Fifteen months ago, the Covid-19 pandemic brought with it not just a severe global health crisis but unprecedented challenges to almost every supply chain. At the same time, it accelerated industrywide trends that were already underway, such as the rise in e-commerce, and emphasized the importance of resiliency and risk management.
To reflect on these changes, the industry association MHI brought together a panel of supply chain executives from Clorox, FedEx Services, and C&S Wholesale Grocers for a keynote session during its ProMatDX 2021 digital trade show. The discussion was moderated by Kathy Fulton, executive director of the American Logistics Aid Network (ALAN).
The executives each recounted how their organizations pivoted to respond to tremendous changes in buying patterns during the last year. When restaurants, schools, and businesses shut down in March, C&S Wholesale Grocers, for example, saw a 100 percent increase in volume leaving their warehouses for four weeks straight, according to Carmela Hinderaker, Senior Director of Business Continuity & Customer Support.
“That is not something that you can easily meet,” she said. “Our whole world flipped.”
Similarly, Clorox was not able to keep up with increases in demand for its disinfecting products, in spite of preparations that the company started to make in January of 2020. Seeing what was happening in Asia, Rick McDonald, senior vice president and chief product supply officer, started ramping up Clorox’s supply chain, hiring more people, adding shifts, increasing inventory, and using more contract manufacturing for the company’s disinfecting wipes.
“We did a pretty good job of building up inventory before March, but then over two weeks, that inventory was consumed,” said McDonald.
From there on out, Clorox was “running factories flat out,” producing a million more disinfecting products between January and June of 2020 than they did for all of 2019.
These rapid and extreme shifts in demand make forecasting difficult going forward as companies try to determine whether the trends that they are currently seeing are here to stay or a one-time blip brought on by unusual circumstances.
What does seem clear is that consumers’ embrace of e-commerce, particularly in the grocery segment, will continue.
“For example, the over-65 age group—which never before thought about ordering online and having them delivered—that demographic is not going to change back [to shopping in store], even after Covid-19 subsides somewhat,” predicted David Lusk, Director of the FedEx Global Security Operations Center. “They have become accustomed to the convenience.”
Throughout the session, the panelists all pointed to lessons from the pandemic that can be applied to future risk events. For example, Hinderaker noted the importance of documenting and sharing not just how warehouses responded the event but also the effect that such events have on employee morale and safety and on the cost of supplies and materials.
Lusk said that the pandemic also demonstrated the benefits of building relationships across the industry and with public sector organizations before a risk event takes place.
“Team building on the front end pays,” he said. “It generates dividends when there is an event in the future.
Finally, taking the time to learn from past experience is invaluable. Lusk said that when FedEx was drawing up plans for Covid-19 vaccine distribution, the company drew heavily from what it learned from designing distribution of the H1N1 vaccine in 2009.