Bare supermarket shelves have become one constant since the Coronavirus disease (COVID-19) struck nearly two years ago. But, it’s more than simply a panicky run on toilet paper. We continue to experience dramatic shortages of fresh produce, meats and packaged foods as a result of supply chain disruptions, such as weather-related delays, unpredictable demand, shipping snafus, employee illness and trucker shortages. These problems are also impacting restaurants, which have resorted to scaling down or revamping their menus to address unreliable suppliers and skyrocketing costs.
The New Normal – at least over the next year or so – is going to be persistent volatility. New waves of the virus and the “great resignation” will continue to wreak havoc with the labor market. And, we’re seeing grocery retailers and restaurants starting to stockpile available goods to ensure they have what’s needed, causing shortages down the lines for other businesses or resulting in waste of perishable items.
These factors will continue to make it difficult to navigate the food supply chain. But, there are some trends beginning to emerge that have the potential to help food distributors better serve their clients while also improving the efficiency of their operations.
Predictability is equally important to price
Consumers have become accustomed to getting groceries delivered in an hour, or same-day delivery of even the most obscure goods from some online marketplaces. But, for restaurants and grocery stores, timeliness is even more important. They need to ensure that their supplies arrive at exactly the right time so operations can run smoothly and their customers are happy. Having produce or takeout container deliveries arrive in the middle of a lunch or dinner rush is not only inconvenient, but also makes it harder for short-staffed restaurants to juggle waiting on customers and stocking the pantry. And, for grocery stores, not having the ingredients for holiday dinners or basic staples prior to a snowstorm can send shoppers to competing stores and impact long-term loyalty.
Competitive prices are still important, but so is predictability. Food distributors unable to meet the time blocks in which clients require their deliveries or unable to regularly fill their orders with the products they need will be at a distinct disadvantage. They will lose business and lessen profits.
Hybrid routing will help meet delivery timelines
Many food distributors have customers on static routes, trying to hit them at the same days and times every week. But while some of those customers depend on specific arrival times, others may have more flexibility.
Instead of only considering static routes, distributors are changing their processes in order to get the right products into the right clients' hands at the right time. By leveraging a hybrid routing process, distributors can give priority to large volume (higher profit) clients with tight delivery windows, ensuring they remain satisfied with their supplier. Then deliveries to smaller, more flexible companies can be dynamically routed to level load the fleet.
AI will be the driving force for greater efficiency
If football is really a game of inches, then food distribution is a game of minutes. The more exact distributors can be with their routing, they'll not only exceed their clients' expectations, but they'll also be more efficient. Artificial intelligence (AI) and machine learning (ML) are being employed to leverage data – from historical delivery stats to insights about other mitigating factors, such as weather, traffic and more – to better plan routes. These technologies can help optimize the process in order to get more deliveries done during the average day, or even help address driver shortages resulting from COVID-19.
Expect to see significant growth of AI in logistics. Infoholic Research predicted 42.9% CAGR growth over the next two years, with the market reaching $6.5 billion by 2023, as AI is exploited to drive scale and efficiency of new distribution models and support greater automation.
The food distribution business has always been complex, but COVID-19 increased this complexity exponentially and introduced scenarios that very few may have imagined possible before 2020.
Pandemic-related challenges, including food shortages, are expected to continue well into 2022. But with the use of AI and ML to optimize route planning and by taking a new approach to delivery routing to improve efficiency and predictability, food distributors can minimize the toll that the current imbalance between supply and demand is taking on restaurants and grocery stores – and their customers – around the world.