COVID-19 Brings the Value of Adaptability into Focus
By Angela Fernandez
The food industry is facing a crisis unlike anything we’ve ever experienced. COVID-19, a disruption bigger than any food recall, hurricane, or other “black swan” event, has exposed the challenges associated with a traditionally linear and analog food supply chain.
Due to the fragmented types of data systems and record-keeping (often paper-based), achieving real-time supply chain visibility in the food industry (particularly in the fresh foods industry) has proven to be a challenge for several years. The crisis has brought these issues straight to the forefront. When data is not digitized, it cannot be easily exchanged from partner to partner, and the supply chain becomes unresponsive to major changes.
However, there is some good news. This current pressure cooker situation has driven forward unprecedented collaboration between trading partners to help keep the country fed and satisfied as they stay home. More than ever, supply chain professionals are working together to keep shelves stocked, fulfill online orders, and keep food safe for consumers in need.
Since the crisis will have a lasting impact on the food supply chain, suppliers, distributors, retailers, and foodservice operators are exploring ways to solidify this collaboration for the long term and build more resilience and flexibility into their supply chains. There are three particular areas where global data standards are supporting this rapidly evolving supply chain collaboration.
Bridging the Gap between Foodservice and Retail Grocery
With schools, cafeterias, restaurants, and buffets now empty due to social distancing, food earmarked for foodservice use is piling up. We’ve likely all seen the images of mountains of squash at a farm with nowhere to go. Diverting food into a new channel is difficult to do quickly, as retail grocery requires different packaging and associated data sets, such as those that populate nutritional labels. Plus, barcodes are required at the individual product level to be sold in a supermarket.
Now, due to the extraordinary efforts of supply chain professionals in the foodservice and retail grocery sectors, progress is being made. New groups and platforms are emerging to help bridge the gap between the two industries. For example, the International Foodservice Distributors Association and the Food Marketing Institute announced an ad-hoc partnership in March. Together, their member companies are participating in a matching program that connects foodservice distributors that have excess capacity (products, transportation services, and warehousing services) with retailers and wholesalers that require additional resources to fulfill consumer grocery needs.
Also, members of GS1 US initiatives in the foodservice and retail grocery industries are continuing to bring trading partners and key stakeholders together to solve supply chain challenges, just as they have done for several years. In the context of the COVID-19 crisis, collaboration via a Supply Chain Visibility Workgroup, for example, is critical now to drive forward standards-based systems to track and trace products. By using a common language of product data, more physical products can be universally labeled and accepted by a multitude of trading partners. GS1 Standards provide a blueprint for selling items into retail and can be leveraged and extended during the crisis to help make the supply chain operationally more efficient.
The pandemic has forced the food supply chain to deal with completely unforeseen spikes in demand. For example, one of the nation’s largest grocers, Kroger, reported that yeast sales are up a whopping 600 percent as people bake more at home. With consumers buying certain products faster than stores can restock them, inventory visibility is critical to know what’s available to sell.
Depending on the category, retailers may simply have a lack of inventory, or restrictions on what they can sell, such as limited quantities on meat sales. Even worse, they may have a lack of visibility into the inventory they already have and just not be able to move it to the shelf fast enough.
The supply chain processes between suppliers and retailers, such as the use of Advance Ship Notices to know what is being shipped and when, are now mission critical. These standards ensure that systems, transactions, and trading partners remain electronically current and aligned. Armed with accurate information, those working hard on the frontlines of stores and distribution centers can collaborate within their organizations and supply chains to get much-needed products to pantry-loading consumers.
Accelerating Digital Innovation
Consumers are turning to online offerings now more than ever. Those who had casually tried online grocery shopping in the past seem to have taken the plunge into making this a usual habit. For example, there was a 208 percent increase in curbside pickup in April, according Adobe Analytics. Retailers like Target are accelerating e-commerce offerings as the pandemic continues, reportedly adding additional drive up parking spots nationwide and adding temperature-controlled storage space in stores to facilitate more fresh and frozen food orders online. Foodservice delivery services have also been surging. Through the end of April, meal delivery sales have collectively doubled year-over-year, according to Second Measure data.
Because a consumer cannot see the product in person, it’s important to provide a complete and accurate digital data set for that product. The processes and systems that e-commerce and delivery operations rely on are built on a foundation of GS1 Standards to ensure that data can be efficiently exchanged. Those companies that have already digitized their supply chain data and adopted standards to exchange it are better positioned to meet evolving consumer needs. Weary of item substitutions, shoppers are shifting their loyalty to whichever retailer or foodservice operator offers a frictionless experience. Supply chain partners need to keep each other informed of product descriptions and item quantities to portray a realistic picture of what is available for purchase online.
An immense amount of pressure has been placed on the food supply chain during the pandemic and these challenging times have forced a major shift in trading partner relationships. Despite the short-term focus on bringing a balance back to supply and demand, the disruption could have a positive impact to move standards-based collaboration forward and increase supply chain resiliency for years to come.
Angela Fernandez is the vice president of community engagement at GS1 US.