How to Build a Supply Chain for the Future

People, process, technology and data must work together to support the desired outcomes.

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With markets changing every day, demand shifting and many workers furloughed or left unemployed, there’s more discussion than ever around the supply chain. Companies across North America and the world are struggling to meet these challenges and implement new processes and protocols to keep employees safe, and keep business going.

The food supply chain has been heavily impacted by COVID-19. Some of these effects caused by the nature of the pandemic, while others are symptoms of underlying weaknesses within the supply chain. With the right technology moves and process improvements, we can innovate while under pressure.  We can mitigate problems and be better prepared for the emerging business and consumer environments.

It won’t be a one-size-fits all solution though. People, process, technology and data must work together to support the desired outcomes.

Go contactless

The industry is seeing a shift to “contactless experiences” to further reduce the probabilities for contagion and cross-contamination. This shift will have a lasting impact on how we interact with retail, as well as commercial enterprises within the food chain. We’re not only replacing the human-touch aspects of in-person customer service, we’re witnessing the creation of new standards for logistics and material handling safety within the food supply chain.

Some of the process-based mitigation is simple—frequent and thorough sanitizing of all contact surfaces and making personal protective equipment (PPE) available and part of standard operating procedures. Physical barriers such as clear curtain walls or plexiglass are being added for worker separation and safety where appropriate. Food processors already require a range of PPE, from hair nets to toe guards. Introducing masks and PPE into other working environments may be a common-sense approach to ensure that your workforce is not suddenly depleted by an outbreak.

As an added layer of protection, operations teams are taking advantage of scheduling changes, similar to medical labs and clinics, to subdivide their workforce into teams that don’t physically interact to isolate the impact of any outbreak. This is primarily a process change, and one that even manufacturing environments should be able to handle through existing production planning tools.

Modernize technology

We are also seeing contactless payment, delivery and entry into facilities. These adaptations include:

●      Zero-cash purchases using a tap-to-pay at the checkout for restaurants and groceries.

●       A delivery person taking a photo of the customer holding the package to certify the receipt instead of a signature capture.

●       Touch-free building access enabled via automated doors combined with real-time location apps that use Bluetooth, text messaging or WiFi technology to certify the experience.

All of these solutions are incremental improvements on things most operators already do. Mitigating the need for physical distancing within a collaborative operational environment requires careful thought, but applications of technology can ensure both business continuity and personal safety.

Android modernization enables companies to manage increased production challenges with new tools, including on-device training, push-to-talk and multi-app-on-device solutions. Physical distancing can be tracked by Android-based apps in the warehouse to ensure employee safety while they go about their everyday tasks (using those same devices), with an audible beep to alert them to an impending close-contact with contact-tracing features. Modernizing legacy warehouse devices now has a whole new ROI.

Identify the gaps

The food supply chain isn’t broken, per se, just poorly connected and finding it difficult to innovate under pressure. These weaknesses are rooted in how people, processes, technology and data are (or are not) being applied. Simply put, we need to improve visibility and resilience beyond the enterprise by connecting our businesses more deeply to the supply chain. And that means stepping up to GS1 Standards for the entire food supply chain, not just the retail-facing chain.

A near-catastrophic shift in buying behavior has resulted in unprecedented imbalances of supply and demand within the food processing and distribution systems. Potatoes are being left in the fields to rot at the same time grocery stores are hard-pressed to keep up with the demand for French fries – this is clearly a problem. Milk being poured down the drain, while livestock are slaughtered is further evidence of a lack of connectivity and agility across the food supply chain.

The goal of the supply chain is to maximize the value-add for each node in the chain—grower, processor, distributor, manufacturer, wholesaler and retailer. But, few enterprises look beyond order-level visibility to their suppliers or customers because they don’t have the standards to support the data for the request. This means they’re dependent on their own historical data for any forecasting, and a Black Swan event like this invalidates all the forecasts for the immediate future.

The stay-at-home order generated a “bullwhip effect,” as spikes in demand caused a cascade of shortages in the retail supply chain for everything from goods to labor to logistics to get products onto the grocery shelves. Simultaneously, there was a cessation of demand in the hospitality and commercial sectors, as reflected in the waterfall of order cancellations for the distributors, wholesalers and commercial growers who supply them.

Build for the future

The crux of the problem is that the retail manufacturing chain is largely independent of the wholesale. The farmer might be able to sell some of his crop into the retail chain, if the retailers have capacity to process it. But, the wholesale chain is not geared to shift these products into retail markets. A systemic adherence to GS1 standards could mitigate some of this problem.

Take French fried potatoes, for example. They are a traditional American comfort food, and shoppers are looking for eat-at-home options. The result? Stockouts. Yet, wholesalers supplying the hospitality industry have a surplus of them and cannot shift stock to the retail chain because the goods don’t match the FDA labeling and retail packaging requirements. Consumers and grocery chains aren’t willing to manage 50-pound bags of frozen fries. Hospitality-chain manufacturers don’t have the agility to suddenly redesign their packaging lines or recall and repackage those fries. As a result, the commercial buyers stop buying, the farmers lose a market and crops that could otherwise be processed and sold go to waste.

The solution is for manufacturers and distributors to be more strategic in their risk assessments and address the ability for serving both B2B and B2C food markets, at some level, so that they can shift their product as demand shifts. If companies apply for and maintain global trade item numbers (GTIN) for both product segments — retail and commercial — they can take a unified GS1 Standard approach to product handling for both B2C and B2B products. Then as demand shifts, they would have the resilience to adapt instead of having to shutter operations until the next crisis passes.

For some companies, the need to evolve and innovate in the midst of this crisis feels immediate, whether it's updating to GS1 standards, implementing new technologies and protocols, or modernizing device deployment and training. Others are looking for ways to cope and survive, with a promise to rebuild in the future. Whatever position you find yourself in, it’s critical that we apply the lessons learned in this crisis to strengthen the supply chain for the future.