Localising or globalising, what does the grocery supply chain look like after COVID-19?
16th March 2021
Our Service Offerings & Thought Leadership team are working closely with the University Of Bath and the students of the MSc in Operations, Logistics and Supply Chain management to investigate the trends driving changes and the common ways organisations are tackling them.
The COVID-19 pandemic has seen grocery retail challenged like never before. Supply chain failures and unpredictable disruption have put pressure on retailers to respond quickly and effectively on the supply-side while coping with unprecedented demand levels. But with these challenges, the opportunity for innovation has arisen, and UK supermarkets have capitalised on this with creative solutions.
Shortening Supply Chains
Prior to the pandemic, food supply chains were taken for granted and the challenges that supermarkets faced in offering ‘seasonal’ products throughout the year were not a huge consideration. Consumers expected mangoes in the middle of winter and sprouts in spring, and supermarkets were happy to oblige by using global supply chains. However, over the past year, it has become apparent that the once sturdy grocery supply chains are not as robust as once thought, and adjustments must be made.
The conflicting issues of using more local sources and offering seasonal products all year long have come to the fore. A shorter supply chain is arguably always advantageous; removing steps in the transportation process by localising as much as possible reduces the chance of disruption. In circumstances where localised supply is not possible, a case for bringing suppliers closer can be made; if the pandemic has taught us anything, it’s that globalisation may be fantastic for a focus on lower-cost, but agility is key for an effective, timely, and resilient response to sudden circumstantial change.
For some retailers, the pandemic has provided an opportunity to further their corporate social responsibility (CSR) objectives through increased vertical integration. Morrison’s recent acquisition of Falfish, a Cornish seafood wholesaler, has seen them become the first UK supermarket to own its own fishing boat. Consequently, 80% of fish and shellfish sold under Morrison’s ‘Market Street’ brand is now sourced from their own operations. Not only does this allow them to monitor quality, but also further their organisational commitment to sustainable and local sourcing. As end-consumer demands for supply chain visibility increase, Morrison’s transparent approach wins them favour with customers and suppliers alike.
Not only does this attitude provide value to consumers, but it has also allowed Morrison’s to remain resilient during the pandemic. They are the “UK’s second largest fresh food manufacturer”, in addition to being the only UK supermarket to own its own abattoir and meat processing operations. This End-to-End supply chain approach has enabled them to mitigate pandemic disruption, and retain their high quality own-brand products, and will continue to do so as the impact of both COVID and Brexit continues.
If you are interested to hear about some of the integration projects we’ve been involved in, please contact Simon Latham at 4C Associates. We have a team of experienced consultants who would be happy to discuss with any requirements with you to support your organisations.