The just-in-time supply chain for grocery store replenishment depends on transportation of food items from around the globe. Shipping is primarily used to move food items. COVID-19 restrictions have slowed down the movement of goods dramatically.
Most grocery stores carry limited days of inventory and depend on transportation systems all working on time. The pandemic has exposed a major flaw in just-in-time systems: no extra inventory in the system.
- COVID-19 Is Changing The Grocery Business (Apr 15, 2020, PYMNTS Media)
- Coronavirus could cause global food shortages by April as export curbs worsen supply chain problems (Mar 31, 2020, South China Morning Post)
This post is based on the CNN article, Can’t fine what you want in the grocery store? Here’s why, by Hanna Ziady, April 2, 2020, and the YouTube videos in the Spotlight. Image source: Tada Images/Shutterstock
1. Discuss the limitations of the just-in-time supply chains.
Guidance: The major limitation discussed in the article is a disruption with transportation systems. Without reliable transportation, just-in-time is not possible. Students may also note that having little safety stock at distribution centers closer to retailers is another concern. If there was adequate safety stock, then the transportation delays may not be as damaging to the system. Still, students should recognize that carrying substantially more inventory to account for severe transportation disruptions is very expensive and potentially unsustainable for any lengthy timeframe.
2. What can grocery retailers do to better manage inventory, given the transportation issues noted in the article?
Guidance: Discussion could include increasing safety stock of key items, developing supply bases closer to retailers to depend on trucks instead of ships or airplanes, or improving demand planning to focus on key items and where they should be directed once acquired. Vertical integration by owning transportation assets is another possibility, but this would likely be difficult to implement.