GET IN TOUCH

The Food Industry Supply Chain Shake-up

If someone would have told me earlier this year that the supermarkets would soon be cleared of pasta, toilet paper, tinned food and eggs for weeks on end, I would have shaken my head in disbelief. The Ocado website? Crashed. Sainsbury’s delivery service? Only servicing elderly, vulnerable and NHS workers (quite rightly). It is evident that behind the scenes, Supply Chain teams in the food industry have had to adapt and overcome huge challenges.

Given that I recently celebrated my one year anniversary in Supply Chain recruitment, I thought I’d mark the occasion by sharing some insights from some of the candidates I have been networking with since lockdown became a fact – here goes.

Panic buying & unpredictable consumer trends
This deadly virus has caused huge strains and pressures on the food industry which we’ve all experienced, especially at the initial stages of lockdown where anxious “panic buying” occurred. First the dried pasta and rice stocks were depleted, quickly followed by toilet paper and eggs. The most recent supermarket shortage we have experienced is flour – it has been difficult to predict what product will be in high demand next. On the grocery delivery front, demand has soared to such a level that most businesses have been unable to fulfil customer needs.

Speaking with clients and candidates within the industry on a daily basis during this period has been incredibly insightful and it is clear that there are two main challenges to overcome across the board. Supply Chain teams are working extremely hard to continue to meet the high levels of demands, while also quickly adapting to unpredictable consumer trends.

Stockpiles

This panic buying has proven extremely problematic for Supply Chain teams and their stockpiles, especially for Demand and Supply Planners. Their main goal has been to ensure that stock reached the shelves for high-volume lines to meet the demands of the consumers, while forecasts were completely changed on short notice. One candidate I spoke with stated that “it’s as busy as the Christmas period, but we didn’t have the 11 months of planning and forecasts to help us – our only goal was to get those products to the shelves as quickly as possible”.

Between the 24th February and 21st March this year, Britons made nearly 80 million additional grocery shopping trips compared to the same period in 2019, spending an additional £2bn on food and drink. Consequently, we saw retailers having to impose purchase restrictions on high volume items to be able to control stock levels.

To a slight relief for the supply chain teams of some of our clients, they are now seeing sales slowing down and consumer stockpiling has decreased considerably, although demand for tins and packaged good remains fairly high.

“It’s as busy as the Christmas period, but we didn’t have the 11 months of planning and forecasts to help us – our only goal was to get those products to the shelves as quickly as possible”

So, what has this shown us?

As consumer spending within the retail food industry is slowly reducing back down to a steady and manageable rate, the last couple of months have certainly proved the extreme flexibility and dedication of the Supply Chain teams within this sector when faced with the biggest public health emergency in living memory.

COVID-19 has forced businesses to review their Supply Chain strategy to be able to fulfil short-term demand, and should we go through something similar in the future chances are they are much better equipped to quickly respond to sudden changes in demand.

I would love to hear what effect COVID-19 has had on the Supply Chain of your business. Do some – or all – of the points above resonate, or has your experience been different? Feel free to give me a call on 0207 438 1565 if you have 5 minutes to spare.

Rhys is a Consultant on our Supply Chain & Procurement team, specialising in the food sector. Contact him on rhys@vertical-advantage.com for further industry insights, or to discuss your next career move.

Related article: The Covid-19 aftermath in the drinks industry