Lifting spirits during difficult times: interview with Bobby Burg
Despite significant operating and market disruptions, Southern Glazer’s Wine & Spirits has managed to keep the beverages flowing throughout the pandemic. The secret, says Bobby Burg, is in the planning.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
No one was prepared for Covid-19. But some businesses were “readier” than others, particularly those that had experience with disruption and had an emergency plan in place.
Such is the case with Southern Glazer’s Wine & Spirits, one of the nation’s largest distributors of spirits, wine, beer, non-alcoholic beverages, and food products. Like businesses from coast to coast, Southern Glazer’s saw its operations upended when the pandemic hit, bringing a host of operating restrictions and shutting down the bars and restaurants that made up a big chunk of its customer base. But unlike some of the others, the company didn’t have to create an emergency plan on the fly. A decade ago, following a string of natural disasters, Southern Glazer’s had drawn up a detailed crisis management protocol that laid out policies and procedures. And it had more than just the processes in place; it also had the people—in this case, a team it could swiftly mobilize to direct and oversee the company’s response.
The head of that crisis management team is Bobby Burg, who also serves as the company’s senior vice president of operations and chief supply chain officer. Burg recently spoke with DCV Editorial Director David Maloney about the company’s efforts to quickly shift gears when the pandemic hit and the lessons his team learned from the experience.
Q: Could you give us a brief overview of the company and your distribution operations?
A: Southern Glazer’s is a middle-tier marketing, sales, and distribution operation that supplies wine, spirits, water, beers, and food products to stores in 44 states, the District of Columbia, and Canada. As of 2018, we ranked as the 37th largest importer into the U.S.
Our distribution network includes 42 DCs with a total of 14.8 million square feet of space. The facilities are staffed by 6,000 employees and serve some 250,000 customers weekly. To support that operation, Southern Glazer’s maintains a fleet of 2,600 vehicles that make 6.5 million deliveries annually.
Q: You had an established crisis management plan in place when the pandemic hit, with a team ready to swing into action. Can you tell me about its role?
A: The crisis management methodology was adopted by the company about 10 years ago and is overseen by 12 senior leaders representing various functions in the company. I am the team leader, and I am supported by the chief information officer, the chief human resources officer, the senior vice president of operations, the controller of finance, our legal department, and others who represent our labor and customer functions along with communications and social responsibility.
Once the team is activated, these leaders come together to develop, discuss, and promulgate all of the company’s crisis-related policies and protocols. So, the foundation was there, the people were there, and the process was there. We activated the team on March 12. It was the first time the team had been activated for a public health emergency.
Q: Typically, crisis management teams focus on regional events, such as a hurricane or tornado that affects a specific geographic area. But the pandemic has disrupted business throughout the world, including all of your operations in the U.S. and Canada. How did this change your team’s focus?
A: There’s no question it made things much more difficult for us—not only because of the scale of the disruption but also because of a lack of alignment in guidance from public health organizations like the CDC [Centers for Disease Control and Prevention] and World Health Organization and even federal, state, and local governments. So, a lot of stuff we had to develop on our own. Plus, we were operating across a wide swath of states, all with different Covid risk profiles and operating restrictions. We had to do what we thought was best even though a particular safety measure might not be mandated or required in a given market.
Q: During the pandemic, you were designated as an essential business. What did that mean for your operation?
A: A large part of our business is distributing water and foodstuffs in addition to alcoholic beverages and beers, so we were designated as essential by the government. In the beginning of the pandemic, being an essential business meant we weren’t required to adhere to any of the regulations related to closures or even social distancing. Then, things got worse, and state and local jurisdictions began handing down guidelines that didn’t differentiate between essential and nonessential businesses.
Having said that, I should note that we conducted our operations as if we were not an essential business in the sense that we first determined what we needed to do to protect our employees and then decided how we were going to operate with those protective measures in place.
Our business is really made up of two different pieces. We have the “on-premise” piece of the business, which is essentially supplying alcohol to restaurants, bars, and hotels for consumption on site, and then we have the “off-premise” part of our business, supplying beverages to retail stores for off-site consumption. One part of our business did very, very well and continues to be strong. The other part of our business went from a hundred to zero in a matter of weeks because of restaurant and bar closures in most parts of the country.
Q: Are you still feeling the effects from that? Have you had to change your distribution strategy?
A: The interesting thing is that liquor consumption in the U.S. did not decline. When people stopped going to restaurants and bars, they bought more from their local retailers. So, our overall orders actually got bigger, with fewer stops and larger deliveries. You can deliver a whole truckload to Costco, for example, where you might be delivering only 10 cases to your local steak and ale establishment—and because restaurants don’t have much storage space, you might be making multiple deliveries per week. So the number of deliveries declined dramatically, which was the big change. There was definitely a difference in the dynamics of our operations.
Q: Given the lack of consistent government guidance and the patchwork of state and local regulations, how did you develop your processes? Did they vary by location and the severity of Covid in the area?
A: We set a foundational standard across the entire country. While other people and agencies were busy debating whether to, say, make masks mandatory, we came together as a team and agreed we would make our own decisions based on what would provide the best protection for both our employees and our customers. So, there are standard policies, and then we have an enhanced protocol for what we call “hot markets,” where Covid cases are high. We re-evaluate these markets every two weeks to determine whether we need to keep the enhanced protocols in place.
All of Southern Glazer's Wine & Spirits facilities do thermal temperature testing.
Q: Could you tell us about the policies you instituted?
A: In the hot markets, employees who can work from home are required to do so. In the other markets, they are allowed to work from home but not required to. We suspended visitors and vendors from entering any of our buildings. We’ve got thermal temperature testing at all of our facilities. We have a company-sponsored testing program that provides results in two days.
Within the warehouse, we suspended our individual bottle picking through last July because it’s an area that is harder to keep clean. And while that was suspended, we re-slotted the bottle rooms. In other areas, we extended the work zones to increase the distance between workers. We were able to procure aerosol-type equipment to clean those areas both before and after use. We increased the amount of PPE [personal protective equipment] the employees wore in each area, meaning they’re required to wear face shields in addition to face masks and gloves.
We also set protocols for cleaning our equipment—whether it’s hand trucks, the cabs of our delivery vehicles, or the tablets used for deliveries. We no longer require drivers to come into the building to pick up paperwork. We now put it in the truck, so they can go straight from their car into a clean truck.
We’ve also begun making “no-contact” deliveries, meaning that customers no longer have to sign a document or a tablet—or have any contact with our drivers whatsoever. We require our drivers, of course, to wear masks and gloves in all of the delivery establishments.
Q: Are you using technology to help maintain social distancing between pickers?
A: Yes, our technology does the largest part of that distancing. We run voice picking in the bottle room, and we run wireless scan guns in the warehouse, so there are screens on all the forklifts, the order pickers, and other pieces of equipment. Workers in those areas are limited to selecting picks from a single aisle, and we don’t have two pickers in the same aisle.
Automated equipment has allowed SGWS to manage increased volume without putting team members at risk.
We also have automated equipment in our larger markets, which has allowed us to navigate the increases in volume without putting any of our team members in harm’s way. For example, our Northern and Southern California facilities have very large automated storage systems, allowing some 30% to 40% of our volume to be picked mechanically. We also have high-end automation in a new building we opened last year in Katy, Texas.
Q: Given the size of your operation, it’s inevitable that some of your workers will contract Covid-19. How do you deal with those cases?
A: We have a fairly comprehensive protocol for presumptive exposure or positive tests. Employees are required to inform their immediate supervisor and their local HR business partner. That triggers an immediate response by the crisis management team. The team manages an aggregate list of all potential cases.
We also have a robust tracking and tracing system that allows us to determine who that individual might have come in contact with and what surfaces they might have touched—whether it’s in our building, in a truck, or at a customer’s facility. After gathering all of the data, the crisis management team then determines the notification requirements.
As a result, we have a very good track record. In the past 170 days, we’ve canceled only 13 of 4,000 planned “shipping nights” across the country out of safety concerns.
Q: Did you have any trouble getting PPE?
A: Yes. In the early days of the pandemic, we certainly faced shortages of masks and cleaners. One advantage we had was that a lot of our suppliers who produce and distill alcohol were able to convert some of their production from alcohol to hand sanitizer and other cleaners.
After the first four to six weeks, we got our supply chain figured out. We then stocked up pretty aggressively to make sure all of our buildings and all of our people had enough PPE.
Q: What are some of the lessons you’ve learned, and what would you do differently?
A: I think we probably should have started accumulating supplies and developing pandemic-specific protocols a little bit earlier—maybe in February versus the middle of March. We had taken our guidance from some others who didn’t think this was going to be a big problem.
We also ran into staffing issues due to the expanded unemployment benefits. With the $600 federal stimulus payment added to the checks, unemployment benefits exceeded workers’ actual pay, which made it tough to get people to come to work. So, there were quite a few instances where we had to initiate what I would call “hero pay” in order to boost attendance so we could complete our mission. In retrospect, that’s probably something we should have addressed a bit sooner.
Then there’s the technology aspect. Although our technology is good, I do think we need to improve some of our methods of internal communication. A lot of our employees get the information they need from our internal website, but some of them—like drivers and warehousemen—don’t have internet access at work, so we probably need to develop a multi-pronged approach to communication.
One of the nice things is that the leadership and ownership of our company really took a hands-off approach. It is quite unusual for somebody at my level in a company to make those types of widespread decisions with their full endorsement. That kind of support was pretty extraordinary.
Q: Let’s talk about what happens once we get past Covid. Will your business model change?
A: I believe our industry is forever changed. There’s a good possibility that as many as 30% of the on-premise independent restaurants, local neighborhood restaurants and bars, and even chain restaurants in the U.S. may never reopen. It has been devastating for them.
In July, the on-premise channel was down 50% compared with a year ago. That number is now about 48%. I don’t think anybody can really say what things will be like 12 months from now, but it definitely will not be the same as it was at the start of 2020.
The logistics process automation provider Vanderlande has agreed to acquire Siemens Logistics for $325 million, saying its specialty in providing value-added baggage and cargo handling and digital solutions for airport operations will complement Netherlands-based Vanderlande’s business in the warehousing, airports, and parcel sectors.
According to Vanderlande, the global logistics landscape is undergoing significant change, with increasing demand for efficient, automated systems. Vanderlande, which has a strong presence in airport logistics, said it recognizes the evolving trends in the sector and sees tremendous potential for sustained growth. With passenger travel on the rise and airports investing heavily in modernization, the long-term market outlook for airport automation is highly positive.
To meet that growing demand, the proposed transaction will significantly enhance customer value by providing accelerated access to advanced technologies, improving global presence for better local service, and creating further customer value through synergies in technology development, Vanderlande said.
In a statement, Nuremberg, Germany-based Siemens Logistics said that merging with Vanderlande would “have no operational impact on ongoing or new projects,” but that it would offer its current customers and employees significant development and value-add potential.
"As a distinguished provider of solutions for airport logistics, Siemens Logistics enjoys a first-class reputation in the baggage and air-cargo handling areas. Together with Vanderlande and our committed global teams, we look forward to bringing fresh impetus to the airport industry and to supporting our customers' business with future-oriented technologies," Michael Schneider, CEO of Siemens Logistics, said in a release.
The initiative is the culmination of the companies’ close working relationship for the past five years and represents their unified strength. “We recognized that going to market under a cadre of names was not helping our customers understand our complete turn-key services and approach,” Scott Lee, CEO of Systems in Motion, said in a release. “Operating as one voice, and one company, Systems in Motion will move forward to continue offering superior industrial automation.”
Systems in Motion provides material handling systems for warehousing, fulfillment, distribution, and manufacturing companies. The firm plans to complete a rebranded web site in January of 2025.
I recently came across a report showing that 86% of CEOs around the world see resiliency problems in their supply chains, and that business leaders are spending more time than ever tackling supply chain-related challenges. Initially I was surprised, thinking that the lessons learned from the Covid-19 pandemic surely prepared industry leaders for just about anything, helping to bake risk and resiliency planning into corporate strategies for companies of all sizes.
But then I thought about the growing number of issues that can affect supply chains today—more frequent severe weather events, accelerating cybersecurity threats, and the tangle of emerging demands and regulations around decarbonization, to name just a few. The level of potential problems seems to be increasing at lightning speed, making it difficult, if not impossible, to plan for every imaginable scenario.
What is it Mike Tyson said? Everyone has a plan until they get punched in the mouth.
It has never been more important to be able to pivot and adjust to challenges that can throw you off your game. The report I referenced—the “2024 Supply Chain Barometer” from procurement, supply chain, and sustainability consulting firm Proxima—makes the case for just that. The company surveyed 3,000 CEOs from the United Kingdom, Europe, and the United States and found that the growing complexities in global supply chains necessitate a laser-sharp focus on this area of the business. One example: Rightshoring, which is the process of moving business operations to the best location, means companies are redesigning and reconfiguring their supply chains like never before. The study found that large numbers of CEOs are grappling with the various subsets of rightshoring: 44% said they are planning to or have already undertaken onshoring, for instance; 41% said they are planning to or have undertaken nearshoring; 41% said they are planning to or have undertaken friendshoring; and 35% said they are planning to or have undertaken offshoring.
But that’s not all. CEOs are also struggling to deal with the rise of artificial intelligence (AI) and its application to business processes, the potential for abuse and labor rights issues in their supply chains, and a growing number of barriers to their companies’ decarbonization efforts. For instance:
Nearly all of those surveyed (99%) said they are either using or considering the use of AI in their supply chains, with 82% saying they are planning new initiatives this year;
More than 60% said they are concerned about the potential for human or labor rights issues in their supply chains;
And virtually all (99%) said they face barriers to decarbonization, with 30% pointing to the complexity of the work required as the biggest barrier.
Those are big issues to contend with, so it’s no surprise that 96% of the CEOs Proxima surveyed said they are dedicating equal (41%) or more time (55%) to supply chain issues this year than last year. And changing economic conditions are adding to the complexity, according to the report.
“As inflation fell throughout last year, there were glimmers of markets stabilizing,” the authors wrote. “The reality, though, has been that global market dynamics are shifting. With no clear-set position for them to land in, CEOs must continue to navigate their organizations through an ever-changing landscape. Just 4% of CEOs foresee the amount of time spent on supply chain-related topics decreasing in the year ahead.”
Simon Geale, executive vice president and chief procurement officer at Proxima, added some perspective.
“It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads,” he wrote. “The results of this year’s Barometer show that business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address.”
Perhaps the extra focus on supply chain issues will help organizations improve their ability to roll with the punches and overcome resiliency challenges in the year ahead. Only time will tell.
Investing in artificial intelligence (AI) is a top priority for supply chain leaders as they develop their organization’s technology roadmap, according to data from research and consulting firm Gartner.
AI—including machine learning—and Generative AI (GenAI) ranked as the top two priorities for digital supply chain investments globally among more than 400 supply chain leaders surveyed earlier this year. But key differences apply regionally and by job responsibility, according to the research.
Twenty percent of the survey’s respondents said they are prioritizing investments in traditional AI—which analyzes data, identifies patterns, and makes predictions. Virtual assistants like Siri and Alexa are common examples. Slightly less (17%) said they are prioritizing investments in GenAI, which takes the process a step further by learning patterns and using them to generate text, images, and so forth. OpenAI’s ChatGPT is the most common example.
Despite that overall focus, AI lagged as a priority in Western Europe, where connected industry objectives remain paramount, according to Gartner. The survey also found that business-led roles are much less enthusiastic than their IT counterparts when it comes to prioritizing the technology.
“While enthusiasm for both traditional AI and GenAI remain high on an absolute level within supply chain, the prioritization varies greatly between different roles, geographies, and industries,” Michael Dominy, VP analyst in Gartner’s Supply Chain practice, said in a statement announcing the survey results. “European respondents were more likely to prioritize technologies that align with Industry 4.0 objectives, such as smart manufacturing. In addition to region differences, certain industries prioritize specific use cases, such as robotics or machine learning, which are currently viewed as more pragmatic investments than GenAI.”
The survey also found that:
Twenty-six percent of North American respondents identified AI, including machine learning, as their top priority, compared to 14% of Western Europeans.
Fourteen percent of Western European respondents identified robots in manufacturing as their top choice compared to just 1% of North American respondents.
Geographical variances generally correlated with industry-specific priorities; regions with a higher proportion of manufacturing respondents were less likely to select AI or GenAI as a top digital priority.
Digging deeper into job responsibilities, just 12% of respondents with business-focused roles indicated GenAI as a top priority, compared to 28% of IT roles. The data may indicate that GenAI use cases are perceived as less tangible and directly tied to core supply chain processes, according to Gartner.
“Business-led roles are traditionally more comfortable with prioritizing established technologies, and the survey data suggests that these business-led roles still question whether GenAI can deliver an adequate return on investment,” said Dominy. “However, multiple industries including retail, industrial manufacturers and high-tech manufacturers have already made GenAI their top investment priority.”
Regardless of the elected administration, the future likely holds significant changes for trade, taxes, and regulatory compliance. As a result, it’s crucial that U.S. businesses avoid making decisions contingent on election outcomes, and instead focus on resilience, agility, and growth, according to California-based Propel, which provides a product value management (PVM) platform for manufacturing, medical device, and consumer electronics industries.
“Now is not the time to wait for the dust to settle,” Ross Meyercord, CEO of Propel, said in a release. “Companies should approach this election cycle as an opportunity to thrive in the face of constant change by proactively investing in technology and talent that keeps them nimble. Businesses always need to be prepared for changing tariffs, taxes, or geopolitical tensions that lead to unexpected interruptions – that’s just the new normal.”
In Propel’s analysis, a Trump administration would bring a continuation of corporate tax cuts intended to bolster American manufacturing. However, Trump’s suggestion for spiraling tariffs may benefit certain industries, but would drive up costs for businesses reliant on global supply chains.
In contrast, a Harris administration would likely continue the current push for regulatory reforms that support sectors like AI, digital assets, and manufacturing while protecting consumer rights. Harris would also likely prioritize strategic investments in new technologies and provide tax incentives to promote growth in underserved areas.
And regardless of the new administration, the real challenge will come from a potentially divided Congress, which could impact everything from trade negotiations to tax policies, Propel said.
“The election outcome is less material for businesses,” Meyercord said. “What is important is quickly adapting to shifting policies or disruptions that address ‘what if’ scenarios and having the ability to pivot your strategy. A responsive manufacturing sector will have a significant impact on the broader economy, driving growth and favorably influencing GDP. One thing is clear: the only certainty is change.”