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Supply Chain: Agility will be mandatory during the next disruption

Until 2020, it could be argued that agility was a valuable capability that led to healthier margins, higher in-stock availability of product, and greater competitiveness for an organization.

As the pandemic hit and remained a major disruption for far longer than anticipated, the importance of agility vastly increased.

It has, as Tom Goldsby, the James A. Haslam II Chair of Logistics, at the University of Tennessee, observes, gone from being a luxury to a necessity. Companies cannot survive and compete without it.

This is particularly true for the fresh produce supply chain—an essential industry with production schedules that cannot be readily modified like the automobile industry.

Lead times for growing, seasonality issues, and limited shelf-life magnify the impacts of an extraordinarily disruptive pandemic. This led to multiple challenges for the industry.

The most noteworthy challenge has been the shift in demand for fresh produce. As the pandemic spread and shelter-in-place orders occurred, sales to the foodservice sector shrank dramatically.

Much of this demand was replaced by retail. However, this required having the appropriate inventory available for grocery channel order fulfillment.

James Houser, general manager for Consumer Fresh Produce, Inc. BB #:292771 in Pittsburgh, PA, recalls the need to add or reduce supply quickly due to shifting demand.

“Having 3,000 cases of single bananas that only schools will take is not a great situation if all the schools are shut down,” he says.

The demand shifts also led to challenges within grocery order fulfillment. Pack quantities and packaging for retail are different than foodservice, as are delivery frequency and lanes.

Plus, retailers shifted requirements for many bulk products to bagged, to minimize shopper concerns of in-store product handling.

“There was a huge shift for manufacturing and packaging to satisfy retail demand,” says Steve Roosdahl, vice president of operations for Oppy, BB #:116424 Vancouver, BC.

“There were short-term packaging shortages, but we were able to find flexible options. Retailers normally have a lot of specific labeling requirements, but they were good with us using clear plastic bags and putting stickers on them.”

For Chuck Curl, director of regulatory, risk and compliance at Bancroft, WI-based RPE Inc.BB #:105471, a packaging challenge revolved around bagged potatoes.

As the U.S. Department of Agriculture (USDA) ramped up its Farmers to Family Food Box program, it became more difficult to find packaging suppliers. Lead times ballooned from 4 to 5 weeks to 8 to 12 weeks. It soon became necessary to use other packaging and secure customer acceptance.

Transportation became a recurring issue across the early months of the pandemic. Trucking capacity fluctuated as some drivers chose to park their rigs. Rates skyrocketed in some lanes as demand far exceeded capacity.

“Product was short in Nogales, and truck rates were extremely high, so we opted to load more produce out of Texas,” notes Glenn Sheader, in sales and purchasing for Consumer Fresh Produce. “The supply was better and transportation rates were cheaper by $2,000.”

Port disruptions, especially on the West Coast, were also widespread.

“We have a newly developed blueberry import program and pretty much every container is arriving a week or two late,” says Mason Brady, CFO and director of supply chain for Homegrown Organic Farms BB #:161459 in Porterville, CA.

Due to congestion, he says the Port of Long Beach was unable to process arriving ships fast enough, and perishables were competing with durable goods from the Asia-Pacific region.

In addition to product flow issues, the pandemic caused plenty of staff displacement and availability challenges. Stay-at-home orders prompted the need to work remotely, while essential onsite workers were tasked with strict protocols to ensure their own protection as well as product safety.

“Over a day or two, we sent nearly everybody home,” Roosdahl says. “Only people who were required in the office and my teams from the supply chain side, who physically handle the product, were here—and business continued with very little impact.”

This is a Supply Chain Solutions feature from the March/April 2021 issue of Produce Blueprints Magazine. Click here to read the whole issue.

Dr. Brian Gibson is executive director of Auburn University's Center for Supply Chain Innovation and a former logistics manager.