The family supply chain has suffered a great deal during the Coronavirus pandemic of 2020. Since the beginning of the safer at home orders, grocery store shelves, once completely full, now (at the time of this writing) have empty spaces where items necessary for the health of our families used to be. Even meat disappeared for a week or so here in Middle Tennessee as people began panic buying. Of course, this was a logistics-based problem as food suppliers simply could not send their product out quick enough to meet the demand. Now there is another looming meat shortage, but this time it is a production issue.
As workers test positive for COVID-19, meat processing plants are forced into temporary, sometimes indefinite, shut-down that disrupts the family supply chain. Retailers, as the main interface between consumers and the distribution chain, have the responsibility to solve this problem through supplier diversification. Now, the technology exists to allow retailers to deal directly with famers and farm cooperatives without a huge amount of cost or complexity on either side. Though a supply chain disruption of this nature has serious consequences for families, families do not have to feel the disruption at all.
Halting Production in the Family Supply Chain
In an article from CNN Business, Dianne Gallagher and Pamela Kirkland write the following:
Some of the country’s largest abattoirs (processing plants or slaughterhouses) have been forced to cease operations temporarily after thousands of employees across the country have tested positive for the virus… Pork processing plants have been hit especially hard, with three of the largest in the country going offline indefinitely— Smithfield Foods in Sioux Falls, South Dakota, JBS pork processing in Worthington, Minnesota and Tyson Fresh Foods in Waterloo, Iowa. Together, the three plants account for approximately 15 percent of pork production.https://www.cnn.com/2020/04/26/business/meat-processing-plants-coronavirus/index.html
The result of the lack of supply output from meat production facilities is a lack of demand for animals from farmers. Consequently, farmers are euthanizing animals and disposing of them instead of sending them into the supply chain for consumption.
According to Successful Farming, Tyson foods ran a full page ad explaining that “as pork, beef, and chicken plants are forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain.” To be clear, we are facing a production shortage coupled with massive amounts of waste within the family supply chain. There has to be a better way. Setting aside for a moment the impact on the business community, meat production directly impacts families’ ability to survive.
The Retailer’s Role in the Family Supply Chain
The retailer is the intermediary between the distribution chain and the consumer. The retailer is who the consumer is trusting to be able to provide for their family. In the eyes of the consumer, the weight of a food shortage falls on the shoulders of the retailer to solve. How do you mitigate a shortage during a crisis? Excellent question. The answer is the strategic diversification of the supplier network.
If the source of the problem lies with production facilities, then go around them. Engage farmers directly. To be clear, this would not be intended to be a permanent replacement for processors and distributers. It would also require farmers to prepare the meat for processing and retailers to process meat in-house, but as a temporary solution it would solve a shortage and keep from wasting incredible quantities of livestock. The family then reaps the additional benefits of investing in the local economy, and by way of removing the middlemen, enjoying a lower priced product.
I want to emphasize this again. Processors and distributers are extremely important; they provide a livelihood for many people. However, if the family supply chain is in jeopardy due to the closure of a production facility, then the retailer has the responsibility to procure another source of supply.
B2B Technology and The Family Supply Chain
Assuming the other challenges with this solution can be resolved, and I believe they can be, there is another glaring issue that would keep retailers from dealing directly with farmers: technology. Most big box retailers use some type of EDI system in conjunction with their ERP system to send purchase orders, shipping notices, and receive invoices. The electronic business documents are the core of the B2B commerce. In order for retailers to do business with a supplier, the supplier needs to have the technology in place that works with the purchaser’s ERP system.
This presents the main issue: connectivity. Often, the technology required to connect with a retailer is beyond what a farm cooperative has the capacity for. It is expensive and has a very steep learning curve that cannot be overcome within the time needed to respond to a critical disruption in the family supply chain, or at least it could not be in the past.
Now, the technology exists that can easily address these issues and make electronic B2B trading and collaboration a reality for even the smallest of businesses without the significant investment or steep learning curve.
A Shameless Plug…
At TTP Solutions LLC, we built a product called TheTradingPortal.com™. What does it do? It allows a business of any size to connect with any EDI and ERP system as a standard electronic trading partner without the associated cost and complication.
How does it work? It runs in the browser as a monthly subscription service and allows the farmer, or any other type of supplier or electronic business partner to send and receive critical electronic business documents in a way that is secure, automated, and without a steep learning curve. From the perspective of the retailer purchasing from the farmer as a supplier they can send a real EDI document from their ERP system making the supplier 100% compliant to the buyer’s EDI standards.
The farmer or farm co-op can receive and reply to the purchase order with a business document from their phone, tablet, or computer to send a shipping notice or engage the next step of the process for each retailer whom they are supplying. This kind of solution is low cost, low risk, easy to implement, and exactly what is needed to mitigate a supply shortage caused by a temporary production shutdown.
Mitigating the Shortage
These are crazy times. COVID-19 is playing all kinds of havoc with the economy worldwide (Click here to read a few thoughts about globalization). This is just another supply chain issue that the virus is bringing to light. Though production at large meat processing facilities will slow or shutdown as workers become ill with the virus, that does not mean there has to be a shortage. The responsibility to make sure that the family supply chain is unaffected by the lack of processing at the current time belongs to the retailer.
Thankfully, by engaging farmers directly and implementing web based B2B commerce technology, we can overcome this problem. Perhaps this production issue will be the necessity that gives birth to invention and revolutionizes the family supply chain for the benefit of the consumer. Whatever the future outcome may be, there is no excuse for the family to suffer this supply chain disruption because the technology and resources to mitigate the shortage are easily accessible by those who have the responsibility to solve it.