Reshaping the Supply Chain for Max Efficiency
In Edible-Alpha® podcast #69, Tera interviews Brad Rostowfske, founder of Raise the BAR Innovation and director of industry growth at FaB Wisconsin, about the food and beverage supply chain before COVID-19, the current state of affairs and what it could look like post-pandemic. Brad has long recognized the fragility of the system and has been working toward making it more dynamic, interactive and sustainable so it can better absorb shocks like this global health crisis. As Tera and Brad discussed, several aspects of the food and beverage supply chain weren’t working well pre-pandemic. He noted that grocery stores had been losing $75 billion annually due to products not being on shelf, whether because of out-of-stocks, late shipments or incomplete orders. Manufacturers were losing $50 million. These losses stemmed from squeezes to freight capacity, slow turnaround times at warehouses, the not-yet-rectified disruption of e-commerce and a laundry list of other factors. Then COVID-19 happened. Suddenly, traditional sales channels were altered, consumer demands skyrocketed, food-buying behaviors shifted and gas prices dropped, exposing the existing cracks in the system and widening them into gaping holes. As a result, many food businesses are now struggling to source ingredients, stick a steady manufacturing schedule, get their products into distribution, get them onto retail shelves or any combination thereof. Meanwhile, consumers are left wondering why the pasta aisles are still so sparse several months into this mess. But before all this transpired, Brad, along with FaB Wisconsin, had been engaging with key manufacturers, retailers and other stakeholders to map out a macro supply chain and address the system’s many pain points. He noted that no single entity “owns” the supply chain, yet the old-school system is not very collaborative, causing unnecessary snags and inefficiencies for all. However, if multiple stakeholders up and down the chain worked together, goods could flow much more smoothly. And if there were more transparency and intercommunication throughout the system, those seeking out freight, warehouse, cold-chain or manufacturing capacity could actually find it. Simultaneously, those with excess capacity could fill it instead of wasting money. Unfortunately, the pandemic has slowed progress on this front, as everyone is focused on keeping their own businesses running. Even so, Brad hopes that lessons learned through this experience can feed into a reimagined supply chain, one that is much less tenuous and can more easily flex to accommodate upheaval. He and Tera compared this vision to power microgrids, in that certain fractions can function semi-independently if needed so a shock to one part of the system won’t totally derail the whole shebang. They also discussed how the pandemic has introduced new dynamics that will impact the supply chain long-term and therefore must be accounted for in future planning. For example, the sharp increase in online grocery shopping will likely hold, as will people working from home, which changes the channels through which they acquire food. And how will the economic recession impact consumer spending on food overall? These are all big questions without clear answers, but they make it abundantly clear that the time to reevaluate and re-envision the food and beverage supply chain is now.