Shortages Have Businesses Rethinking 'Just-In-Time' Inventory
Companies are planning for shortages of popular brands of food and staples to continue for months, and managers are trying to keep up as dif
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"The fact is, it’s like whack-a-mole,” Vivek Sankaran, chief executive of Albertsons Cos., said on a conference call recently. “On any given day, something is out of stock in the store.”
Some packaged-food makers, struggling with stretched staffing and hard-to-find raw materials, are limiting shipments of products, companies said. In response, grocery buyers, who are in charge of planning and coordinating orders, are spending more time tracking down vendors, managing trucks that arrive late and searching for substitutes for out-of-stock items. Food retailers are buying extra inventory whenever they can, ordering items months earlier than usual and sending their own trucks directly to manufacturing plants to make pickups and speed up delivery times.
When Covid-19 began spreading in the U.S. in early 2020, grocery chains struggled with the surge in demand for staples ranging from baking products to toilet paper. As pandemic restrictions lifted this year and the U.S. economy rebounded, food makers haven’t been able to find enough workers to fully staff production lines, or drive trucks to deliver goods to stores and warehouses.
"I do think everybody has shifted their thinking” to build more inventory, Mr. Smith (CEO, Associated Wholesale Grocers Inc.) said.
Food sellers’ strategies to buy bigger and earlier represents a shift from the “just-in-time” model of holding as little inventory as possible. Industry executives said they plan to continue storing more supply at least for the next several months, but don’t yet know if the change will be permanent."