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Grocery store rationing is back, but relax: the supply chain is doing well

Hard times have returned to the toilet paper aisles of the country.

As coronavirus cases and lockdowns are on the rise again, shoppers are returning to the panic buying habits of the early days of the pandemic. In response, grocery companies such as Target, parent company Ralphs Kroger and parent company Vons Albertsons Cos. Reinstated purchase limits for toilet paper, paper towels and cleaning products.

But this time, grocery stores say, they are putting limits specifically to avoid the empty shelves many consumers face in the spring – and industry experts say grocers and suppliers are ready for the winter wave.

“We have set the limits on caution,” said Kevin Curry, president of Albertsons’ Southern California division, who noted that the current surge in demand is nowhere near what he saw in March. and April. “The supply chain is better positioned to handle this rush.”

Over the summer, the industry put in a number of measures to adjust to a new normal in high-volume grocery shopping and waves of foreclosure-related shopping spree.

Among them, stores and suppliers have started to keep more inventory on hand, where possible, to prepare for unpredictable spikes in demand.

The industry has “shifted from a just in time mentality to a just in case mentality,” said Willy Shih, a Harvard Business School professor who studies manufacturing supply chains. Businesses have spent the last decades trying to reduce inventory, seeking a world where raw materials arrive in factories in the morning, leave as finished goods at night, and run out on store shelves the next day, without surplus. at the end of the process.

The just-in-time model relies on the use of past data to forecast demand and on flexible logistics networks to adapt to expected changes. It crumbles, however, when the unpredictable strikes on a global scale.

Nick Green, managing director of Thrive Market, which primarily sells organic food and health products, said he has provided additional supplies to prepare for this new wave of shopping.

“In an ideal world, and nine months ago, we had tens of millions of dollars less than we are today,” Green said.

But the world changed in March. “We went through six months of toilet paper in about six days in the first wave,” Green said. This time around, he saw demand more than double last week.

To prepare, Thrive went vertically to their warehouse for the first time. Historically, Green has stated that “our product is on the ground” for easy access. Now, “we not only have to use the 700,000 square feet of floor space, but also stack several floors of pallets.”

Retailers have also gotten creative in making deals with lesser-known manufacturers who typically produce toilet paper and cleaning products for restaurants and office buildings to make more store-branded products, which can fill up. the shelves when renowned brands sell out.

“Smart, strategic retailers have changed their source of supply significantly, tapping into excess inventory that was choking foodservice and institutional manufacturers,” said Burt P. Flickinger III, managing director of retail consultancy Strategic Resource Group . With most restaurants, hotels, offices and large venues closed due to the pandemic, this pivot has allowed the paper products market to meet high consumer demand.

The same goes for cleaning products, according to Curry at Albertsons. Popular branded items, such as Clorox disinfectant wipes, remained in short supply throughout the year, so the grocer began to stock more.

But the logistical challenges of getting all this product from regional distribution centers to stores can be a challenge. The disruptions to the global supply chain that began when the coronavirus first triggered lockdowns in China continue to work their way through the system today, changing the typical delivery and shipping schedule for all. kinds of consumer goods. Long Beach harbor checked record volumes in October and November, when in a typical year, the holiday expedition rush would have died down earlier in the fall.

“Whether it’s imports for distribution centers or food logistics, they spill over into each other,” Shih said, as companies compete for space on ships, trucks and trains.

The downturn in the restaurant and institutional catering industry has, however, once again proved to be a boon for the grocery sector.

When consumer demand for fresh produce increased at the onset of the pandemic, “cold stores and refrigerated trucks were all getting bigger and bigger,” said Michael Castagnetto, president of the logistics company’s products division. CH Robinson. His business was able to tap into small regional warehouses typically used to store restaurant supplies, a strategy that helped grocers weather the first wave.

The same customers who needed that extra cold room in the spring re-contacted last week, Castagnetto said, saying they needed help again, “probably over the New Year.”

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