What no Bananas? Are You Crazy?

I've written at length about my time working at the supermarket. One thing that has not changed since those days in the early '90s is our dependency on the end to end supply chain. While COVID has put the supply chain back into focus for many, it has always been a balancing act to ensure the right goods are in the right place at the right time.

As a teenager working in retail, I came across multiple "supply chain issues" - many of which were the simple result of supply and demand challenges caused by ad matching and other promotional tactics used by supermarket retailers. Back in the day, bananas were the key benchmark of pricing power and driver of customer behaviour. Bananas on the front page of the circular usually meant a steady stream of cases being refilled over the course of the day. Drop displays, opening boxes and putting under tables for ease of replenishment later were commonly employed.

I recall one Saturday morning our daily warehouse delivery was late by a few hours and we quickly sold out of bananas while they were on sale. Due to the just in time nature of our supply chain and the added promotional pressure on the item we simply did not have the supply to meet demand for a short period of time while we awaited the truck. As the display sat empty for what seemed like an eternity, customers would mumble and grumble about the lack of supply - most were pretty good about it but there were a few who were more than a little bothered by the lack of supply. The person I recall being most upset was our front end supervisor - she must have had enough of people complaining at the front to the point where she came over to the produce department flustered and upset. I was lucky enough to be the one she saw first - "out of bananas? What is wrong with you?"

Well, how do you even respond to that? I can laugh about it now but in hindsight did she really think I was the fly in the ointment that prevented customers from landing their prized low cost purchase? By lunchtime the truck had arrived and crisis was averted save for some upset customers. That said, the words of that supervisor have stuck with me for a generation.

Fast forward to the COVID challenges we've seen over the past few years and things have not changed much. OK maybe they have but if anything supply chains are getting LONGER and customer expectations are getting raised HIGHER. As I reflect on the supply chain challenges during COVID and my days pushing bananas and other wares in the supermarket some key themes come to mind:

1) Find ways to simplify your supply chain - as the old adage goes, you only get paid to touch it once so find ways to minimize the steps and touches in your supply chain. Re-shoring, near-shoring and minimizing touches and distance have all come back into fashion over the past few years. While this strategy may come at a cost (real estate, labour differential for example), what is the cost of an interruption to your business? From packaging to carrier decisions, I have seen multiple changes and variations to this approach over my years in the business world. While new technology and methods can help in this space, the easiest path to success in my experience is map out the process from end to end and cut out ANY of the steps you can early. Sounds simple and the easy response is 'we do that already' but have you? Map it out end to end - you may surprise yourself with the extra steps and complexity you have added over time.

2) History is a good teacher - put differently, you must forecast and use predictive analytics to drive your supply chain decisions. Back in the day, we could predict how many cases of bananas we could / would sell in the day based on the last promotion we ran. While the methods may have been chicken-scratch on a napkin back then we still had a good handle on our supply and demand. Tools employed today can provide much more analytical power and predictive logic to determine cause and effect relationships between price and demand. Further, depending on the industry you are in, you can use models and logic of prior week / month / quarter / annual data to estimate future activity. While seasonality and other factors can also come into play, not using methods and tools at your disposal today can be a quick route to failure. "History" is the backbone of a good replenishment or transportation management system.

3) Never stop improving - the automotive industry perfected just in time logistics decades ago. As the assembly line moves, the required parts arrive and are put into production use with little to no dwell time. Other industries do so out of necessity. Bringing in a week's worth of ripe bananas on day one of the promotion will only yield waste and markdowns which benefit few to none. Perpetual review and reinvention is at the heart of the successful supply chain. As market and economic conditions change, you must find ways to improve your end to end process. While history is a good teacher, you can become irrelevant if you rely on outdated ways of working as the world changes around you.

Finding ways to tinker with and improve your end to end supply chain is not for the faint of heart. That said, you must be careful not to get too comfortable in your everyday - if you do what you've always done you will get what you've always got.

Stay safe out there!

Jim

Jim McKay is a seasoned supply chain executive with over twenty-five years experience in leading and coaching others. Through his 'Reflections' posts and 'Reflections of a Workaholic' publications Jim shares his experience in transportation, supply chain and leadership through impactful and insightful stories that are meant to help and inspire others.