Supply chain is not broken — but it’s definitely stressed
After a two-week period in which one of the nation’s largest meat processing companies declared the food supply chain “broken,” President Trump declared that meat plants must stay open and retailers began imposing limits on meat purchases, Supermarket News sat down for a Zoom interview with Abe Eshkenazi, CEO of the Association for Supply Chain Management (ASCM) to get some perspective on the issue of food supply amid coronavirus in the U.S. Chicago-based ASCM is the largest non-profit association for supply chain companies around the world.
“From our perspective, we don’t think the food supply chain is broken as much as it is stressed,” Eshkenazi said. “When you take out labor, one of the most significant aspects of the supply chain, you’re going to have a significant disruption within the supply chain. So I think we can understand that from Tyson Foods’ perspective, they’re dealing with a new and unforeseen break in their services. But I think we also have seen that it takes time for supply chains to respond. So I don’t know that they’re as much broken as they are stressed right now for the food supply chain.”
As for shortages and stock-outs in grocery stores, Eshkenazi, left, advised patience on all fronts.
“We’re entering a different frontier, relative to food right now, and that’s food scarcity. We started to see it in the beginning of the pandemic with consumer packaged goods, specifically toilet paper and paper towels. We saw a significant run on those particular products, but what we’ve also seen is that the supply chain has responded, so those gaps in the supply for those particular items are being filled,” he said.
“So it’s taken a while for the supply chains to respond to the spike in demand, but it’s also critical that we recognize that this is a spike. This is not a new demand signal at that level. When we take a look at utilization, we’re not looking at an increase in terms of food or consumer packaged goods. So we’ve still got the same mouths to feed and the same bottoms to wipe as we had two or three months ago. It’s just that we’re seeing a shift in terms of where the demand is being sensed right now, and that is in a home based environment.”
Eshkenazi noted that what consumers are experiencing in the short term are reductions or stockouts in certain products and that in some cases they will have to take a second or third choice on a particular product or in the meat category.
“We’re in a period right now where you’re going to see some stockouts, where you’re going to see some changes in terms of buying behavior or availability of the products, but the system will catch up,” he said. “It just takes a little time for not only the companies to ensure that they have a safe working environment, but also for the employees to feel like they can come back and provide it.”
When asked about retailer limits on meat purchases, which Kroger, Costco and other leading grocery chains started last week, Eshkenazi allowed that quotas may help in the short term as we start to ramp up production and then see availability and variety start to increase.
“As the system catches up, I think we’ll see an easing of that but it also does present a problem because the quotas are not relative to family size,” he noted. “They’re relative to the buyer. So a family of five or six has the same quota as a family of two. So we have to be aware of the current circumstances that these individuals are facing. It’s not a one size fits all.”
Looking forward, Eshkenazi said, “As we evaluate getting out of this disruption, I think we’ll spend quite a bit more time on risk and resiliency, and identifying what are those critical elements that we need to ensure that are of national interest and national security. And I think everybody would agree that our food supply chain is of the utmost criticality for our consumers and patients alike.
“I fully expect organizations as well as supply chain professionals to take up the challenge on how to respond in the future to these types of disruptions,” he continued. “So I’m looking forward to not only putting this disruption behind us, but more importantly, identifying the things that we can do as an industry to respond to the challenges that we face today and in the future.”
Check out our Zoom interview with Abe Eshkenazi to hear more of his thoughts on the current crisis, safety and production issues in America’s meat plants, the need for agility in the supply chain and where the food industry goes from here.