doing so to shorten the learning curve.
Examples Baker cited include redeployment of labor and sanitation and cleaning practices. In addition, retailers are putting up sneeze guards to create a barrier between consumers and cashiers or practicing click-and-collect only.
“And they hope to see what the benefits are, how associates respond, how the consumers respond, just so that we have somewhat of an understanding moving forward,” Baker said.
Moving on to supply chain resiliency, the message is clear. “This is a demand issue. It’s not a supply issue,” Baker said. “We are asking customers to purchase no more than seven to 14 days’ worth of inventory.”
He added that demand spikes have occurred when “shelter in place” orders are issued in areas where the pandemic has hit hardest.
“Retailers and manufacturers are working closely together,” he explained. “The industry is using a technique called pacing to keep product moving at an efficient level. This allows consumers to get access to the items they are wanting.”
The FMI encourages retailers to use pacing, because it brings organization to the situation and store environments. According to Baker, manufacturers are limiting the variety of products so they can fill orders more efficiently.
The machines, however, cannot add surplus into the system. The supply chain is about two to three days behind, he said, because the demand has been unprecedented.
“Obviously household cleaning, personal care, shelf, stable and frozen are some of those categories that are seeing the biggest spikes. When possible, manufacturers are shipping direct to the stores on high-cube items rather than going through the warehouse.”
Baker also pointed to a partnership between FMI and the International Foodservice Distributors Association (IFDA), which has felt a severe impact from restaurant closings. He described it as a matching program that connects distributors with excess capacity (products, transportation services, warehousing services) to help food retailers and wholesalers struggling with demand.
“Some examples of that are…paper towels, toilet paper that’s being used in restaurants. They can redivert those over to grocery. But it even goes as far as fresh products. Bacon, right?
“But then it also allows those distribution centers to continue to employ associates and drivers as well. So we saw that as a great opportunity for our industry to also help an industry that’s actually seeing some challenges.”
Baker also cited some recent logistic waivers. The Federal Motor Carrier Safety Administration (FMCSA) issued an emergency declaration that allows for motor carriers to be exempted from existing hours of service requirements if responding to coronavirus support.
The agency followed this up with a new, expanded emergency declaration to help address rising stresses in the nation’s supply chain. The transport of the goods mentioned above now includes shipments to distribution centers, fuel and “immediate precursor raw materials.”
There is also the possibility of food-related exemptions during the Covid-19 pandemic.
“There are a couple of areas where we are working with the FDA to get some waivers on,” he said. “If you think about No. 10 cans that go into retail, they have a typical retail label on it. If that No. 10 can is going into food service, it’s typically just a black and white label and it doesn’t have all of the information that would be expected to be on the label in retail environment…so we are trying to work with FDA to get some flexibility there.”
Looking at consumer and store trends, Baker said online shopping is shifting as consumers buy products they don’t normally online. Click-and-collect and online ordering likely will become vital as more people stay at home and ensure they have access to food.
While there are no labor disruptions at this time, some retailers have suspended online options because they can’t fulfill orders to the level they want. Asked about the likelihood of measures to control crowd size in stores, Baker acknowledged there are “some smaller areas in cities and communities and counties that are enforcing that.”
“But actually the industry is asking for flexibility from that because that does put some strain on the industry as well,” he said. “And so the understanding and the preference would be that those 50-person rules are not applied to grocery stores.”
Grocery store workers have been deemed as essential and critical infrastructure. “That is why some of these other distancing activities have been put into play, like the sneeze guards and the signs on the floor where people can stand and keep a distance,” Baker said.
It’s far too soon to assess possible long-term effects from the pandemic on the grocery industry. However, with more people learning to shop online, Baker said FMI would re-evaluate its digital shopping Nielsen number, which had online sales of food projected at $143 million by 2025. People could maintain those habits.
“If you weren’t typically somebody that enjoyed shopping online and you are choosing to stay home and you choose that as a platform it might become something that you feel comfortable with and you stick with,” he said.
“(But if) we are in our homes for 30, 45, 60 days, we could be ready to just get out and then everybody wants (to stay) out.”