It goes without saying that Christmas is a an even busier time of the year for stores with consumers buying more food, clothes and gadgets than normal. But this Christmas some supermarket shelves will remain empty, thanks to supply chain issues and the lack of staff across the food industry.
This has galvanised food manufacturers, suppliers, wholesaler as well as retailers into working more closely together to look at innovative ways to help keep shelves well stocked. Food supply chains are complex, vast and vital and so it’s not surprising that when there are disruptions, making the news headlines.
While there’s no denying farmers, manufacturers, suppliers and retailers are pulling out all the stops to deliver this Christmas, food supply chains are facing a daunting task and it will be inevitable that there will be some pinch points, where shoppers should prepare for reduced choice, some gaps on the shelves and unfortunately higher prices for some goods.
Among the challenges is the long-term shortage of HGV driver shortage. Commercial fleet operators have struggled to retain and recruit new drivers, with the Road Haulage Association suggesting a shortfall of 100,000 in the UK. On top of this the problem has been exacerbated with import delays due to new procedures at ports and crossing points because of Brexit.
Consequently, the situation has led to growing demand from retailers for large volume product shipments in an effort to prevent or reduce empty shelves. As a result, some food manufacturers have reported certain key product line volumes increase by as much as 30-50%.
This in turn has had a knock-on effect and increased challenges for restaurants and fast food chains, including the likes of Nandos which during the summer was forced to temporarily close around 50 of its restaurants. Meanwhile, McDonalds ran out of milkshakes and some bottled drinks across its 1,250 outlets and for and Greggs run short of chicken.
There were also reports of manufacturers like Nestlé experiencing problems, impacting the supply of family favourites such as Quality Street and other food products in the lead-up to the festive season.
The British Retail Consortium warned that despite a “gargantuan effort to ensure that essential food and gifts are ready for Christmas,” shops “continue to be dogged by ongoing challenges in supply chain problems.”
Combatting supply chain struggles
To combat such issues, food manufacturers have had to increase overtime and use their enterprise resource planning (ERP) solutions to plan extraordinary production runs. Demand has also led to increased shipments of products from overseas, which in turn has had a knock-on effect on food supply chains around the world.
The result of all this is for the retail sector to find ways to reduce the impact of both current and future supply chain disruption, starting with building stronger relationships with their suppliers. This approach allows retailers and suppliers to join forces and adopt more flexible approaches and mitigate any issues.
One option is to work with manufacturers to optimise distribution runs with other customers, ensuring lorries are never under-utilised and helping to ease the burden on hauliers. They can also put in place for temporary storage to stockpile key products. Another option, should shelf-life allow, would be for retailers to work with manufacturers to optimise production, calling in orders that sit further along the planning process earlier than normal.
No matter what strategies retailers and manufacturers decide to take, it is essential that their efforts are backed up and supported by the latest supply chain technology.
Futureproofing supply chain management
Modern ERP solutions are pivotal for retail applications in supporting supply chain management and possesses that are frequently under-used in mitigating supply chain disruption. This includes being able to model the impacts on the supply chain and plan for future supply chain problems. For example, these solutions can demonstrate what will happen if organisations pull orders in early or highlight the potential demand on storage and internal distribution.
They can also help food retailers and manufacturers understand how their supply chains are likely to react during conditions of stress. In addition, analytical tools and stock requirement lists, powered by machine learning (ML) and artificial intelligence (AI) technology, can show when stock is close to running out and pinpoint which production lines will be affected and identify the customer orders that will not be fulfilled. They can also help reprioritise fulfilment to more strategic customers when challenges occur.
With this type of insight, retailers and manufacturers should be able to take action and achieve resilience across the supply chain. As Christmas is almost here all of this will be essential in helping the food sector to businesses to steer the difficult, disruptive times they continue to face, allowing them to better cope with future disruption.