Pictures of empty supermarket shelves, and stories of supermarkets putting limits on items dominates the news as people stockpile due to Coronavirus.
Jan Godsell, Professor of Operations and Supply Chain Strategy at WMG, University of Warwick offers her expert comment on why it needs to stop.
Supporting the supermarkets to ‘smooth the spike’
A demand problem…
"The current issues facing UK grocery supply chains, is not one of supply, but one of demand. The UK grocery retailers have sophisticated planning systems that seek to balance demand and supply. Over time, they learn seasonal patterns, the impact of promotions and other events and automatically adjust. The systems are so sophisticated that in the shorter term, they can adjust to changes in weather, for instance making sure we have the right food for our BBQs on hot days.
Need to smooth out the spike…
"The one type of demand that these systems really don’t like is unpredicted spikes in demand. Most grocery products have a relatively stable, and predictable rate of demand that the retailers can plan for. If this suddenly increases, it can take time for the supply chain to react, and move the stock that is further upstream to the shelf.
The problem at the moment is that whilst there is stock upstream in the supply chain, it is hard for the retailers to replenish it to shelf at the rate consumers are taking it. It also means that rather having stock in a warehouse, that could be used by all, the stock gets isolated in our homes, where it can only benefit an individual or their family.
Grocery retailers are taking the really sensible step of ‘rationing’ to try and smooth out these spikes. This is a really responsible reaction, and one to be commended as it will help to ensure that everyone gets the essential items they need.
Need to protect the vulnerable…
"Many in the UK have to budget carefully and only have the financial resources to buy what they need, when they need it. They can’t afford to stock pile.
Rationing should improve availability of products to all, and encourage everyone to buy at the rate that they consume. In that way we should all have access to the essential items we need.
Further measures by grocery retailers to prioritise delivery slots, and have dedicated in-store shopping slots for the elderly and vulnerable are be commended too.
What else could be done?
"Whilst UK retailers have started rationing, some are still offering promotions. Buy-one-get one-free, 3 for 2, or buy 2 for a fixed amount, all encourage consumers to buy more than they actually need.
Perhaps now is the time to stop such promotions, move to fixed pricing, to discourage purchasing more than required.
The Italian retailers are a number of weeks ahead of the UK retailers in understanding the impact of the virus on demand. It would be expected that once initial panic buying is over, when cupboards are full, replenishment will return to a more normal rate. There may be some uplift as we stay at home, and consume more in our domestic environment. Insight from the Italians, shared with UK retailers and their suppliers could help us to prepare.
With more consumers shopping online, and rationing in place, donations to food banks have fallen at a time when they are needed more than ever. Perhaps it is time to consider, how we can move food banks on-line too. Donate food, as part of our on-line shop or as a direct donation. With digital food bank vouchers, enabling the most vulnerable to get direct supply from a retailer.
These are unprecedented times. The basic principle of good supply chain management is to balance demand and supply. The UK retailers are working really hard to ensure that we have all the essential items that we need. We can help too, by buying responsibly and supporting the more vulnerable."