How can I help alleviate supply challenges post Covid-19 lockdown?
allmanhall’s Procurement Director, Mike Meek, has been providing clients with some helpful and practical advice around procurement and supply chain management. Working with an expert partner for your food procurement will ensure and enable this approach and deliver the cost savings and support that may be essential for you, at this time.
- Provide advanced notice of reopening wherever possible (2 weeks ideally)
- Forecast phased return to help suppliers plan stock levels and resources
- Communicate potential changes to your future product mix
- Share new protocols and business processes relevant to your supply chain
- Identify supply chain weaknesses and build contingency for potential product shortages or supply disruption
- Collaborate with your supply network
An essential concept to remember when planning to re-start operations is that food supply chains operate on a just-in-time (JIT) basis. JIT helps all segments of the supply chain become highly efficient by removing unnecessary waste – both physical and financial.
So, what does this mean and what are the benefits? Well, think of the supply chain as a fast-moving conveyor belt, where efficiency gains are attained at each stage by maintaining perpetual motion and curtailing downtime, work-in-progress, inactive assets, and money tied up in stock. Most significantly for enthusiastic caterers, JIT has led to significant enhancements in product quality, product shelf-life, freshness, and kept food relatively cheap.
There can be downsides too and these should be considered when reopening catering facilities. JIT supply chains can be vulnerable to demand surges or disruption where the effects can oscillate throughout the entire supply chain. On this basis, it is good practice to provide advanced notification of site resumption, perhaps even two weeks’ notice. This will help suppliers refine their operational planning, including supply chain, warehousing, distribution, and furloughed workers.
As service starts to reopen, suppliers will be keen to optimise or revive distribution routes which may result in some re-routing of existing delivery schedules. Whilst not always the case, it is important to consider that some changes to delivery days and delivery frequency may be enacted, with the option for Saturday deliveries potentially removed.
As inventories are not normally stockpiled it is also important to identify and communicate anticipated volume changes, particularly when considering a phased re-opening. This should include menu changes and any new product lines that may be required. Remember, inventory management systems use historic purchase data to help forecast future demand, so it is easy to see how significant changes may lead to impaired service performance if not communicated effectively.
Time to use our imagination again and revisit our high-speed conveyor belt concept. When product or components flow through the supply chain they increase in cost. The raw material component generally only accounts for a small proportion of the overall final delivered cost; about twenty per cent in the UK. Other most notable cost factors include transport, energy and labour attributed to the three connected sectors: agriculture, food processing industry and distribution sectors.
Wastage incurred further along the supply chain is, therefore, more costly. For assiduous caterers, any wastage incurred at this stage is when the product cost is at its greatest. It has already incurred all the costs associated with farming, manufacture, distribution, and potentially catering production. On this basis, it is not only important to manage your wastage but to appreciate that effective pre-planning and communication with your suppliers can significantly reduce unnecessary wastage for them too.
Covid-19 has impacted all segments of the wider supply chain. Clear communication, advanced planning and due consideration will help suppliers improve service performance and manage costs much more effectively whilst navigating through these challenging times. This may require a greater degree of flexibility during these initial stages of business resumption, but you will reap the rewards in the long run.
Should you collaborate with suppliers to alleviate challenges? I would say it is a necessity. allmanhall can help and are already providing support.