Disruption everywhere leads to gaps in supply chain and resourceful thinking
Name an industry, any industry. Its supply chain is in a state of disarray because of the novel coronavirus. Whether it’s goods that are in demand and next to impossible to keep in stock, produce going to waste because there’s no one to pick it, or items that suddenly no one has any use for, everything is topsy-turvy. From innovative to devastating to just plain weird, these are the most fascinating supply chain disruptions and possible solutions we’ve seen.
As the coronavirus went from being some faraway thing we heard about in the news to a huge part of our daily lives, people began hoarding certain supplies. Chief among them was toilet paper. Two months later, it’s still tough to find a pack, and stores have limits on how much you can buy. Even with restrictions, shelves are quickly cleaned out, and online vendors are often out as well. Crowdsourcing app OurStreets allows users to keep others in their area informed about inventory levels in local stores. Amazon, Target, and Walmart all have in-stock alert functions via their apps or websites that will give a heads-up email or notification when toilet paper or another out-of-stock item comes available. Still, you’ll have to be quick in order to reup before supplies run out.
The disruption is so great that even with food demand up, vegetables are being buried and plowed back into the soil. While farmers are donating items that would normally have headed to restaurants or schools, food banks only have so much storage capacity for perishable items. The Dairy Farmers of America estimate nearly 4 million gallons of milk are dumped each day. Meanwhile small farmers have switched to crops with quick grow cycles to meet the immediate demand at farmers’ markets, and home delivery or pickup produce boxes as part of community supported agriculture are big with customers doing more home cooking than ever. Local Harvest can help you find a CSA in your area.
They might not to be able to sell or store all that fresh produce anymore, even if they are operating carryout and delivery services, but restaurants are filling a gap in the supply chain caused by the disruption. They’re selling groceries to customers who can’t find what they’re looking for at supermarkets or perhaps don’t want to make an increasingly complicated grocery store trip for just a few items. Since restaurants and grocery stores typically have different supply chains, shoppers might not be able to find milk or flour at the supermarket but can at a restaurant. Sysco is helping restaurants revamp their online ordering systems to sell grocery items. Those CSA produce boxes? Fine dining establishments such as Chez Panisse are partnering with small farmers to sell them out of restaurants.
Now that restaurants aren’t buying anywhere close to their normal order volume, wholesalers have begun selling direct to consumers. When San Francisco restaurants closed in March, Water2Table Fish Co. saw daily orders for the fresh-caught fish owner Joe Conte buys from fishermen go from more than 100 to six. The company laid off workers and wasn’t sure what to do. “It was all gone,” Conte told KPIX. “We were just staring at each other Monday morning wondering what to do. And we decided to go on offense instead of defense.” Water2Table began selling direct to consumer and has fared well enough to hire back most of the laid-off employees. Larry Inver Wholesale Foods in Philadelphia took the same approach and is making just about the same revenue as before. The Cheetah app is helping Bay Area wholesalers deliver directly to consumers with Cheetah’s fleet of refrigerated trucks, and other localized technologies have been doing the same across the country.
Shortening the Chain
As large food processing plants in the egg and meat industries have had to close temporarily because of drops in restaurant demand or coronavirus outbreaks, causing quite a disruption to the national supply chain, local sourcing has kept smaller operations afloat. Much the same way restaurants espouse the zero-kilometer philosophy, butcher shops that buy from local farmers are seeing a brisk business without disruption. In the Denver area, Locavore Delivery is bringing boxes of curated meats to customers’ doors. It’s farm to table, except the tables are in dining rooms, not restaurants. As Covid-19 continues to complicate life, more businesses will look to shorten supply chains where possible.
With cheaper labor and lots of it, China has been a key cog in the industrial supply chain for years. When the virus struck there first, there was an initial disruption as factories closed for months. Apple’s much anticipated iPhone SE release was delayed, and even factories that assemble cars elsewhere had to shut because they source parts from China. Even as Chinese factories reopen, manufacturers are looking to relocate plants to Southeast Asia or Latin America. Many companies were looking to do this anyway as a result of the US-China trade war, but now plans are really ramping up. They’re also looking to digitize supply chains to reduce the need for in-person document signing.
With travel pretty much shut down, airlines hauling more freight as a way to generate some cash amid a bevy of commercial flight cancellations. Delta is flying freight to 70 international destinations from 13 US airports after cutting commercial capacity by 40%. American has flight attendants aboard its freight flights between Hong Kong, Buenos Aires, and European hubs, with Dallas, New York, and Miami serving as waystations. Air Canada took the seats out of three 777s to free up more cargo space.
A lot of what those airliners are transporting is personal protection equipment for frontline healthcare workers. Pharmaceuticals and antibiotics are also vital medical supplies that are often sourced from China. An already growing call for more of this manufacturing to take place in North America is getting louder by the day, but in the meantime, people need medicine, and it has to come from where it’s made. Look for this supply chain to shorten in the coming years as a response to the biggest supply chain disruption most, if not all, of us have ever seen.