Supply Chain Distruption

Supply Chain Challenges and How They Impact the Co-op

To Our Community,

If you have been following the news lately, you know that labor shortages are impacting businesses everywhere, and our Co-op is not immune to this phenomenon. The result of this shortage is tremendous pressure is placed on the complex, intertwined network of supply chains that drives business locally and globally.

This strain is beginning to place heightened operational demands on suppliers, including those that deliver products to our Co-op.

This labor shortage is helping to create the following challenges:

Transportation Shortages

The United States is experiencing one of the worst driver shortages the country has ever seen. Railroads, docks, shipping lanes, and other transportation sectors are experiencing similar problems.

Warehouse Shortages

Challenges recruiting and maintaining warehouse workers in this labor market is intense. Compounding matters, the increase in COVID-19 cases over the summer and early fall has further limited the availability of workers.

As a result of these conditions, many brands nationwide are having difficulty in getting products to retailers. Staple dry goods, like cereals, breads, and pastas, are particularly vulnerable. The result is many suppliers who are unable to fulfill 100% of a retailer’s orders are engaging in a practice called ‘smoothing.’ Simply stated, suppliers scale back all retailers’ individual orders so they can fulfill as many overall orders as possible.

For those of you who may have been asked about supply chain impacts on inventory, there is another point I would like to make. This past weekend our quarterly inventory count was conducted. As many of you know, during this process, we have two needs to balance:

a) shelves looking and being full for shoppers
b) and shelves that are neat and ordered for an accurate inventory count

Items therefore tend to be grouped and pushed to the back of the shelf, making the shelf appear less full than usual, but also easier to obtain that accurate inventory count.

I want to draw one important distinction here. Given news headlines, anytime there is empty space on the shelves, there is a temptation to think we are seeing a repeat of the pandemic-driven panic buying that affected the retail grocery industry last spring.

I cannot stress enough, this is a labor issue, not a panic-buying issue. Every industry is being affected by this, and the Co-op and our wholesale suppliers are no exception.

Please know that we are keeping an eye on this, and our merchandising teams are working with our suppliers to respond creatively and proactively. In the meantime, for our members and shoppers the message is to be patient and do not panic. Instead, please continue to recognize that everything is interconnected. Labor shortages on the shipping lanes half a world away can affect prices and product availability here at home.

Wrap Up

On a very good note, I would like to draw your attention to the event below we are sponsoring next week:

Communities & Consequences II Screening And Panel

On Tuesday, October 12, 2021, from 4:00 to 5:30 p.m., I encourage you to join New Hampshire Businesses for Social Responsibility for a virtual screening of the documentary “Communities & Consequences II.” The film shares stories of how people are working together to ensure a thriving future for their communities and the state.

Our own Director of Public and Government Affairs,
Allan Reetz, will moderate a discussion following the showing of the documentary.

As always, thank you to our members and shoppers for all of your support. We will talk again next Thursday. Be kind to one another and to yourselves, and we look forward to serving you in our stores and at the curbside.

Onward and upward,

Paul

The following two tabs change content below.
Paul Guidone

Paul Guidone

Paul Guidone, CFA, spent the better part of four decades in the investment management business here and abroad. He held positions ranging from analyst through Deputy Chairman and Group CEO, at organizations such as Citigroup (US) and The HSBC Group (London and Hong Kong). He joined the Co-op in 2016 as the CFO and in 2018 became Strategic Advisor to the General Manager. Paul was appointed by the Co-op Board as interim General Manager in March 2020 and General Manager in September 2020. To contact, email PGuidone@coopfoodstore.com.
Paul Guidone

Latest posts by Paul Guidone (see all)