Extraordinary times call for extraordinary measures; grocery retailers and food manufacturers have implemented such measures to ensure that Canadians continue to have access to safe food. Grocers have modified their in-store practices and suppliers have changed manufacturing processes and their supply chains to address unprecedented demand. “In Their Own Words” brings the behind-the-scenes stories to Grocery Business' readers.
Pat Pelliccione, president, Jan K. Overweel Limited
Crisis leadership initiatives
Early in March, upon learning of the COVID-19 virus and the measures being taken by governments, we immediately organized a committee of our associates to deal with the crisis. The committee was formed with representatives from all sectors of our business, including, marketing, human resources, warehousing, quality assurance, sales information technology and ownership. We set up policies for all our associates to deal with the COVID-19 virus (both associate safety and customer safety). These policies included a work from home directive, a social distancing initiative for all associates involved in manufacturing back office support and a policy for cross interaction between our various buildings that our businesses operate in. The greatest achievement of the committee was to develop a back-up plan for each area of our organization in the case that a positive case of the COVID-19 virus infiltrated our company. Our quality assurance department ensured that all of our suppliers had full COVID-19 preventative programs in place, which helped to ensure our customers that any products that we supplied were safe for consumption.
Impact on the supply chain
Given that our company handles many different food products, our supply chain has been affected in many different ways due to the COVID-19 virus. The supply chain for dried goods has been decimated. Canned goods (beans, and tomatoes), pastas, rice, gnocchi and cookie offerings sold so quickly we didn’t have time to adjust supply and with canned goods in particular that are generally available on a cyclical basis, shortages have occurred and will continue to occur until the new crops come in to be harvested and canned. Our tomato suppliers told us their sales in March 2020 were 87 per cent higher than in March 2019 due to the COVID-19 virus. So many of these dried good grocery products will be in short supply in the coming months.
In the case of our perishable products (cheeses and meats), we’ve had a different experience. The decision by some retailers to close down in-store deli departments means we are now dealing with a lot of excess stocks of bulk meats and cheeses; these are products generally sold to retailers for slicing in their deli departments. One of our sales representatives said two major chain retailers were not accepting bulk products for their in-store deli during the pandemic. This led to pandemonium as our factories had already purchased the raw material meat supplies for production, however we were able to transition production from bulk meat products to those that could be made for slicing. So, with deli meat products we immediately changed over to products that were sliced and pre-packed.
It has been a nightmare for our imported cheese products from around the world. In many cases, cheeses have to be ordered in advance and the lead time varies for cheeses from 6 to 12 weeks. Once orders are passed to the factory, cheese products are made and shipped and it is almost impossible to cancel orders. And they continue to arrive even though there are no sales for them.
Given how retailers have changed shopping structures in their stores so customers move in and out of stores very quickly, it’s resulted in deli being overlooked.
This in turn has resulted in a significant decline in the sales of perishable products such as meat and cheeses. In addition, imported perishable products are taking longer to import due to many foreign government offices not being opened during the crisis. We realize that many countries (Italy, Spain and France) have communicated that it is business as usual for exports of essential goods (food products, medicines, etc), however, when it comes to requesting the necessary government paperwork to travel with the shipments, this has been a difficult and time consuming task resulting in many delayed shipments.
COVID-19 crisis has also resulted in longer lead times to produce goods in our manufacturing facilities. Government mandated protocols for social distancing have resulted in less people working on the production lines in our facilities, which has increased productions costs.
Your business takeaways from this experience
The COVID-19 crisis has shown us that consumer shopping habits have changed dramatically. The channels of where consumers are filling their needs have changed. Channels such as e-commerce, home delivery and curbside collections have become the new “go to” for consumers to source their needs. Consumers have replaced restaurant dining and frequent trips to the grocery stores with the “stock piling” of non-perishable goods in their homes.
The crisis has also shown us that as a company we have to become more flexible to change and that supply considerations (forecasting, logistics, etc.) have to be better managed to ensure inventory can accommodate surges or reductions in demand.
Consumers are looking for entry prices and safe products that have been pre-packaged, and are more interested in the “centre of the grocery store” aisles again.
This pandemic has taught us how to make our workplaces safer for our associates and how to communicate better with our co-workers who are now working from home. The management of information technology will be a critical factor for success for all businesses as we move forward into the future.
Finally, the COVID-19 crisis has taught us that a financially stable business allows it to survive during a pandemic. Financial stability also allows a business to capitalize on opportunities brought about by a pandemic.