Companies across the food supply chain have been working hard to face the unique challenges that have come to fruition in the COVID-19 era. The U.S. Bureau of Labor Statistics (BLS) recently reported that the Consumer Price Index (CPI) for food at-home (which includes groceries) grew by 2.6 percent from March to April 2020, noting this was the largest monthly increase since February 1974. To meet these demands, suppliers were forced to expand business hours, hire more people and work more days so grocery stores and other businesses remained stocked.
This mountainous task has been faced with a number of issues, greatly straining the food supply system. Some challenges include: shut-downs of plants due to COVID-19 concerns, ingredients being harder to come by, spare parts suppliers being listed as non-essential, extended lead times for packaging supplies and labor shortages, to name a few.
Responding to Crisis
While the COVID-19 pandemic is uncharted territory for many, supply chain companies have been faced with similar, albeit nuanced, challenges in increased demand during times of crisis or seasonal spikes. Companies across the food supply chain will typically have emergency protocols in place. For example, many factories will shift to "full capacity" into a state of maximum production rate for when such emergency events occur. Other companies, like General Mills, have implemented new strategies such as allowing corporate employees to temporarily work on manufacturing plants, reducing the number of individual items (or SKUs) and enhancing benefits for plant employees.
In the farming industry, in addition to the Centers for Disease Control and Prevention(CDC) requirements, agricultural employers are recommended by the Upper West Agricultural Safety and Health Center to adjust line speed and other processes to enable employees to maintain safe social distancing, stagger break and lunch times, limit crew size by staggering work shifts, increasing the number of work shifts and establishing pick-up and drop-off times to limit vehicles on and off the farm.
Preventing a Food Shortage
Based upon empty shelves in stores, one can assume there may be a shortage of food. This has led to consumers hoarding and panic buying shelf-stable products and other essential items. However, members of both the United States Department of Agriculture (USDA) and the Global Cold Chain Alliance (GCCA) have reassured the public there is in fact no shortage of food and that the food supply chain is sound.
Abe Eshkenazi, CEO of the Association for Supply Chain Management, has also noted that the current shortage being witnessed in grocery stores is a temporary spike in demand and that the food supply system will catch up as companies ensure they not only have a safe working environment, but also as employees feel safer to return to work.
Governmental agencies have been assisting in preventing food shortages as well. According to an NPR interview with the USDA Secretary, the USDA tracks plant openings on a daily basis. One of the challenges the food industry had in protein was the closures of some of the processing plants. While there were some temporary closures and some retailers may not have the same degree of variety they once had, all those plants are now back open. The USDA has provided personal protective equipment, face shields, masks and other items to the plants. In addition, they have provided testing where required so workers can have confidence they are operating in a safe working environment.
Supply-Chain Food Heroes on the Front Line
It is not a surprise that the recent challenges the food supply industry has faced and is currently facing, has provided stress and pressures on the food supply system. In the midst of the challenges, what can be applauded is the industry’s response to the devastating pandemic and meeting the increased demand in food.
The food supply chain has many elements from farmers and growers all the way to the distributors. Often times, workers in the food supply chain are working closely and are at high risk of contracting the virus if proper steps are not taken to prevent it. As mentioned above, both companies and governmental agencies have responded to ensure the safety of its workers and the public through use of social distancing, personal protective equipment, testing and changes in operational strategies. The general public has been vocal of praising and supporting health heroes; however, it is also important that people recognize the bravery, resiliency and efforts of the unsung heroes that help keep the world fed.
If you have questions about any of the above topics, please contact the GHJ Food and Beverage Team to learn more about these trends and how we could assist your business during COVID-19.
Additionally, GHJ’s COVID-19 Response Team has as an experienced team of consultants specializing in cash-flow projections, strategy and operations consulting and re-organizations. We are here to assist organizations to succeed in these very challenging times.
