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The food supply chain is facing one of the biggest shifts we’ve ever seen. The logistics world is trying to cope with parts grinding to a halt while others see meteoric and unexpected rises. No one could have predicted how this unfolded, and the rapid spread of the coronavirus to more than 130 countries.
Now, we all have to learn to deal with it.
In the food supply chain space, that’s become a significant challenge. There are many industry best practices that still work, but all require additional steps and sources and precautions to be effective. You’ve got to keep moving goods quickly and prevent spoilage and other concerns, while also ensuring teams are safe and healthy.
It’s a complicated affair and there’s no easy path forward. Thankfully, some practices are emerging as useful for keeping the doors open and lights on, so let’s take a look at five important things to consider for your food supply chain.
1. Review Labor And Prioritize Safety
The food safety management systems you had in place before the coronavirus still apply. Now, you’re layering additional requirements on top of those. Additional sanitation needs are present, and your team must be both trained and properly equipped to meet those needs. Make time to build in training and procedure reviews with your teams. Have floor managers check to ensure things are being followed correctly.
Hygiene serves to keep your people safe and your business running. In many cases, depending on your food products and your position in the supply chain, cleaning and other mechanisms impact your staff but not customers. Right now, there appears to be no evidence of COVID-19 being directly transmitted through food or packaging materials.
The substantial risk comes from smears and direct contact with an infected worker.
So, your response must be to protect your team by allowing them to work at a safe distance from one another. Slow down your production lines, if possible, to accommodate this and to ensure that people can have a moment to step away and clean up properly when needing to cough or sneeze. And send those people home! Make it possible for your workers to afford to go home and take care of themselves, or they may come to work when ill.
2. Review Your Logistics Command
Food supply chains have a variety of differences and unique elements that set them apart, but they also share many core commonalities with other supply chains. So, logistics best practices still apply.
Your food operations can take lessons from other supply chains that have weathered COVID-19 well. Start by building a command center that takes time to look across your entire supply chain. Seek out weaknesses and areas where partners may be disrupted or you could have a bottleneck, slowing down your operations.
Run scenarios. Test your capabilities. Communicate to everyone up and downstream.
Building a central command will give your company and your partners a single place to go for news, information, or questions. It collects data and can prevent harm by communicating well. Your best bet is to get leadership involved so that this center can make supply chain decisions immediately, instead of having to get multiple approvals for necessary reactions and steps.
A command center will be a mix of leadership, SC professionals, and IT. You need people who can understand what’s happening and the related data, plus troubleshoot potential issues to keep information flowing and people moving. Current analytics and dashboarding will be important to make decisions quickly but effectively, relying on the best possible information at the time.
3. Build a Plan for Continuity
Every partner in a food supply chain should be thinking about and working toward continuity. It’s going to look different for each company, but there are some guiding principles to use.
First is that you’ll want to start looking into a diversification of your sources. What products, raw materials, and other elements can be produced and delivered by companies other than your current provider? If you provide raw materials, like whole foods or dairy products, look for alternative locations to start selling your goods.
Both producers and suppliers may find that their local community has needs and resources coming from state and federal programs to purchase some of your supply if an existing retail partner is struggling.
For manufacturers, distributors, and retailers, start considering both local and foreign sources for your products. While an immediate cost may be higher for CPG, a local provider may be a more reliable source and saves you from having to look at multiple ocean lanes for your production.
Build redundancy to ensure continuity in your operations.
At the same time, you’ll want to start looking at future production capabilities. You likely have some rates already negotiated for your suppliers and order fulfillment. However, shipments of many goods are at risk of being delayed prioritizing moving medical and other essential items. Review agreements to ensure that you’re not at risk of being bumped and maintain those relationships to minimize disruption in the event that your rate renegotiation happens during the crisis.
4. Audit Facilities and Partners
Auditing is something we often think about when working with a new partner or supplier, performing checks directly or hiring a third party to manage things. You’ll generally work out an audit or review schedule and see how your partner handles these in an ongoing fashion, ensuring everything meets your standards.
Normally, this includes checks like if someone is a USDA/FDA Certified facility, if their handling guidelines meet your requirements, and if there are any specific certifications or precautions you require. IoT and other tech can make this easier to track, and all of these considerations should be reviewed with your partners now, just like normal.
What’s outside of the norm is the need to do more spot checks and audits of partners. Workforce issues are causing considerable damage to the food supply chain — just look at some of the recent announcements of major poultry and meat producers. Bank on your existing relationships and reach out to partners. Ensure that they have the right staff and are operating at capacity, with the training and other requirements to meet your needs.
With everyone facing difficulties in labor, fulfillment, and logistics, you need assurances and audits with photos and other documentation. Everyone makes mistakes when stressed, whether that’s leaving a freezer door open at home or putting the wrong things on refer trucks or blanking on FIFO procedures. Check-ins with partners and audits or process reviews help mitigate this by returning the focus to your business needs.
5. Talk With Last-Mile Services
The U.S. has faced a looming driver shortage for years and we’re starting to see some major impacts because of it. Cold chains are among the hardest hit, experiencing slowdowns at each stage of producing and exporting goods to the U.S. and then getting those products to the end consumer.
Requirements for power, temperature checks, inspections, and other elements are generating an increased risk due to human error and the time it takes to properly care for cold chain products. At the same time, those looking to move via air freight are seeing problems as flights are cancelled and FAA regulations limit some available routes.
There’s a lot that can get in the way of getting your products to their final destination.
Companies in the food supply chain space should start working with shipping companies, 3PLs, and other partners to minimize disruption and prepare alternative actions in the event that a port, air terminal, or other lane becomes unavailable.
Not only do you need secondary sources for products and raw goods, but you should consider alternatives for fulfillment. Split-testing some goods across 3PLs can protect operations and potentially save you money if you’re able to reduce costs associated with storage, shipping zones, packaging, or handling.
Toss Those Old Demand Forecasts
One final note about the food supply chain is that no one can be sure what’s next. You must think and plan and look at the most recent data to try and prepare. However, uncertainty is the new standard. That, unfortunately, means all the hard work you did creating demand forecasts and advanced planning back at the end of 2019 needs to go out the window.
Don’t rely on old demand forecasts and models. Update everything you can so that you’re best prepared to adjust products and efforts to meet how buying behaviors have changed, or which partners are closing their doors. Consumers are working off a mixture of boredom and panic, dramatically changing how they shop each day — such as the 652% year-over-year growth in bread machine sales on Amazon and other ecommerce platforms.
You’ve got to protect your operations today and look forward, with the right data, so you can do so tomorrow.
