Supply chains matter, food supply chains especially so. They work almost invisibly, ensuring we have 24 hour access to a high variety of food and drink. We only notice them when they don’t work, as in the case of the rows of empty shelves of toilet rolls and tinned tomatoes. So what happened?
Take the tinned tomato chain. We buy from the supermarket, but the chain is made up of a network of warehouses where bulk stock is stored, the processor who tins the tomatoes and the producer who grows them. The retailer balances our demand for tins with supply from the warehouse and processor. Panic buying caused demand to spike and the tins of tomatoes couldn’t flow through fast enough from the warehouse to the supermarket to meet the rate at which people were buying - even though there were plenty of tins further down the chain.
Returning to a level of normality
We’re now seeing supply chains return to a level of normality. But there are still some challenges. Retailers are having adapt their delivery channels to meet an almost 20% growth in on-line shopping. We’re still seeing shortages of some foodstuffs. As almost 50% of our food used to be supplied through catering outlets (restaurants, staff canteens, pubs and cafes), there has been more demand for food in the home and some catering supply chains have been slow to switch to retail channels.
Flour is a case in point – we’re baking more so demand is higher (sourdough and banana bread anyone?). While there is enough flour in the overall supply network, flour for catering is supplied in larger tonne bags so switching to retail size packaging has proved a challenge for millers and retailers.
In the longer term, food supply chains rely on a steady source of supply of fresh produce and UK farmers are dependent on migrant labour for harvesting. While the government has encouraged furloughed workers to take on farm jobs, the sector is warning that there will still be labour shortages. Globally, labour also poses a problem and there has been an overall drop in food trade. Restrictions on supply will mean that we should expect prices to rise in the short to medium term and we may see less variety of produce available.
Ensuring there is enough food to go round
Food insecurity, especially for people on low incomes, will be a continued concern so community schemes such as food banks are going to be a really important part of our response. However, our retail supply chains are robust and flexible so while choices may be more limited, there will be enough food to go round. We’re also seeing the growth of local supply chains, such as fresh box schemes connecting farmers directly to the public. This all helps to create more diversity and resilience for our food supply.
Food is critical to life and our supply chains are the means to deliver this. They are of course economically important but this crisis has shone a spotlight on their role in providing wider societal outcomes. Future food chains will need to be more resilient to shocks, but also ethical and socially responsible, focused on being able to provide affordable, healthy food that is environmentally sustainable.
Supply chain design will need to adapt and future configurations will need to be structurally flexible, nimble at reacting to changing market conditions and thus have more balance between global, regional and local supply.
Adoption of digital technology is a core enabler, helping make the physical flow of product more visible. This helps partners across the chain plan and manage these flows more effectively but also provides consumers with instant traceability and assurance of where their food comes from and that it is ethical and sustainable. These are unprecedented times but the opportunity is there to re-shape our food supply chains so we can all access safe, healthy, affordable and sustainable food.
Find out more about WMG's Supply Chain research here.