COVER STORY SUPPLY CHAIN STRATEGIES
As FMI’s Baker said, “the machines are running,” and at a round-the-clock clip, so it is not necessarily a supply chain issue but a demand issue. “It becomes a supply chain issue if you start having equipment issues, if you start having ingredient issues, if you start having labor issues,” he said. Within that supply chain, private brand manufacturers and retailers are working together to execute the most efficient strategies to keep up with demand. Baker said strategies include suspending slower-moving items and pack sizes to focus on fast-moving ones. “They’re doing us favors by simplifying their selections,” said Mark Singleton, vice president of Rudolph Foods, the world’s largest producer of pork rinds, including private label for several retailers. “Instead of eight SKUs, it’s asking for five SKUS,” he said, noting that it saves the company time on the line to not have to stop and change out film and bags. Singleton is not in a category like toilet paper or poultry where the challenges have been exceptional, but snacking is a category that saw a big boost, and he said like everyone else they’re learning as they go on how to adapt. Officials at Good Plant Foods, a plant-based cheese company, have been working in private label for the last two years and also see a tremendous need for product, even as a smaller niche brand. “Due to ingredient lead time, imported products and other challenges, it can be difficult to meet
our partners’ current levels of product needs at the speed at which they ask for them,” said David Israel, the company’s CEO. “To help solve that problem for one of our private label partners, we’ve actually air freighted product from Greece so they have something to have on-shelf.” Israel said the company will absorb that cost. “Not because it necessarily benefits us, but because we want to be a good partner, and we want them to do well.” It is important to note that suppliers and retailers have stepped up to work together. “Of course, we can mince our words and soften our conversations with our private label partners, but we try to minimize surprises and instead communicate support,” Israel said. Good Planet, specifically, is seeing its category growing at a rate of three or four times faster than expected, and they’ve needed to seek additional partners to help keep up with demand, so it’s trust, communication and transparency that helps get both companies by. Baker said retailers grasped the need to get product on shelves, not worrying about differentiation, having certain scents and flavors. “And it’s pleasing to hear that those conversations are actually going on,” Baker said. “That’s the only way we’re going to keep the supply chain flowing and keep key product hitting the shelf.” Whelan said that across Albertsons’ substantial footprint, stockers are refilling high-demand products as quickly as they can through its robust supply chain, and in an effort
YEAR-OVER-YEAR GROWTH BY PRODUCT CATEGORY ONLINE Hand Sanitizer and Wipes
2019
+5678%
2020
Household Cleaning Products
+344%
Liquid Hand Soap
+170%
Toilet Paper
+207%
Canned Food
+96%
Paper Towel
+122%
Vitamins and Supplements
+88%
Bottled Water
+103%
Frozen Dinners
+71% 0K
10K
20K
30K
40K
50K
TOTAL ITEM SALES Source: Mercatus, March 2020
18
Store Brands
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April 2020
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www.storebrands.com
60K
70K
80K
90K