US Food Supply Chain Disruptions due to the pandemic

An article in the McKinsey & Co website titled “US Food Supply Chains: Disruptions and implications from Covid-19” describes the shift in the mix between grocery and food service to serve the US population. With grocery moving from 56% to 73% of the total food spending, distribution systems were impacted and food insecurity issues magnified. The impacts are faced by grocery retailers, distributors, farmers and restaurants. How should each of these supply chain entities plan to synchronize with demand changes ? How can shortages be averted by leveraging customer demand flexibility ? How can virus transmission rates and associated impacts be incorporated into supply chain planning ?

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44 Responses to US Food Supply Chain Disruptions due to the pandemic

  1. Amanda Tronchin says:

    These supply chain entities can legally collude with each other to have the most efficient operation. While this coordination effort takes time, it will provide long-term benefits and a formal structure to establishing such relationships. It would reduce the likelihood of a bullwhip effect.

    Each of these supply chain entities would need to synchronize their demand data to each of the entities in the supply chain. This will be a significant undertaking, but with long-term contracts in place, it will be a great benefit.

    Finally, the virus transmission rates and associated impacts can be incorporated by each entity in the supply chain’s production rates. When comparing the production rate and the demand rates, it is possible to determine the shortfall.

  2. Anantharaman Gomathyshankar says:

    Transparency in supply chain is pivotal for the efficient operation of Food Supply chains. Demand pattern data for all level of the supply chain need to observed and analyzed to synchronize the ordering cycles for all levels of the chain. This will enable the coordination of the supply chain and create value for the entire chain to ameliorate the effect of the bullwhip effect caused by the COVID 19 pandemic.

    Packaging is the pivotal component to distribution for consumer retail food business. Although the full extent and rate of recovery to pre-pandemic demand levels and demand distribution cannot be accurately projected, we can infer that the pandemic has changes consumer behavior. Spending more time at home and being closer to the family, has stirred a wave of curiosity about food and health. People have begun choosing healthier and more sustainably sourced products in terms of food consumption. We can definitely credit the pandemic with the creation of the next normal. Hence, medium term investments to incorporate packaging demands at customer level has the potential to maintain and elevate the strength of the companies in the next normal.

    Virus related metrics can be introduced as stress tests for discrete event simulation optimization to give concrete scenario based analysis and best course of action and investment allocation for activities related to medium term competitiveness.

  3. David Ng says:

    During the pandemic, many government policies forced farmers, distributors, restaurants, and grocery retailers to go out of business. Therefore, those supply chain entities must work together. According to the article, many distributors cancel their shipments from farmers mainly due to government-mandated closure of restaurants. Simply put, the demand fluctuates, and it is difficult to predict the correct amount of quantities to order.

    Perhaps, those supply chain entities can create a healthy ecosystem to assist each other. They can share their data, encourage purchasing goods and services from one supplier to another within the supply chain and be flexible.

    The virus transmission rates will go down due to the availability of vaccines in the US. COVID has changed a plethora of restaurant owners and suppliers to adopt different strategies to stay competitive. With the economics slowly open up, things will start going back to normal; therefore, those supply chain entities should stay aware and learn to work with each other.

  4. Yilun Xie says:

    These supply chain entities can group together to get through this tough time. Retailers and distributor should be thinking of ways for helping out the farmers. For example, training certain employee to participate in the farmer’s work. Besides helping out farmers, retailers and distributors should also make sure to improve their e-commerce groceries services to ensure better and on-time shipping. As for farmers and restaurants, the upstream and downstream of this supply chain, farmers can ask for help from the grocery stores just like mentioned before. For restaurants, they can think about partnering up with each other to create big volume of demand so that both the distributors and the restaurants can benefit from it. As to control the virus transmission rate, restaurants should be thinking about how they can better serve their customers through takeout. For grocery stores, following the CDC guide is important.

  5. Mu Hua Hsu says:

    During Covid-19, consumers’ behavior has changed from public venues to eating at home. It means that the food distribution channel now must more converge to groceries, rather than the food-service companies. It will severely upend the supply chain, from upstream to downstream. One way to solve the problem of uncertain demand is synchronizing. Entities in the supply chain can share the information so that each of them could more precisely decide the production amount. Then, the bullwhip effect might be minimized. Besides, entities can coordinate to pool the risk together or share the revenue. In this way, entities will not only focus on their own profits but instead trying to maximizing the whole supply chain profit. They might also decrease the influence of shortages by sharing resources. Despite the restructuring requires tests and time, the restructure might be a long-term benefit no matter the pandemic continues or not since the relationships can bring a positive to the whole system.

    The virus transmission rates are also influential. Since the customer behavior, policy, or production resources will all change if the pandemic mitigate. Therefore, using the virus transmission rates, the supply chain or company can change their planning in advance, such as what product to produce, how much capacity should reserve, or whether leave the industry or not.

  6. Coumba Niang says:

    Across the supply chain, incentives for improved coordination must be in place in order to plan and fulfill demand. Disruptions from COVID-19 will, in my opnion, change the retail industry in the long term and these entities can use recent “historical” data to predict demand and go from there. The databases should be renewed, revisited and respected. Effective coordination of the supply chain can maximize profits and decrease costs in these uncertain times. This coordination also goes hand in hand by resolving the shortage issue. Shortages can also be avoided by carrying safety stock thus ensuring flexibility. Preventative methods in every link of the supply chain can be adopted to control virus transmission rates. Each entity can share or have the same vision on how to control the virus which in turn reduces the probability of transmission incrementally throughout the steps of the supply chain.

  7. Ahmed Hegazy Ali says:

    Supply chains will need to adapt in regard to mediums of item delivery to customer and adjust overall supply of merchandise. I think that utilizing inventory pooling across various stores was an intelligent move, which should have enabled stores to have less stockouts on a macro level. However, I think that capacities for products were unmet, which led to the issues last year (toilet paper shortage, medication shortages, etc.) and this year (microchips and silicon shortages).

    Entities should plan to synchronize with demand changes through automation and data management. With farmers for instance, shortage of labor is present, which creates further hinderances for a strongly undervalued industry.

    Shortages can be averted through information symmetry between supply chain entities. Shared packaging, shipping, and warehousing can streamline fulfillment, which would increase fill rates and customer satisfaction. Furthermore, providing customers with various options of delivery such as ‘delivery at a later date’ like amazon does can create an opportunity for shipping more vital items prior to the items that can wait.

    Transmission rates can be applied to the data regarding supply chain to assist in simulation programs and anticipating future demand; should a pandemic take place again. These rates can be added to a data repository and can be used in the future to predict demand and supply changes.

  8. Sara Fortman says:

    Once the pandemic hit everyone was panic buying, this caused many grocery retailers and farmers to go out of business, since they were not able to preplan for the pandemic. Many restaurants and small businesses went out of business because of the lack of business (and the lack of people going out to restaurants). The government’s food policies actually became stricter for farmers to sell their crops and meat, which unfortunately made them go out of business, or have to make drastic life changes for their farms. Many distributors and restaurants had to cut their orders/shipments with farmers. The pandemic made these industries very difficult to cater to the pandemic demands. There needs to be a database that can manage these shortages and changes a little more.

    Shortages could be avoided with a surplus of stock on the retailer and distributors’ end which will allow for flexibility, but I do understand that can be a little difficult especially for non-perishable foods. There needs to be more planning and proactive methods to help prevent the shortages within the supply chain to control virus transmission rates.

  9. Yi-Hsuan Hsu says:

    Grocery retailers:
    To benefit from the significant demand increases and to maintain their competitiveness, the grocery retailers should increase their capacity by hiring additional labor in physical stores and establish their e-commerce channels as soon as possible, as the trend of online ordering will last even after the pandemic.

    Farmers:
    In my opinion, the farmers should not decrease their capacity, even though farmers are going through their difficult days right now. It seems that the demand fluctuation will not last long. However, once the farmers decrease their capacity, it takes a long time for them to adjust their capacity to the previous level, and the complete supply chain will be affected. Therefore, there is a need for the farmers to maintain their current capacity. To do so, the other retail channel participators will need to coordinate and try to provide incentives (or they could seek for the government’s help) for the farmers to maintain the current capacity even if they are losing money every day.

    Food distributors:
    The food distributors, on the other hand, has more flexibility to adjust their business strategy. Unlike farmers, it won’t take a long time for them to adjust their capacity according to the demand. To overcome the current over capacity issue, they could consolidate their networks of state-aligned distribution centers into regional ones, because it is an efficient way for them to cut down their costs and to avoid more loss to occur during the COVID-19. Once the demand goes back, the food distributors can easily adjust their operation and back to their original state-aligned distribution mode.

    Food service:
    They are encountered with the dilemma of reinvesting the food-service network for retail. These companies might want to push off their reinvestment as there are still many uncertain factors in the macroeconomic environment. Even though under the pressure of competition, they might want to complete the reinvestment as soon as possible to get ahead of the game, it is too risky to make the decision instantly.

    Customer and packaged-good companies
    Companies are trying their best to maximize labor utilization, and struggling to deal with the demand peak. Because the shortage of labor and the ultimately high demand for certain products might be simply temporary situations, the customer and packaged-good companies should not invest in fixed infrastructures immediately to expand their capacity. It will immediately cause a huge expense on their financial statement, and they need to pay for maintenance or depreciation expenses for the fixed asset afterward. A better way to address the high demand would be to coordinate with the food service producers, to utilize their excess capacity. In this way, customer and packaged-good company will not need to bear the high risk of expanding their existing network under uncertainty, and on the other hand, the food service company could also benefit from it.

    In conclusion, companies at different position of the supply chain are facing with very different situation. Some of them are busy dealing with the demand peak, while others are considering to decrease their capacity because the demand is affected by the COVID-19. To rebalance the situation and maximize the overall value of the supply chain, the participators of the supply chain should leverage coordination strategy, such as markdown money, vendor managed inventory, or CPFR.

  10. Emma Wellington says:

    Increased communication among each of the supply chain entities is critical to synchronize with demand changes. For grocery retailers, it is important they are monitoring the quantities of items sold and communicating that with suppliers, so suppliers understand which products will likely need greater capacity. It’s also important grocery stores communicate with consumers that they are continuing to place orders and offer safe shopping experiences to reduce panic and anxiety, which will hopefully aid in reducing bulk buying. Distributors were struggling with how to redistribute shipments that would have gone to restaurants or similar food services, as these large sizes are not suitable to sell to individual families. To synchronize with the reduction in demand from food service locations, distributors should look into serving other areas such as churches, soup kitchens, and schools that could utilize large quantities of food in redistributing it to individuals.
    Farmers need to synchronize with the changes in supply of labor to meet the increased grocery demand. They should collaborate with existing employees to ensure safe procedures are in place to continue production while mitigating risk of infection. Restaurants are facing a drop in demand due to closure or limited indoor dining. As the article mentioned, restaurants can shift to take out and delivery to synchronize with this change.
    Shortages can be averted by leveraging customer demand flexibility by encouraging consumers to purchase food in new ways and packages. For example, some restaurants and distributors are selling items in bulk or repackaged items. Consumers could be encouraged to pursue outlets like these to prevent shortages in grocery stores.
    Virus transmission rates can be incorporated into supply chain planning by creating contingency plans and procedures for how employees will interact and work at given infection rates. For example, higher rates of transmission could cause less employees on shift at the same time in order to ensure social distancing and cleaning procedures. This impacts supply chain planning by affecting the capacity of goods produced, packaged, and transported.

  11. Sara Yung says:

    Because of COVID-19 many industries had to adjust to the “new norm.” The grocery and food service industries saw a massive shift in which groceries went from 56% to 73% of total food spending. In order to match these demand changes, these relate supply chain entities should consider delivery types, inventory pooling, automated machinery, and data management/governance. Reviewing delivery types, will help these entities be more efficient in what lead times and review times are needed for their supply chain. Inventory pooling will help the large demand orders and if there is a need for a particular product. Automated machinery will help overall efficiency in food warehouses by being quicker. Investing in data management/governance will help all entities be transparent in what their needs are and can help increase overall profit in the entire supply chain. Shortages can be averted by leveraging customer demand flexibility by sharing information between all entities and establishing later delivery dates. Virus transmission rates can be included in the information pool. The information pool will be able to predict future demand and supply changes using simulations.

  12. Dakota Ropp says:

    The most efficient thing for them to do would be for each part of the logistical system to synchronize the demand data with data from the pandemic. They need to find when there demand is increasing and how much they will need at each point to be able to not have a food shortage. This will also allow for each part of the logistical system to know when they are going to have to increase the supply they are able to give. This will allow them to stay proficient even when the time they are trying to get through is uncertain. This can also help the customers as well. They will know when they can expect for food to be more readily available than at other times. It can also allow the company to let customers know ahead of time when there is a possibility of a food shortage. So, all around it will really help not just the supply chain, but every company in the supply chain and even the customers that benefit from the supply chain.

  13. Juan Bautista Rigal says:

    COVID-19 has disrupted every supply chain, but groceries saw a massive shift when it comes to consumption. I believe that supply chain entities need to develop different strategies to avoid stockouts and make it more efficient. Coordination should be the first step and one of the most difficult ones, anticipating demand and minimizing risk is a must to address the current issues. Strategies like inventory pooling and changing delivery types could be crucial to reduce lead times and have a higher service level.
    This are short term decisions that must be taken to avoid disruptions, but also needs to be a starting point to develop automated systems, invest in structure and data centers for the future. Once everything is in place, it could take into account virus transmission or other major disasters that can affect consumer behavior.

  14. Chia-Yen Lu says:

    The impact of the pandemic gives entities changing demand, however, the natural produces needs several months of lead time to produce. In my opinion, I think distributors or retailers could sign a cooperate contract to guarantee the purchase of all the products that a farmer makes. And at the same time, the distributors and retailers could try to incorporate the virus transmission rates to the future demand of the produces, and also looking for a food processed factory to make the food for a backup plan. Take tomato for a contract example. When the demand for the product is high due to the virus transmission rate, the retailer could sell all the tomatoes directly in the retailer store. However, if the future demand for the product is low due to the virus transmission rate, the retailer/ distributor could process part of the tomato in the food process factory to make ketchup, tomato sauce, and other product. This way the farmers would try their best to produce as much tomato as they can, and distributors and retailers will have enough produce to sell for the customers.

  15. One of the impacts from COVID-19 global pandemic, especially considering the lockdown measures adopted by governments around the world is the shift in food demand, from restaurants to grocery retailers. In-person dinning was prohibited for most of the health crisis period while grocery retailers as well as unprepared food distributors were able to operate under somewhat revised models. The pandemic oversaw an explosion of virtual shopping/curve side pickup, as well as grocery food delivery in the market. The reality is that, with a vast majority of the population being stocked in their homes, it is reasonable to see more people choosing to prepare their meals rather than dine out in restaurants. Moreover, the suppression of in-person dinning option would ultimately cause more households to prepare their meals instead of paying a premium for meal delivery or going through the hassle of curve side pickup. As result, grocery retailers and food distributors saw big surge for their products demand. On the other hand, governments restrictions of certain activities had serious negative implications for farming productivity. There were, consequently, much less output from the agriculture industry. This has put more stress on an already stretched supply chain. To respond to this demand changes, actors across the supply chain would have to coordinate and synchronize their activities/operations to produce total supply chain efficiency. Synchronizing among different entities in this case would ensure that products are supplied in the right/optimum quantities, at the right locations, and at the right time. This should be like the Just-In-Time strategy, where supplies are made available just as needed to avoid waste, shortage in some places and surpluses in some other spots. Substitute products might also play a big role in this synchronization to help provide customers what they need, while keeping service levels from falling drastically. Information, particularly demand data and inventory data would have to be shared among partners, as they coordinate to satisfy consumers demands. Win-win contracts may have to be crafted to incentivize partners to adhere to the coordination strategy. Improvement from the pandemic situation, i.e., transmission rates or the lack thereof would dictate planning direction. Continuation of high transmission rates would signal that food demand increases for grocery retailers and food distributors would remain or likely become worse.

  16. Nicholas Reverman says:

    Food supply chains need to be more lucid when it comes to handling the volatility in demand that is typically faced. Demand data should be collected from retail grocery chains and restaurants and sent to farmers, distributors, manufacturers, et cetera to use to better forecast demand. This will allow firms farther up the supply chain to allow optimal amounts of production in the supply chain weeks or months before restaurants or retailers need it. For farmers, this is very difficult, as they typically have to plan for an entire growing season, which is already a challenging task, that is emphasized by the volatility in demand for different types of food. This will help alleviate some of the bullwhip effect that is currently going on. Packaging and inventorying food products is trickier than other non-perishable products, as you cannot always simply mass produce one product and have it sit until you need it. Some have a much more limited lifespan than others, namely dairy and meat products. This is where having plenty of data to get the utmost accuracy possible in demand planning is crucial. Being able to relay this information back up the supply chain in a timely manner is going to be a decisive event that will determine whether we continue to have mass shortages.

    Based on the events of COVID-19, and the associated data collected regarding food spending, there is definitely a good possibility of using virus transmission rates, to better plan for possible upcoming waves of COVID cases. In this case, if there is an outbreak, and retailers suggest that there could be the possibility of a shutdown, they know that consumption at retailers are probably going to be higher in the near term, as restaurant spending is going to decrease, at least in the near term. Using these past identified trends that we have observed over the past year and a half, food manufacturers can have a better understanding of the levels of demand for certain food products in the near term.

  17. Shivang Batra says:

    Pandemic has resulted in changing customer eating patterns from eating at restaurants to home which has increased grocery demand. In my view, entities in the supply chain should synchronize their work with each other with proper data sharing among the whole supply chain and works to make a coordinated supply chain. This would result in less inventory mismanagement as per demand change.

    Shortage can be prevented through real-time data sharing between supply chain entities this can result in making better decisions related to transportation, warehousing (having shared warehouse between entities), inventory pooling resulting in better customer satisfaction without being stock-out.

    During the supply chain planning phase, data related to virus transmission rates can be incorporated in simulation which can result in better predictability of demand if such kind of situation arises again in the future. Different Delivery options can be designed as per the different situations resulting in proper social distancing.

  18. Sruthi Madadi says:

    The customer demand is unpredictable, and it is essential to plan across the supply chain entities to match the supply with demand. The food/groceries industry involves multiple touchpoints in the supply chain with different industries involved like retailers and restaurants And it’s important for these entities to adapt to the changes in the demand.

    Coordination among these entities will help to absorb the disruption to a certain extent. As mentioned in the article the government enforcement of the restaurants’ closure during the pandemic has impacted the farmers catering to this industry whereas the demand for the groceries went up in the retail market where most of the items went out of stock in no time. There is a clear mismatch between demand and supply.

    Coordination comes into play here; an ecosystem must be built such that farmers should cater the channel (retail/food service) based on the demand.

    And now that we have experienced the impact of virus transmission on demand, use this historical data to build a simulation model and allocate/build up inventory where we predict there might be an increase in demand.

  19. Ting Lin says:

    Grocery retailers should increase their capacity to meet the increasing demand. They might partner with delivery companies to help reduce the in-store traffic to accommodate more customers. On the other hand, they might consider hiring more labor to aid the need of the store. Distributors may want to consider reducing supply chain costs by evaluating options to consolidate their warehouses and increase efficiency. They could look into the option of upgrading the existing technology and vehicles to increase capacity. Farmers should continue to invest in labor and increasing capacity since they are the product producers. Restaurants suffer greatly during the pandemic, they can coordinate with their up stream suppliers to secure their supplies while strategically provide services to customers.

    Giving discounts to customers can sometimes win some flexibility for the suppliers. Some customers are not in a rush and value the discount rates more than instant availabilities. Suppliers can consolidate demand and deliver at greater utilization.

    The rapid virus transmission rate creates panic, and people are uncertain about its impact especially on their daily lives. They feel insecure if they don’t have enough food at home and therefore will want to increase their food storage at home. The same principle applies to other essential items and explains the surge of consumption during the pandemic. While planning for the supply chain, we need to consider the overall demand and coordinate with data visibility. Having more inventory stock up might have a positive impact while there is a shortage and the item is critical to the business’ function.

  20. Li Ci Chuang says:

    I think one of the key solutions to this issue is integration of different entities in the whole supply chain. Only when realizing the changing customer needs, the system could be responsive and achieve optimization with decreasing logistic costs and stable profits. Vendor Managed Inventory (VMI) helped this a lot. It is a coordination agreement between manufactures and retailers, and it also benefit the end entity – customers. To be more specific, through the in-store analysis and full understanding of demands, manufacturers can directly choose retailer inventory levels. In this way, they can improve service level and provide more frequent delivery to meet uncertain demands. Retails can also guarantee customers that they would set fixed prices, limitation of number of goods being brought, customers then do not have to worry about the increase in price or any shortage. Even there is a stock-out event, they can expect when will be in-stock, because the lead time is smaller.
    My thinking is agreements between both manufactures and retailers, retails and customers can lead to more efficient supply chain.

  21. Hao-Wen Weng says:

    The retailor might need to increase the rate of replenishment to make sure the stock is sufficient. Since the grocery demand is increasing and fluctuating, it means that the entities should consider coordination with each other to maximize the total supply chain profit, instead of working on its own profit separately. For example, farmers share the information of their products with distributors, and distributors share the shipping condition in-time with retailers. It can help share risk and increase the overall profits.
    It is hard to control when customer will place the order, but like the airlines will compensate the customer who choose not to take the airplane when they over sell the tickets. The retailer can also encourage customer to place the orders later when it’s over their capacity by giving discount or a voucher for next time.
    For the virus transmission rates, the impacts to supply chain planning are still under observation. However, we still can estimate how much time the delivery will be delayed, or how demand changed based on the empirical data since we have the data of last year. It might not very accurate, but it provides us an insight. Also, the impacts to the supply chain planning is getting weakened. We can plan the worst situation like the beginning of the pandemic last year, but we can schedule the plan for the future more optimistically.

  22. Chou Yen Hung(Misha) says:

    Supply chain entities plan to synchronize with demand changes:

    The grocery retailers should increase the stock level and coordinate with whole supply chain with advanced technology. Grocery retailer know the most from customer demand. For instance, grocery retailers can provide information to farmers so that farmers can produce precisely in advance. Furthermore, optimizing online ordering system can enhance efficiency during the pandemic and increase the capacity of products.

    Many food distributors had a great deficit as restaurants, schools and hotels close in response to the COVID-19 pandemic. Most of them are family businesses. In my opinion, there are two ways to gain more flexibility. First, these food distributors can coordinate together from regional based to state based to achieve the capacity. Second, the food distributors may collaborate with uber or Lyft services for doing house-hold sending business. Although Walmart or Whole-Food can do the same service with larger capacity, the advantage of these distributors is faster delivery with complete coverage. Take West Lafayette as example, we can’t order through Whole Food and Walmart delivery is not fast as we expected.

    Farmers are not flexible as others supply chain entities. It’s difficult for them to adjust capacity because crops capacity set up in 6 to 12 months in advance. Thus, farmers should coordinate with grocery retailers to get the first-hand information and make the right prediction.

    Restaurants should invest or collaborate more with food deliver services company to increase the capacity during the pandemic. In recent, more and more restaurants open virtual kitchen in Asia to cut down the labor and rent cost. The cost reduce from labor and rent can hire more chef to increase capacity to meet the high demand of the food during pandemic time.

    Shortage can be prevented with information sharing system between all the entities. However, it’s quite difficult to coordinate all parts of the supply chain. I think the easiest way is giving some discount to customer. In conclusion, coordination with all the entities would be the best solution. It will be more flexible when occurred high virus transmission rate period.

  23. Jiandong Hu says:

    The most efficient way to deal with the unpredicted demand is the coordination among grocery retailers, food service companies, distributors, and farmers. Since it’s challenging to forecast the future demand, if those companies only focus on their demand and supply analysis separately, they will probably order less due to the high risk. However, if those companies could reach some risk-sharing agreement and optimize the whole supply chain profit, such as sharing the real-time demand information, it will leverage the risk significantly.
    The mismatch of package-sizing would be the main issue because of the decreasing demand of food service companies and the increasing demand of grocery retailers. Therefore, retailers should provide customers with more advertising and incentives. Meanwhile, when the everyday items are in shortage, customers also would like to purchase in big size.
    As it referred, if the virus transmission rates increase, the government will issue more restricted guidance, such as capacity limitations or social distancing. These restrictions will impact the yield rate of the producer plants, so supply chain planning has to incorporate with the virus transmission rates. Increasing the safety stock will be a possible solution due to the uncertainty. Also, companies should invest in more automotive production lines to reduce the dependence on intensive labor.

  24. Lindsey Prommer says:

    The grocery and foodservice sectors have no doubt been hit hard due to implications of the COVID virus. Grocery retailers, distributors, farmers, and restaurants should synchronize with demand changes by creating contracts to maintain a minimum supply, minimum order quantities to incentivize stocking shelves, predetermining substitutes for various products that are out of stock, and determining what SKUs aren’t worth keeping on the shelf to replace them with more desired SKUs. Shortages can be averted when customer demand is flexible by having pre-arranged order minimums in order to share risk. Virus transmission rates and associated impacts can be incorporated into supply chain planning by recognizing that as transmission rates increase, demand will switch from restaurants to grocery with people eating at home rather than eating out. Additionally, stockouts are more likely if transmission rates increase and employees become sick, so it is imperative that all foodservice providers have COVID plans in place to maintain the health of their employees and customers.

  25. Su Tien Lee says:

    When sensing a change in customers’ consuming behaviors, the end player grocery retailers should share the information with the distribution system. With every player in the system informed of this, the bullwhip effect can be reduced and would not be easily affected by the demand fluctuations. Distributors as well should provide a transparent demand-supply chain to their upper supplier so that it can better handle the surge in demand. Farmers can level up their productivity gradually throughout the pandemic and customers’ panic, and provide commodity products in a more frequent batch. Restaurants would face more takeaway orders, thus the ingredients they need may change. Easy takeaway food such as light meal, salad, fast food may have higher requirements, therefor restaurants may need to order more from their upper supplier, make analysis, and expect future sales of this food.
    Suppose originally customers mainly do grocery shopping on weekend, but since the pandemic happened, these people started to go to supermarkets even on weekdays. The original supply an alter to supply more groceries on weekdays and lessen on weekends, making the supply more equally on each day. Considering the covid-19 cases and people’s panic, when the daily cases and the virus transmission rate go up, people may scramble for more commodities even they already have sufficient of them. Therefore, grocery retailers may consider these impacts into their supply chain policy to better meet customers’ needs.

  26. Haoning Wang says:

    As we all know, a pandemic like Covid-19 is not a new event encountered in the history of humanity because mankind has experienced various pandemics in history. What pandemics have in common is their severe negative impact on the global economy. From the perspective of the food supply chain, the most important link in the economy, the new crown pneumonia epidemic has affected the entire process from the scene to the consumer. In view of the recent challenges facing the food supply chain, people are now concerned about food production, processing, distribution, and demand. The COVID-19 disease has caused restrictions on workers’ movements, changes in consumer demand, closure of food production facilities, restrictions on food trade policies, and financial pressure on the food supply chain.
    Do we have some better ways to face this situation? The answer can always be “YES”. Since the pandemic occurred, people should take control of the origin of food, which is the farmer’s side. They should be careful with the food itself. The government should promote the movement of workers and agricultural products. In addition, small farmers or disadvantaged groups should be supported financially. Facilities should change working conditions by changing safety measures to maintain the health and safety of employees. Food protectionist policies should be avoided to prevent food prices from rising so that the demand will be controlled smoothly. Each department of the food supply chain should coordinate to deal with the situation. In food facilities, various robotic systems can be used to prevent humans from spreading microorganisms and ensure food safety. The fourth industrial revolution played an important role through data-driven autonomous decision-making in production. The pure robots can decrease the virus transmission rate and increase the efficiency of the whole food supply chain.

  27. Esha Kaushal says:

    Major inventory disruptions and the simultaneous boom in online shopping brought by the COVID-19 pandemic have reshaped the grocery supply chain impacting retailers, distributors, and other involved in the process.

    To tackle the changes, restructuring of the supply chain is required with a focus on speed and flexibility.
    This can be facilitated by –
    • Reducing product variety
    • Increasing coordination between suppliers
    • Revising buying plans and reallocating staff towards high demand categories
    • Dial down near term buy plans to preserve cash

    Overall, maintaining the flexibility of logistics is essential for limiting disruption to the supply of essential services. The surge in demand across nondiscretionary product categories is slowly eating away at excess capacity.
    One strategy retailers can adopt is to have suppliers bypass distribution centers and ship goods directly to stores. They can also simplify assortments and packaging so that suppliers can make same-SKU full-pallet shipments to hub stores or distributor-consolidation facilities. This approach will put shipping speed ahead of product variety at a time when many consumers would rather have adequate supplies of key items than a wide assortment.

  28. Chi-Wen Chen says:

    The root cause of the disruptions in the food supply chain is the changing pattern of customer spending. Therefore, every entity in this supply chain architecture should be participating in arranging a new deal to mitigate the bullwhip effect. One possible arrangement is to control the demand pattern by adopting marketing strategies like promotion, a quantity discount, etc. Other than that, the virus transmission rate should also be incorporated into their decision-making process. For instance, in areas that the new variant spreads the fast, there should be a contingency plan to support the supply of food products.

  29. Rubin Mao says:

    Due to the Covid-19, many restaurants shut down or started no-dine-in policy. As a result, people tend to eat at home, which enables the rise of grocery sales. With the demand increasing, future demand analysis is necessary. However, it is still risky that covid-related sales are unpredictable. For supply chain entities like grocery retailers, distributors, farmers or restaurants, it requires them to coordinate together to build a win-win situation, and to share profits and risks together specifically. If they can have more close connections and coordination, and sign some agreements, they can make the information flows more timely. To avert shortages, demand analysis, risk-sharing agreements and information flows are needed. Sometimes, a sudden virus case may interrupt a local government’s policy. Depending on the how serious the case is, and how many patients are found, the policy may be tighter or looser. It may change people’s living habits and shopping habits, which may then influence demands and supplies. To be well-prepared is critical and safety stock should be considered.

  30. Alexander Rabold says:

    These supply chain entities can better synchronize with changes through greater sharing of demand-side information, working on improved methods of coordination, and determining the production needs of goods and SKU variety. Focusing on a steady production of required goods, as well as improving health/safety standards would also allow for greater certainty in the supply chain by both reducing the variety of goods produced and reducing the risk of shutdowns.
    The supply chain can also impact customer demand by focusing on a smaller variety of required goods and ensuring the public’s perception of the supply chain remains confident. Customers are interested in goods with longer shelf lives and necessities. Limiting SKUs to maintain steady production, providing information on the availability of goods, and maintaining a clean and organized storefront could all help keep customers calm and satisfied, even with less variety available.
    Virus transmission rates can also impact planning by forcing companies to consider the speed and depth of necessary changes. Lower transmission rates and more effective health/safety policies would allow for a faster recovery and return to normal, but given the rise of new variants, it is vital to create contingencies and plan around longer recovery periods.

  31. Zachary McClurg says:

    The ability of the players in the supply chain to synchronize with demand changes will be tough. This pandemic is not predictable, therefore the supply chain demand is unpredictable. The best way to improve will be able to pivot supply is a rapid manner and that will be dependent on mainly the distributors. Farmers are basically stuck with their current supply and only can change in long term. The restaurants and retailers could form local pacts for the restaurants to prepare take home meals to be purchased in store, or if the grocery store has a shortage, they could work with restaurants with surplus to package their supply for their customers. One way shortages can be averted would be to shift a percentage of food meant for restaurants’ packaging to a grocery store customer friendly type. That way if customer demand flexes to a higher percentage of grocery, then retailers can shift those products that way. If transmission rates are on the rise or if ease of transmission goes up, there is a likeliness of there being a shift back to a grocery store majority. Working with the government to understand what the threshold would be for a shutdown of any kind; the supply chain could work together to make the transition easier and hopefully keep margins above 0.

  32. Zeyu Hu says:

    For the entities in the upstream of the supply chain, including farmers and distributors, they have to take measures to deal excess products or inventory due to sudden reduction in orders from downstream entities, leading them to consider decrease their capacity in the future. That could lead to product shortages and price increases for both food producers and consumers when downstream demand returns. Entities in the downstream of the supply chain could coordinate with entities in the upstream of the supply chain to maintain their capacity for the long term through signing risk sharing agreements in order to mitigate inflationary pressures when demand returns.
    Once the virus transmission rate starts to decrease, it will mean that the demand will gradually return to a normal level within a certain period of time, so entities in food supply chain need to prepare in advance for this.

  33. Ying-Hsuen Tsai says:

    Covid-19 had brought big challenges to each entity in the supply chain, from farmers to customers. While household demand for groceries skyrocketed with consumers staying at home, many restaurants closed, and their large food orders ceased. Farmers who sold to places like restaurants and hotels found it hard to sell their products while retail stores didn’t have enough suppliers because their customers needed more products. To avoid more severe ripple effects, entities in the supply chain should work in closer coordination. One of the ways is to enlarge the network of the supply chain and share the information to some degree. Those who are unable to buy enough products from their original suppliers can purchase from other suppliers instead. The same logic can be applied to the suppliers. If all the data has been digitalized, it’s also possible that the parties in the supply chain can use AI to optimize the decision-making process. The virus transmission rates will certainly have an impact on uncertainty in the food supply chain. The supply chain members can have a discussion in advance of which degree of the virus transmission rates, what demand fluctuations or changes can be anticipated what action items should be taken.

  34. Zihan Zhang says:

    Each stakeholder in the supply chain system should be aware of the information transformation. To stop the possible bullwhip effect and delay of the goods, suppliers should work closely with downstream businesses to avoid unnecessary inventory, and at the same time, retailers need to provide suppliers with accurate demand reports timely. Businesses should cooperate with each other with the help of ERP and related systems that make transactions easier. Facing the problem of an unpredictable future, both retailers and suppliers need to design a model to influence the demand properly to meet the expectation. A growing number of variants of the virus and the increasing amount of affected people can make customers’ activities and demand extremely hard to predict and make the supply chain not very agile in response to the sudden change. The online retailer’s profit may go up but the in-store shoppings may decrease.

  35. Hasit Yarlagadda says:

    The demand at every stage of the supply chain was drastically affected by the pandemic. Consumers started panic buying due to the perceived shortage of food and groceries. This demand surge is first realised by the retailers and then flows down to the farmers who are at the bottom of the supply chain. If the retailers are not able to convey the demand surge transparently and accurately to the distributors or farmers, there might be a bull whip effect where the distributors or manufacturers might end up overestimating the demand and stocking up excess inventory. To prevent this, there should be an agreement between all stages of the supply chain and the demand and sales information must be transferred to every stage.
    The shortages can be averted by ensuring the consumer of constant pricing in future and availability of items. This would reduce the anxiety of the customers and lead them to continue their regular shopping behaviours and reducing the load on the supply chain. The restaurants could start their own delivery service or merge with a last mile delivery agency to continue their business despite restaurants closure.
    The virus transmission rates can be monitored regularly to understand if there is any possible lockdown or demand surges possible in the near future. This would prevent any shortages due to unexpected surges in demand. On the other hand if they see that the pandemic is settling down, they can modify their supply chain design to bring back more in-person operations.

  36. Vasif Yusifzada says:

    Pandemic had a significant impact on the demand rates faced by grocery retailers, distributors, farmers, and restaurants. It is not easy for the supply chains to predict this impact and synchronize with the demand changes. One of the most important strategies that need to be implemented by supply chain entities is to improve coordination and information sharing in order to synchronize with the demand changes. Especially, grocery stores should implement efficient data sharing strategies with the suppliers because of bulk buying problems for specific items. Retailers should analyze the demand rate for each item and communicate it directly to the supplier in order to be able to maintain higher inventory levels for all these items and show customers that there is no need to concern about product shortages.
    Shortages can be averted by increasing communication between supply chain entities and implementing vendor managed inventory strategies in order to maintain lower lead times and optimize the inventory levels to make sure that retailers do not run out of stock. Also, since many customers are primarily using online delivery applications instead of visiting the stores during the pandemic, it would be an efficient decision to implement an inventory pooling strategy to prevent shortages.
    Finally, virus transmission rates and associated impacts should definitely be incorporated into supply chain planning because it has an enormous impact on employees. Depending on the virus transmission rates during the pandemic, the number of employees participating in the operations of each supply chain entity can change. For example, higher virus transmission rates can lead to lower employee levels, and, therefore, lower production rates and higher lead times of the products or services.

  37. harishgavva says:

    The pandemic had a varied effects on the food industry. Due to the unpredictable demand miscommunication between the entities of supply chain has caused a bull whip effect and this leads to over estimation of the demand. Therefore, coordination between these entities is very crucial to improve the efficiency of the chain. Retailers should ensure availability and give price assurance to the customers to stop them from buying excessive amounts. Due to the pandemic, there is a change in customer preferences as majority of them are now focusing on groceries instead of food deliveries. To cope up with the increasing demand the retailers can try to reduce the variety of the products and have vendor managed inventory so that the demand information is accurately broadcasted across the supply chain. The suppliers should also take the virus transmission across the regions into consideration while planning for the inventory so that there will be less shortages. In regions where there is a high transmission No contact deliveries can be implemented to decrease the risk.

  38. AKSHIT JAIN says:

    As mentioned in article, after strike of pandemic Covid-19 in Mar-2020, a drastic change in consumer spending on Grocery and Food Service items observed. As per data provided in article, Grocery Product sales increased by 29% while Food Service sales declined by 27%, these changes in sales pattern was expected because of Govt. Order of closing Food Service places in response of Covid-19, but major challenges arise for Farmer-Distributor-Producer-Retailer supply chain that was trying to fulfil uncertain demand pattern with Pandemic Restrictions. Uncertain demand pattern from Customer will only increase Bull Whip effect and reduce the overall Supply Chain Profit.

    Effective data management, proper communication and accurate demand forecasting can help all entities to synchronise better with demand changes and reduce Bull Whip effect. But each entities on their individual level have to make changes, such as Farmers can request local government to form an organization that can provide Farming Equipment on hourly basis, this will help farmers to tackle Manpower shortage during demand change. Distributors can leverage local Cold Storage house to expand their Storage capacity during demand change (without investing in expensive Infra), Producers should move towards Automated Assembly Line that will ensure continuation of Assembly Operations during Pandemic or Manpower Shortage. Retailers plays a crucial role in Demand Forecasting, retailers can control or channelize customer demand by promising Last Mile Delivery | discount on orders (agreeing for more than 2 Day Delivery) | discount on Online Orders.

    From Mar-2020 Onwards, we have data of Covid-19 Transmission Vs Consumer Demand (Grocery + Food Service), we should incorporate this valuable historical data to build a simulation model, identify bottlenecks and maintain safety stocks at bottleneck step, all this initiatives will help whole supply chain to achieve higher customer service level and maintain overall profit even during Demand Change.

  39. Vinay Krishna Devulapalli says:

    With the virus changing by the day, cooking at home regularly had become a norm in the majority of the households. This led to the increase in the grocery percentage of the whole food supply. In turn, the restaurant’s demand had decreased compared to a few years back. Meanwhile, food shortage can be avoided by having canned goods as safety stock in case of emergencies. While on the items which are on the fresher side this can be achieved when the retailers, distributors are transparent with one another on the demand changes so that there is ample supply. This could be achieved through sharing data on the available inventory, forecasted demand, lead times, etc. While forecasting the demand one needs to consider the impact of the virus and its mutations on the customer purchasing patterns. Robust models should be built based on the past 2 years’ data to better gear up for the future.

  40. Mark Stickford says:

    As the pandemic has moved more people into their homes and increasing at-home cooking demand for groceries has naturally gone up. For the supply chain to meet this demand they need to work together at each link. If there was transparency within the supply chain there would be better ability to meet demand whether it increased or if it decreased as well. Transparency would allow every link in the chain to see what exactly was required of them to meet demand and how to do it more efficiently, while having an open line of communication with everyone in the chain. Shortages could be averted by keeping a higher safety stock for certain staple items that will always be in high demand. This is tricky with perishables, but in periods of high demand you could increase your order quantities to meet demand, which goes back to open lines of communication to keep demand trends in check. One way to reduce transmission rates within the supply chain would be to do as many things as possible contactless. If there was a level of automation within the chain that could take care of some tasks then the product would be touching less people’s hands and thus seeing less germs and risk of spread.

  41. Wei-Ling Huang says:

    To synchronize with demand changes, each of the supply chain entities should coordinate with each other by sharing the demand from downstream to upstream in a timely manner, so there would be more buffer time to be resilient if demand changes within a short period of time.

    Besides updating accurate forecast demand and having efficient communication channels within the supply chain, shortages can be averted by encouraging customers to purchase food in new ways such as in their own packages, or to pre-order if they are not in a rush and can wait for a while.

    The virus transmission rates are positively relative to customer’s stockpiling behavior, so the food industry should monitor the rates when doing forecasting and production planning. Having contingency plans in place within the supply chains would also help mitigate losses from demand fluctuation due to the pandemic.

  42. Calei Kelly says:

    Since the start of the COVID-19 pandemic, government orders and businesses closing has changed the normal supply chain drastically. Synchronizing this supply chain more and coordinating is much more essential than it used to be. Demand shifting from restaurants to grocery stores requires a lot of changes to the supply chain. Cancelled shipments to one group could hopefully find demand from a different source. Some shortages can be resolved by customer flexibility. If customers are willing to give up their need for a certain size, brand, or exact flavor of a product, then demand is more easily pooled into larger product groups. This added flexibility can help shortages be reduced or avoided altogether. Virus transmission rates lead to shut down plants along the entire supply chain. Potential prediction of where these outbreaks may be can help create supply chain alternatives before the system is stopped. Additionally, safety stock should be increased in the pandemic times to help avoid this.

  43. Vikram Narendra says:

    The food chain is an integral part of a country’s economy and well-being; food shortages can lead to a humanitarian crisis. It is evident from the article there was a shift in point of consumption due to Covid-19. Retailers and distributors need to coordinate and closely monitor the ground situation at the downstream supply chain and pivot their strategy accordingly. For example, retailers can partner with local housing associations/communities to pool the demand and provide door service. At the upstream, the government can provide a minimum support price for farmers, incentivizing them to continue agriculture produce. The US government can categorize labor from other countries as essential workers and provide them with health insurance to address demand shortages.

  44. Wenbo You says:

    First, grocery retailers, distributors, farmers, and restaurants need to have stronger coordination with the other entities in the supply chain to synchronize with the demand changes caused by the COVID-19 pandemic. I think entities should share demand information with each other to be able to deal with demand fluctuations and shifts in the supply chain in time, but each entity should decide their own strategy based on the characteristics of their business. For example, during the pandemic, restaurants should shift their service focus to take-outs and delivery under the government-mandated closure to maintain their revenue streams.
    To deal with potential shortages, businesses can hold a higher volume of safety stock and improve the transportation of goods between entities while abiding by the pandemic safety policies. Businesses can also try to alter methods and volumes of delivery and reduce the minimum value of delivery.
    Keeping track of the virus transmission rate gives the businesses incentives to deal with potential policy changes, such as another potential closure due to the Delta variant, and supply chain entities will be able to predict the demand and adjust their sourcing strategies more easily.

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