The consumer demand pattern and behavior has shifted multiple times in a short amount of time. I don’t want to keep using the word ‘unprecedented’, but it is definitely unprecedented when you see that activity.” -- Tony Zuazo, Dollar General
The Harbert College is dedicated to partnering with companies and alumni to engage industry and improve business practice.
What new challenges have been imposed upon worldwide supply chains and how are large organizations meeting these challenges? Executives from three leading companies – representing retail, transportation and the food/beverage industries – were guest panelists on a special webinar, Tuesday, May 12, “Where’s My ….? Supply Chain Responses to the COVID-19 Crisis.”
Presented by the Harbert College of Business’ Center for Supply Chain Innovation, Franklin Littleton, President of North American Consumer Goods at DHL Supply Chain, Susanna Zhu, Vice President for Commercial Planning and Supply Chain Operations at The Hershey Company, and Tony Zuazo, Senior Vice President for Transportation and Inventory at Dollar General, shared a variety of views in relation to serving customers amidst COVID-19. The target audience: leaders in the supply chain industry worldwide.
“There’s a lot of pundits claiming that supply chains must be fundamentally changed,” said Brian Gibson, Wilson Family Professor at the Harbert College and Director of the Center for Supply Chain Innovation. “Certainly, there is some level of challenge in the supply chain. It’s testing our resiliency. Many industries are facing challenges, but others are definitely handling inventory challenges, fulfillment bottlenecks and transportation headaches.”
Key phrases taken from the webinar: safety, efficiency, and communication.
Littleton, an Auburn alumnus, said sales volumes at DHL – a shipping company – briefly increased by 400 percent, but are now “110 to 140 percent of where it would be normally.”
“Trying to deal with that volume has been interesting,” he said. “As we’ve seen the volume spikes, we’ve seen the transportation really not keep up. At one time, we had 700 trucks waiting on loads for one particular customer. We’ve kind of been in the middle of trying to keep the stores and the retailers supplied, as well as make sure the goods flow out of our customers’ distribution centers and plants.”
Even though we have made some changes in terms of focusing on the agile, faster decision-making based on real-time demand signals – what doesn’t change is how we let our values drive our decision-making, how we continue to focus on people, our people’s safety, and all of the teams working together to drive the common goal, which is servicing the customers and the consumers.” -- Susanna Zhu, The Hershey Company
Zhu mentioned three specific challenges the COVID crisis has caused: labor availability in relation to increasing demand, operational efficiencies due to physical distancing, and the rapid change in demand.
“Some businesses have seen tremendous growth in demand, especially during the panic buying period,” she said. “Some other parts of the business have seen some softness in demand. How do we react quickly and pivot as necessary to meet those changing demands, continue to support consumers, and provide the right product to the right place at the right cost at the right time?”
Zuazo noted the early stages of panic-buying, the buying constraints worldwide, and stress of demands placed on manufacturers. “But now we’ve seen a shift in the buying patterns of what people are now calling ‘nesting 2.0’ and things such as lawn and garden, swim and summer, seasonal items – things that people are now doing at home versus going out,” he noted. “The consumer demand pattern and behavior has shifted multiple times in a short amount of time. I don’t want to keep using the word ‘unprecedented’, but it is definitely unprecedented when you see that activity.”
Zuazo said to help meet consumer demand, Dollar General continues to open new facilities, including two distribution centers.
Zhu noted that the best way to ‘pivot’ and manage a pandemic stems from preparedness. “As we look at the Hershey Company supply chain organization, we had already kicked off an initiative that we call Supply Chain 2.0 with the focus to be more agile, more real-time,” she said. “There have been a few things that we’ve done differently, number one, is focus on the core. What are our core SKUs that we want to maximize? The second piece is looking at collaboration with our partners. In this case, make sure that we have real-time demand signals from the customers so that we can translate that and best utilize our resources.
“Even though we have made some changes in terms of focusing on the agile, faster decision-making based on real-time demand signals – what doesn’t change is how we let our values drive our decision-making, how we continue to focus on people, our people’s safety, and all of the teams working together to drive the common goal, which is servicing the customers and the consumers.”
Another thing we had to deal with, because we’re across North America, we ended up with 290 new local and state laws that govern how we do business,” Littleton said. “We had to be very reactive because they would often implement changes such as ‘you must wear masks’ and give you 12 hours to comply.” -- Franklin Littleton, DHL
As Zhu mentioned, safety is paramount at most organizations. The Hershey Company has even gone as far as mass producing safety masks for employees and the community. At DHL, this included rigorous cleaning, staggered shifts, changing traffic patterns and minimizing contact.
“Another thing we had to deal with, because we’re across North America, we ended up with 290 new local and state laws that govern how we do business,” Littleton said. “We had to be very reactive because they would often implement changes such as ‘you must wear masks’ and give you 12 hours to comply.”
“In a lot of cases, what we ended up doing is issuing our associates a travel pass that said we were an essential business – which a supply chain was under all the laws that we dealt with. There was a lot of ‘best practice’ sharing between us, our customers and retailers as well. The more that you can share in a situation like this … it’s about keeping the whole population safe.”
Dollar General has also implemented a “contact-less inbound process” for trucking companies coming in from the outside to deliver a product. “We’ve gone to hero pay to support the essential work our employees are doing,” he added. “We have also had to reassess who’s coming into the buildings and why they are coming in. Do they need to come in? And then for the folks that do, how do we ensure their health and safety.”
Maintaining production, transportation and consumer retail efficiently and safely. That’s the name of the game these days. “But there was no playbook for how you react to any one of the facets,” Zuazo said. “We have learned a lot in this experience.”
The Center for Supply Chain Innovation will host its fourth annual supply chain symposium “Fusion” at the Opelika Marriott - Robert Trent Jones Grand National Golf and Resort on August 20-21. Fusion brings some of the nation's top supply chain minds together for a round and best practice discussions and collaboration. For further information about registration, visit: http://auburnscm.org/events