When Logistics Run Out of Time

24 March 2020 — Novara Media

by Craig Gent

@craigoreyt 

The vast majority of people first experienced the growing coronavirus crisis for themselves in a supermarket. Almost every store now has at least half a dozen bare aisles, if not more, and social media has been awash with pleas for so-called ‘panic buying’ to stop, which the government is now echoing.

In addition to an earlier announcement that “those involved in food production, processing, distribution, sale and delivery” would be included on the list of critical workers deemed vitally necessary in the fight against Covid-19, this weekend the NHS England medical director, Stephen Powis, scolded the nation for emptying shelves, telling us in no uncertain terms that “we should all be ashamed”.

He referred to a viral video posted by a critical care nurse who implored shoppers to stop stripping supermarkets of essential items, leaving little behind for NHS workers coming off long shifts. It is an undeniably emotive and valid issue, but widespread calls for shoppers to exercise restraint have so far mirrored the government’s own narrow framing of the necessary response to coronavirus more broadly: namely, the absolute personalisation of responsibility over scrutiny of the infrastructure we all depend on.

Yes, the sight of middle-aged men squaring up over wet wipes certainly speaks to a low point in social order, but it remains true that scenes of serious bulk-buying and supermarket scuffles are still more likely to be seen on Twitter than in your local Tesco. Of course there is always an ethical dimension to greed in the face of scarcity, but the moral panic around ‘panic buying’ (and the folk devil of the greedy shopper) distracts us from a far more significant problem – the inability of profit-driven logistical systems to adapt to the rapidly changing needs of the people who rely on them – and serves to blame ordinary people for a problem that is more political than personal.

Selfish shoppers and where to find them

If we wish to see empty shelves through the lens of shopper behaviour, it is an unavoidable fact that the actual problem is less the small minority of particularly selfish bulk-buyers – assuming people with full trolleys aren’t buying for their small businesses or self-isolating neighbours – but rather the great majority of us who have, however moderately, visited the shop twice in a week rather than once, grabbed a small trolley instead of a basket, picked up two soaps instead of one, or picked up an extra pack of bog roll before you’re down to your last one.

Yet few of us would say we’ve been notably voracious in our recent shops. Everyone thinks themself a broadly responsible and considerate shopper. But at a time when we are facing a genuine and seemingly open-ended crisis that affects, among other things, our ability to leave the house, it is only reasonable and honest to say that every single person’s attitude to shopping will have changed in some way, however subtle we may think, over the last month.

A common refrain has emerged across social media: take only what you need and there will be enough for everyone. This may be true in an abstract sense, but there are material reasons why it is misguided in a literal sense. In this particular truism, the phrase “there will be” is doing a lot of heavy lifting.

Last week, former Waitrose managing director Mark Price hoped to reassure shoppers when he appeared on Newsnight, informing us:

“The supply of goods, the manufacture of food, is in good shape. There isn’t a problem there; there is enough food. […] The challenge that the supermarkets are facing at the moment is getting that food into their distribution centres and then having enough space, and having enough lorries and drivers to get it to the shops, and then being able to keep it on the shelves.”

Unfortunately, these challenges speak less to the behaviour of individual shoppers, selfish or otherwise, and rather more worryingly to the nature of how supermarket logistics work. It may be comforting to know enough food exists – and that, logically, “there will be” enough to go around – but it means little if supermarkets can’t get it on to their shelves.

This is something that cannot be blamed on individual shoppers any more than they can be blamed for needing to buy things like food from places like supermarkets, for the simple reason that what is overwhelming supermarkets right now has less to do with Ian and Karen’s personal appetite for flour and more to do with more fundamental logistical considerations for supermarkets, such as footfall and time.

Supply, supply, supply

Let’s be clear. If supermarket chains are having problems with getting goods into distribution centres and out into stores, no one can honestly say their supply chains are healthy. They are being overburdened by an obvious surge in demand in stores that they cannot meet fast enough. This demand is coming from all of us because coronavirus forces us to change our shopping habits.

At the very least, developing coronavirus symptoms means you will have to self-isolate for between seven and 14 days, and if you are old or have certain health conditions, you have been asked to stay home for 12 weeks. Some look at nearby countries on ‘lockdown’ and judge that it will only be a matter of time before similar measures are introduced here, perhaps unaware that people in countries like Spain can still technically go to the shop, albeit with restrictions.

The government’s policy of taking the ‘right action’ only at what it says is the ‘right time’ means people feel uncertain about the future and worried that they cannot plan. There is a separate argument to be had about how a lack of trust in the government affects people’s behaviour, but at the most basic level even the less anxious among us are now shopping for eventualities that will mean restrictions on leaving the house for anywhere between seven days and 12 weeks depending on our personal circumstances.

As a result of the upheaval of daily norms, supermarkets are experiencing vastly increased footfall – the sheer numbers of people entering through the doors far exceeding typical rates for this time of year. Moreover, the nature of the upheaval means people are all opting for similar sorts of goods: personal hygiene and cleaning products, frozen or freezable food, hardy vegetables, and non-perishable foods from rice and pasta to baked beans.

The narrative that shortages of these products can be traced to the rightly vexing actions of a very, very small minority of shoppers is convenient because it feels emotionally intuitive. But at most, in the current crisis hoarding shoppers can only be responsible for shelves sitting empty for longer, not for them emptying in the first place.

To demonstrate the point, consider a quick thought experiment: if a shelf is stocked with 300 packs of toilet roll per day, six greedy shoppers could clear it within minutes by buying 50 packs each. If people only took one pack each, 300 shoppers would clear the aisle in a few hours. If the store has a footfall of 6,000 and half of them want a single pack of toilet roll – which seems reasonable in the circumstances – the shelves are still empty for most of the shop’s customers for most of the day in both scenarios, because demand is outstripping supply 1000%.

Clearly it would be preferable if people weren’t greedy – in the case above, at least 10% of the people who wanted toilet roll would get it. But even if shoppers were more personally conscientious – and of course we all should be, at any time – there is still a fundamental supply problem keeping the shelves empty: supermarkets cannot fill their own shelves fast enough. Not supermarket workers, but the supermarket giants themselves.

As we know from repeated statements over the last few days, the companies that make food and other items have stepped up production to ensure there is plenty to go around. In which case, scrutiny needs to be aimed at the means by which goods “go around”. It should be remembered that shoppers are only the last link in the supply chain that gets food and goods from ‘farm to fork’, and for their part they are being as successful as they can be in moving goods from store to home. But the problem they are experiencing as a lack of replenishment is really a failure of the likes of Tesco and Sainsbury’s to adequately move goods along the supply chain from producers – and perhaps most crucially a failure to ready themselves for the upswing in demand the virus would prompt, despite clear warnings across the world.

Creatures of habit

Supermarkets keep their shelves stocked on the basis of just-in-time logistics and predictive analytics – a finely tuned system many decades in the making which combines mundane technologies to determine supermarkets’ purchasing, production and distribution needs in the most efficient way possible.

Scanning item barcodes updates the stock inventory while time-stamping each purchase and recording combinations of items bought together. Loyalty cards build up profiles of shoppers over long periods of time, helping the company to understand customers’ purchasing patterns longitudinally. Doorway security detectors double up as footfall trackers. Every day, data about shoppers’ behaviour is used to determine the most cost-efficient way for supermarkets to buy produce and put it on the shelves by predicting what customers are going to buy and when.

By now, each major supermarket is essentially an expert in the business of efficient purchasing, storage and predictive analytics. There is a reason even the most obscure non-perishable item rarely sits on a shelf long enough to gather dust. It helps that broadly speaking we are creatures of habit, whether we like it or not, yet supermarket systems are designed with a certain level of adaptability in mind. Famously, as Hurricane Katrina battered Louisiana, Walmart was able to mobilise its logistical systems to provide essential items to thousands of affected people on a non-commercial basis even quicker than the Home Guard.

We might ask, therefore, why supermarket supply chains – the process of getting products into distribution centres and out onto shelves – aren’t better equipped to reorient themselves towards the set of demands placed on them by the present situation. Yes, the actions of a small minority of stockpilers are irritating and even unethical, but even in the best case scenario, the pandemic forces us all to think, shop and act in very similar ways within the same short period of time.

With the best will in the world, supermarkets do not stock enough units of pandemic essentials for each household to buy even one handwash, toilet roll and tin of beans at the same time, because that isn’t generally how people shop, and if people don’t usually shop that way supermarkets won’t automatically be prepared for it.

Supermarkets are used to making seasonal adjustments, more notably at Christmas, when thousands of extra staff are hired both in-store and across the entire supply chain. Speaking at the daily government press conference on Saturday, Helen Dickinson from the British Retail Consortium likened the experience to “Christmas without the four-month build-up period”. But while the pandemic hasn’t arrived in the UK with the predictability of Christmas, we have known about the virus being inside the country since 31 January – the same day Italy confirmed its first cases and immediately declared a state of emergency. How supermarkets respond to major incidents is not a matter of capability, but decision. Ahead of Hurricane Katrina hitting the US coastline, Walmart convened its emergency operations centre and – within the context of a different set of variables, granted – organised its response in just days.

Time and space

The primary reason the supermarkets are increasingly empty is because the supply chain is insufficient to keep them filled at a time when more people need to shop. Given the food exists, to make sense of Mark Price’s statement that “The challenge that the supermarkets are facing…is getting that food into their distribution centres and then having enough space”, particularly at a time when supermarket shelves are displaying ample space, it’s important to understand the way supermarket supply chains operate.

Just-in-time logistics, drawing closely from its sister, just-in-time production, is a logistical approach which is centrally concerned with minimising ‘waste’. Conceived of in the broadest sense, the idea of minimising waste is to maximise efficiency (and therefore profit) through the reduction of as much surplus time and space as possible. Classically, this means a strong aversion to warehouses with expensive ground rent sitting full of stock in favour of more dynamic distribution hubs and (to use the Amazon nomenclature) ‘fulfilment centres’ where stock turnover is very high and flows of inbound/outbound goods are constant. The essential principle, for which the philosophy is named, is that goods are moved between each stage of the supply chain ‘just in time’ to meet demand and not before.

In a system with high demand but generally little in the way of stored stock, just-in-time logistics hubs rely on well-calibrated linkages across the supply chain which generally involve a combination of algorithmic inventory and order management and deskilled, replaceable and often poorly-paid workers who can be swapped in and out easily (and are a lot cheaper and more reliable than robots).

If it wasn’t clear enough at the present moment, logistics workers are the lifeblood of supply chains – it doesn’t matter how much food you have queuing up to get into a distribution centre outside Heathrow if you haven’t got enough healthy staff to sort it and distribute it and you don’t have enough lorry drivers to run deliveries of every item to every store each day. It is a recognition of this simple fact that has led the major supermarkets to announce they are now hiring thousands of (temporary) workers to enable them to expand their supply chains, which means increasing the capacity available for goods to flow along them.

The reason supermarket chains are only now keen to hire new workers is that within their logistical approach, the labour force is also regarded as a form of waste to be minimised. Every effort is made to ensure these critical workers are as productive as humanly possible. The reason till operators in budget supermarkets seem to almost throw items at you is because they are forced to meet scanning targets on pain of disciplinary measures. Further along the supply chain in distribution centres, it’s common that supermarket deliveries will be organised by outsourced workers who are allocated shifts on the basis of text messages that tell them whether or not their daily performance has secured them another shift. Within just-in-time logistics, time is always money – that’s the bottom line.

When logistics run out of time

Supermarkets’ enduring obsession with efficiency and minimising ‘waste’ – including the workforce – has sabotaged their ability to fill their own shelves. It is convenient to blame consumer behaviour, as if a global pandemic wasn’t going to make people head to the shops, and it is more convenient still to imagine entire supply chains have been derailed because of a relative handful of arseholes.

Shoppers are certainly responsible for their behaviour in-store. Without doubt, greed, thoughtlessness and in particular abuse towards supermarket workers should always be decried. But it is the supermarket companies who should be held to account for shelves sitting empty, because it is the supermarket companies who decided to wait until coronavirus began creating chaos rather than ‘wasting’ resources preparing for what we knew was coming.

There may not have been the luxury of a four-month build-up, but we’ve had six weeks at least, as well as the dubious advantage of seeing the effect of the virus on other countries first. It is only right that questions should be asked of why supply chains weren’t expanded sooner, and why it appears that profit has been put before preparation.

Consumers deserve better than this. Critical care workers deserve better than this. Supermarket workers, so poorly remunerated by the companies they’re working for in these challenging conditions, also deserve better. In recent weeks, supermarkets have taken somewhere in the region of £1bn extra over the till, and they stand to make a lot more once they do expand supply. These are giant companies who are agents in their own right, and who now bear responsibility for ensuring the public has access to the things we all need for the foreseeable future. It is us who should hold them to account over empty shelves – not the other way around.

Craig Gent is head of articles at Novara Media.

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