Buying discipline needed to tackle the supply chain challenge

Taken in isolation, headlines in the media flagging up a series of challenges in the hospitality supply chain are worrying enough. When you put all the factors together, it’s clear that there’s quite a bumpy road ahead over the coming months.

In the space of few days recently we were told that some fresh produce growers were facing a 90% shortfall in the labour they need to pick and pack; that the UK distribution sector has almost 70,000 vacancies for HGV drivers; and that supplies of many products into the UK are being disrupted by the combination of increased bureaucracy post-Brexit, and the continued impact of the COVID pandemic around the world.

Whether it’s fish, meat, fresh fruit and veg, or stock cupboard staples such as coffee and oil, the story is much the same. Retailers are also affected, with many media articles reporting supermarket shelves empty of many key lines.

Prices are increasing due to production limitations and increased freight and import costs, and shipments are being routinely delayed due to a global shortage of containers and slower production. An outbreak of COVID at a key production or distribution hub can have an immediate and significant impact on supply.

We also have to factor in the well-publicised labour shortage in hospitality itself, and the looming spectre of inflation, which is running above the target level. It’s not simply about food and drink; in a global supply chain everything from bar stools to combi ovens, and teaspoons to champagne flutes, travel across then world from the manufacturer to the end customer, and face the same pinch points in terms of labour shortage and distribution holdups.

All in all, it’s fair to say that even seasoned purchasing professionals, who are used to most obstacles the supply chain can put in our way, have never known a market like this one.

Experience also tell us that, even if it takes time, the current problems will be resolved. We need to get past the debate about whether the labour shortages and bureaucracy resulting from Brexit could have been anticipated, and focus on pragmatic ways to overcome them. As the COVID pandemic is managed globally, which could still take another year or more, production and distribution will improve.

However, it would be a mistake for hospitality buyers and chefs to think they can fall back into old habits in terms of sloppy buying practices and a reliance on a ‘just-in-time’ supply chain. The world has changed. Issues around sustainability and waste reduction haven’t gone away because of COVID and Brexit, and will soon be back at the top of the agenda for both consumers and regulators.

Just as you wouldn’t go to the supermarket every day, operators will have to be less reliant on six-day-a-week deliveries, and get better at planning bigger orders once or twice a week.

We heard recently of a business that placed an order with a wholesaler for a single bag of veg. That’s a luxury that no business can really afford, and one that’s unlikely to even be an option for too much longer. Many suppliers are already reviewing their minimum order levels and delivery charges in the face of higher distribution costs.

Of course, there is an onus on suppliers to raise their game, and the best of them will, as they have always done, bend over backward to make sure their customers get the service and products they are paying for. However, the operators who are prepared to meet them halfway, and plan their orders sensibly and sustainably, will be best placed to benefit.  For the supply chain to work effectively, co-operation between suppliers and operators is essential.

Latest Market Forecast

SPRING 2021 MARKET FORECAST

Download the Article