Product availability in the food industry during and after the pandemic

At the end of May, we had the presence of the former executive partner of ILOS and current Global Head of Network Design at a large food company, Rodrigo Arozo, in a webinar promoted by Coppead. Now living in Amsterdam, Arozo faces one of the biggest crises in the world at the helm of a food manufacturing company, which has undoubtedly challenged the day-to-day of its operations.

The fundamental point highlighted, which impacts not only the food industry, but many others classified as Essential Goods, is the duty and social responsibility that the lack of such products can generate. Centered on this fundamental duty, the company's operations had to deal with pressures in various areas of the business, with adequate and, above all, agile responses.

With regard to demand, for example, the food sector grew much above normal, but this increase needs to be understood in detail. When we look at the channels served by the company where Rodrigo Arozo works, the variation in demand was quite different. In Traditional Supermarkets, growth was strong and evident, while for the Food Service channel that serves, for example, bars and restaurants, demand plummeted. In addition to the channel, it is also important to analyze changes in the product portfolio. They occur not only because of this variation in the channel (each channel has its specific portfolio), but also because there has been a significant change in the way and characteristics of consumption: people are stuck at home, some anxious and afraid, and need to prepare their own food, to the detriment of eating on the street. This generates uncertainties that lead to the need for quick commercial information, fundamental for planning processes.

Changes in global supply chains, changes in consumption patterns and different contagion waves for each region and country are important information used by the company for the construction and analysis of scenarios, which can help in the allocation of PM stocks in M+ 1, for example, and help with the Risk Management of the chain. These scenarios range from the most pessimistic (new wave of contagion, extension of social isolation) to the most optimistic (vaccine development in record time). With real-time updates and considering service levels, analysis of costs and risks involved, the scenario decision is taken and some of them are put into practice.

Figure 1 – Tactical Planning and Risk Management, which uses scenarios to define resource allocation. Sources: ILOS

For the post-pandemic, Arozo highlighted some points such as (i) the importance of, even in times of pandemic, keeping the focus on the company's processes so that the resumption is consistent and at controlled costs and (ii) greater collaboration between suppliers and companies' customers. In addition, two other important service-related points drew attention. The first was in relation to e-commerce, a topic that Rodrigo sees as a lever for business growth, and the huge impacts on operations that the growth of this channel could bring. And secondly, the importance of availability for service delivery. Not only because of the need to guarantee food for people, but also because, in times of Covid-19, when there is a supply challenge in supply chains, when competitors enter into stock out it is the best time for the company to gain market share. By increasing your shelf presence and reinforcing your brand, availability becomes the main source of increased sales. brand equity for companies, becoming an effective marketing action.

Figure 2 – Availability (contemplated in the Reliability service dimension) is fundamental, not only for essential goods, but for various sectors in the role of marketing action and market-share growth. Source: ILOS

Topics such as the impact of the increase in the e-commerce channel, omnichannel growth and the importance of service dimensions such as reliability will be addressed in the Live that we at ILOS have prepared to discuss the Customer Service in the New Reality on the 01/06th (Monday) at 2 am. Participate and call your colleagues, we will certainly address fundamental points in services, which impact different industries and links in the supply chain.

References:

Webinar “Strategies for essential goods chains – Challenges and Opportunities”, from the series Supply Chain in Times of Crisis, by Coppead