Posted on 03/17/2020 1:34:44 PM PDT by LibWhacker
Empty Shelves? – Understanding Supply Chains, Logistics, and Recovery Efforts…
By now everyone is familiar with the abundant pictures on social media of empty shelves in local stores. Having some familiarity with the supply chain might help people to understand some of the challenges; and possibly help locate product. (Pics from Twitter)
There are essentially two types of distribution centers within the retail supply chain for most chain markets, food stores and supermarkets. The first type is a third party, or brokered, distribution network. The second type is a proprietary, company owned, distribution center. Knowing the type of distribution helps to understand what you can expect.
If your local retail store is being replenished from a third party distribution center, you can expect greater shortages and longer replenishment times; we will see entire days of empty shelves in these stores. However, if your local retail store owns their own warehouse and distribution network, the replenishment will be faster. In times of rapid sales, there is a stark difference.
These are general guidelines: An average non-perishable distribution center will replenish approximately 60 stores. Those 60 stores will generally not extend beyond 100 miles from the distribution center. The typical company owned warehouse will have approximately 20 tractors (the semis) delivering trailers of goods to those sixty stores.
In this type of network… On a typical day a truck driver will run three loads. Run #1 Delivery-Return; Run #2 Delivery-return, Run #3 Delivery Return. End shift.
If every tractor is operating that’s a maximum capacity of 60 trailers of merchandise per day. Many stores receiving more than one full trailer.
A typical store, during a non-emergency, will receive 1 full trailer of non-perishable goods three to five times per week. However, under current volume the purchased amount of product is more than triple normal volume. It is impossible to ship 180 trailers of merchandise daily to sixty stores with 20 fixed asset tractors. This is where the supply chains and logistics are simply incapable of keeping up with demand.
Thinking about distribution to a 100 mile radius. The stores closest to the distribution center will be delivered first, usually overnight or very early morning (run #1). The intermediate stores (50 miles) will be delivered second, mid-morning (run #2). The stores furthest from the distribution center will be delivered third, late afternoon (run #3).
So if you live close to a distribution center, your best bet is early morning. If you live in the intermediate zone, late morning to noon. If you are in the distant zone in the evening.
The current problem is not similar to a holiday, snow event or hurricane. In each of those events typical store sales will double; however, during holidays or traditional emergencies the increase in product(s) sold is very specific: (a) holiday product spikes on specific items are known well in advance and front-loaded; and (b) snow/hurricanes again see very specific types of merchandise spikes, with predictability.
In the current emergency shopping pattern the total business increase is more than triple, that’s approximately 30% more than during peak holiday shopping. Think of how busy your local store is on December 23rd of every year. Keep in mind those customers are all purchasing the same or similar products. Now add another 30%+ to that volume and realize the increases are not specific products, everything is selling wall-to-wall.
Perishable and non perishable products are selling triple normal volume. This creates a replenishment or recovery cycle that is impossible to keep up with. The first issue is simply logistics and infrastructure: ie. warehouse (selectors, loaders), and distribution (tractors, trailers, drivers). The second issue is magnifying the first, totality of volume.
A hurricane event is typically a 4 or 5 day cycle. A snow event might be 2 days. The holiday pattern is roughly a week and all the products are well known. However, the type of purchasing with coronavirus shopping is daily, everything, with no end date.
Once the store is wiped out, a full non-perishable recovery order might take four tractor-trailers of merchandise. In our common example, if every store needed a full recovery order that would be 240 tractor-trailers (60 stores x 4 per store). This would need to happen every day, seven days a week, for the duration of the increase. [And that is just for the non perishable goods]
That amount of increase is a logistical impossibility because: (a) no warehouse can hold four times the amount of product from normal distribution; (b) the inbound supply-chain orders to fill the distribution center cannot simply increase four fold; and (c) even with leased/contracted drivers doubling the amount of tractors and trailers, there’s still no way to distribute that much product.
Instead what we see are priorities being assigned to specific types of product that can be shipped to maximize “cube space” in outbound trailers going to stores. A distribution center can send 100 cases of canned goods (one pallet) in the same space as 15 cases of paper towels or toilet tissue (one pallet). So decisions about what products to ship have to be prioritized.
Club stores (ex. BJ’s, SAM’s, or Costco) can ship bulk paper goods faster because they do not carry a full variety of non-perishable items. The limited selection in Club stores naturally helps them replenish; they carry less variety. Meanwhile the typical supermarket distribution center has to make decisions on what specific goods to prioritize.
Nationally (and regionally) the coronavirus shopping panic is far outpacing the supply chain of every retailer. Instead of a weeks worth of food products, people are now trying to purchase a months worth. Every one day of coronavirus sales is equal to three or four normal days.
To try and get a handle on this level of volume we will likely see changes in operating hours. Expect to see stores closing early or limiting the amount of time they are open every day…. the reason is simple: (1) they don’t have the products to sell over their normal business hours; and (2) they need to move more labor into a more compact time-frame to deal with the increases in volume.
We’ve had cloth diapers for millennia. Got wash-clothes, warm water and detergent? Baby, mommy or daddy, no dif. And get good fiber, makes everything better.
Not hardly.
I’ve seen that … TP, fresh produce, fresh meat, bread.
Agreed.
I assume that somewhere, the factories that manufacture T.P. and other staples are running flat-out, 24-7.
I note that Kimberly-Clark stock is up nicely in recent days.
They need to do that. You guys are now the bloodstream running oxygen through the nation's veins. You are necessary to help keep us alive.
>>I haven’t seen anything in my neighborhood that approximates those photos. Nothing.
Boston area. All paper aisles at all stores here look like that, as do a lot of cleaning supply aisles. Meat sections have some areas like that, some not. Right now eggs are gone from one store; still in another. Depends on the product. One store is out of broth cans; another still has some. It’s like when you were young and starting out and counting every penny. Instead of shopping every store for the best price on this or that, you’re shopping every store to find out who still has eggs or who has the only brand of dog food your dogs will eat.
About two years ago a friend gave us a chest freezer. It has been in my garage and getting in the way since. Been talking about moving it into the house for months.
Finally a week or so ago, literally just before the present shopping spree commenced, I brought it in and fired it up. So this leave us (myself, my wife and two hangers-on grown kids) with two refrigerators and a chest freezer.
This evening Sue and I went to WalMart and filled up a cart with mostly frozen foods. At this point I believe we are as they say prepared, everything from booze to bacon with a backup generator to boot. Plus, while I’m not a prepper, I have enough canned and survival food to last 6-8 weeks, maybe longer.
OMG you went to Walmart an FOUND frozen food amazing!!!
Wow! It’s completely normal here except for tp.
Might be that you have less cases where you are, so people are in an earlier stage of panic. Boston is definitely behind NY in the panic department, but I have faith that we’ll get there. Saw my first face mask on a grocery store customer two days ago, and the checkout clerks are all wearing gloves.
Groomer closed down today. Doctors calling to cancel apptments. Bird seed store owner is hysterical over how much people are buying and how much she has to restock alone. (I’ve got 4 20# bags of peanuts and 5 20# bags of bird seed. My outdoor critters will be fine.)
Walmarts in central NC are restocking at a very fast clip.
Their semi’s are all over from Charlotte to Greensboro.
My local WalMart, while out of Rice a Roni, had quite a bit of stuff. I ran into a friend that was able to get a few rolls of TP and some bottled water! This was after work about 6:00PM. I filled a cart with frozen vegtables, frozen potato products, frozen chicken products and frozen fish products. Right now I have ample supplies of frozen productsl.
Next on the list...SPAM!
The warehouses are full - there are not enough workers to pick orders and fill the trucks. Warehouse workers are already worn out from overtime. Kroger is up to $20 an hour for warehouse labor.
I joke that before this is all over we are all going to be working for Amazon.com.
I’m moving to Venezuela. They probably have more stuff on their shelves.
Good points, thanks!
I live in fricken America! I shouldn’t have to stand in Soviet Union style lines to find Venezuela empty shelves! I’m mad as hell and don’t understand why everyone isn’t. This panic was created by government and the media.
I’m neither going to lick nor rub my bare butt on the carpet.
On what planet?
Very likely.
That's why anyone with the means ought to top off their supplies before the next mad rush.
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