Tag Archives: fulfillment

Are Traasdahl, Crisp
FST Soapbox

Creating a Disruption Database in Response to COVID-19

By Are Traasdahl
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Are Traasdahl, Crisp

The spread and impact of the COVID-19 pandemic has been fast and furious across the globe.1 The toll on human life and the economy is being felt by everyone, everywhere. Closures of schools and restaurants, restrictions on social gatherings, the shift to working from home, and other social distancing practices have created sudden, unusually high demand spikes across a number of categories, particularly related to food.

COVID-19 in the Food Industry: Mitigating and Preparing for Supply Chain Disruptions | Attend  this complimentary webinar on-demandRepercussions from these dramatic demand surges are being felt across entire supply chains. Growers, producers, processors, manufacturers, wholesalers, and retailers of all sizes are scrambling to fill immediate shortages.2,3 At the same time, foodservice operators are reassessing their needs in response to government mandated take-out/delivery-only service. Schools are consolidating preparation and pick-up points for breakfast and lunch programs, while on-campus foodservice venues have closed at colleges and universities. Food companies are scrambling to redeploy and redirect existing inventories, as well as forecast short and mid-term demand and production requirements in the face of an unprecedented situation.

In the first several days of disruption, the immediate response is all-hands-on-deck damage control. Rightfully so. But in the flurry of activity, it is critical that those responsible for demand forecasting document the disruption as it is happening. Why? Because sales history is the foundational input of sales forecasting algorithms. Outlier events, such as COVID-19, natural disasters, extreme weather, short-term international trade restrictions, etc., have the potential to distort demand trends if they aren’t recognized and weighted appropriately in forward-looking projections. Formally documenting extraordinary events allows organizations to:

  1. Explain unusual variances to history and/or forecast
  2. Create evergreen institutional knowledge (vs. relying on individuals, scattered notes, and memory)
  3. Build a “disruption database” that can be used to make fact-based overrides to algorithm-generated statistical forecasts when a similar disruption is predicted or occurs in the future.

These “disruption databases” could ultimately serve as the foundation for even more sophisticated disruption forecasting models. As machine learning and artificial intelligence continue to evolve, these models could potentially be customized based on the type of event. Importantly, this annotation of events needs to occur within your forecasting platform so that it is permanent and visible to inform insights for all forecast users.

So, what information should you capture?

  1. Timing of the event
    • This includes specific days or weeks as well as information across the event lifecycle, including pre, during, and post event completion.
  2. Geography impacted
    • The scale of the event should also be noted. Some events are market-specific (i.e., the 2020 Nashville tornado), while others are state or region-specific (i.e. California wildfires, Hurricane Katrina) or result in national or global level impacts (COVID-19).
    • The ship-to locations of your customers relative to the disruption will influence the demand impact of the event.
  3. Customer gains & losses
    • During shortages, changes to current customer strategies should also be accounted for, such as potential volume reallocations. This could mean realignment of current customer distribution centers, temporarily not shipping to or losing specific customers, and/or even securing new customers based on your ability to supply when competitors cannot.
    • Customers may also shut down temporarily and/or delay previously scheduled new store openings. They may also reduce their hours of service and/or increase frequency of deliveries.4
  4. Channel shifts
    • The use of different channels in response to the event should also be captured. For example, in response to COVID-19, grocery retailers are seeing a significant increase in home delivery and click-and-collect orders.
    • Collaborate with your customers to quantify this shift. It may explain your volume trends (if your products are or aren’t typically purchased online) and/or suggest alternative product forms, packaging, etc. to meet both immediate needs and longer-term demand.
  5. Products impacted
    • This includes both items with demand spikes as well as those realizing unexpected demand declines. Shifts may also occur between product forms. For example, some consumer concern about bulk produce has been expressed with COVID-19 since the produce is manually stocked and shopped.5 While efforts are underway to dispel this misconception, it has impacted short-term demand for both the bulk items and their pre-packed counterparts.6,7
    • Adjacent, complementary and/or substitutable items should also be considered.8 Focusing short-term production on core varieties, cuts, forms, etc. vs. a complete assortment may allow a faster return to category (if not item-specific) in-stock levels.
  6. Ordered vs. filled quantities
    • Typically, sales reporting systems only capture what was shipped/invoiced, not what was ordered. Capturing and comparing both enables quantification of the demand “opportunity loss,” which could be factored into future “event” forecast models.
  7. Consumer sentiment and behavioral shifts
    • Specific to COVID-19, Nielsen IRI and Crisp DemandWatch have identified “phases” of consumer behavior and anticipated category purchase impacts. Noting when these phases occur in your forecasting system can provide insight into performance analysis and inform future projections. These consumer patterns may also have application to other extreme events, such as natural disasters.9,10
    • In the face of significant disruptions, look for, leverage, and annotate relevant consumer insights to inform the forecast. Link the annotation to a central archive of relevant research and data to expand access and understanding across your organization.
  8. Raw material, ingredient, packaging, labor or other sourcing issues
    • Note any shortages that impacted your ability to meet demand. Your ability to satisfy demand may be impacted by your own suppliers’ ability to get you the necessary inputs and/or your ability to staff production runs.
  9. Distribution & logistics issues
    • Access to truck, rail, and/or air transportation of products may also be disrupted by the event. Note any logistics constraints to delivering finished goods to customers.
  10.  Competitor activity/disruptions
    • New product launches, delivery systems, ownership, facility fires, labor shortages or disputes, weather patterns, and more that impact your competitors can also influence demand for your products, both in the short and long term.

In the heat of the crisis, this level of documentation may sound burdensome. Even if you start with notes on a scratch pad, email chains, and a collection of industry newsletters, set aside one morning or afternoon a week to annotate within your forecasting platform the factors that impacted demand that week. Continue to post notations in the week each specific disruption-driving factor begins and each week thereafter until its impact has dissipated. Keeping up with annotations as you go along will keep things fresher in your mind and can help inform immediate and near-term plans.

Disruption Database
Disruption databases can serve as the foundation for more sophisticated disruption forecasting models. As machine learning and artificial intelligence continue to evolve, these models can be customized based on the type of event. (Figure courtesy of Crisp).

Don’t forget that pantry loading shelf-stable items early in a disruption may significantly impact post-disruption sales, as consumers work through inventory they have at home. Track this as well. Best-in-class forecasting platforms, such as the example shown in Figure 1, can effectively leverage advanced computing power and analytics to help visualize the impact of COVID-19 on supply and follow-on effects predicted to be felt in your markets. The disruption information you track can be gathered, organized, and analyzed along with trillions of data points from disparate sources to generate high-quality statistical demand forecasts and actionable insights with speed and precision.

When the dust settles on this current event, take the time to document other historical disruptions. Working in reverse chronological order, gather as much date-specific archived data and tribal knowledge as you can, and add it to the annotations in your forecasting platform. The next time a disruption occurs (and it will!), you will be equipped to draw on this “database of disruptions” to proactively predict and respond to future impacts on demand.

References

  1. Coronavirus Disease 2019 (COVID-19). (2020. Centers for Disease Control and Prevention.
  2. Fares, M, Baertlein, L. (2020). Factories shift operations in scramble to restock supermarket shelves. Yahoo! finance.
  3. Redman, R. (2020). Coronavirus: How leading grocery chains are responding to keep customers safe and shelves stocked. Supermarket News.
  4. Wells, Jeff. (2020). Grocers modify store hours to clean and restock amid panic buying. Grocery Drive.
  5. Naidu, R, Fares, M. (2020). Wary of coronavirus, U.S. shoppers skip the fresh produce aisle. Reuters.
  6. Ward, A. (2020). COVID 19 Coronavirus Prevention: A dozen things to know about leafy greens. California LGMA.
  7. Koger, C. (2020). No reason to avoid fresh produce during outbreak. The Packer.
  8. (2020) Nielsen Investigation: “Pandemic Pantries” pressure supply chain amid COVID-19 fears. Nielsen Insights.
  9. (2020) Key consumer behavior thresholds identified as the coronavirus outbreak evolves. Nielsen Insights
  10. (2020) IRI Brief – COVID-19: Impact on CPG and Retail. Retail Wire.
Derek Rickard, Cimcorp Automation Ltd.
FST Soapbox

Up to Speed: How Automated Order Picking Protects Product Freshness

By Derek Rickard
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Derek Rickard, Cimcorp Automation Ltd.

Today’s food producers and retailers are in a constant race against time. This race starts within the four walls of the distribution center, where products must move from receiving, through storage and dispatch—with high speed and accuracy. While the goal (or finish line) is to get these products to stores as fast as possible and meet consumer expectations, speed of delivery also plays a vital role in ensuring the quality of foods—particularly easily perishable ones like fruits, vegetables, eggs, meats, certain dairy products and baked goods.

Namely, efficient product flow means companies can meet shorter lead times and thereby deliver fresher, safer food—with longer shelf lives—to market. It’s a seemingly easy concept, yet many organizations continue to stumble as a result of ongoing operational challenges that slow distribution down, especially in facilities that continue to utilize manual order picking.

Major challenges include:

  • Continued reliance on physical labor with fulfillment speed highly dependent on the endurance of individual employees.
  • SKU proliferation due to product diversification, where facilities must now store and manage more products than ever before in a seemingly shrinking amount of space.
  • Seasonal spikes in business that require order picking staff to work harder and often longer hours to keep up with the influx of orders.

For organizations struggling to address these challenges and meet the need for speed in distribution, now is an opportune time to look at automation. There are now robotic order picking systems that can store, retrieve and move products effortlessly through a facility, ensuring rapid handling and very short lead times.

By choosing to automate, food producers and retailers can realize numerous benefits, including the following.

1. Accelerated Order Fulfillment

Naturally a robotic system can assemble orders and prepare them for outbound shipping far faster than humanly possible. Thus, an automated distribution center is often up to six times more efficient than a manual one. Notably, there are systems now that integrate order picking and product handling in a single solution, rather than separate functions (as traditionally done but which is too slow for fresh food distribution).

Such a system can perform both buffer storage and order picking in one simultaneous operation for significant time savings. Facilities can thereby prepare orders closer to the time of a truck’s arrival, instead of hours in advance. Foods then spend less time in transport and can maintain their quality and consistency. This also helps to reduce chances of spoilage, which in turn cuts back on waste and the supply chain’s impact on the environment.

2. Improved Ergonomics and Workplace Safety

In distribution centers that rely solely on manual order picking, employees have to run up and down long stretches of aisles and lift heavy crates or boxes. In addition to being inefficient, such manual operations make order picking a strenuous and injury-prone job. The risks for injury have only helped further the labor shortage problem seen nationwide, as job seekers show declining interest in material handling careers.

But when automated systems take over the majority of order picking processes, there is less human involvement—which can help fill in any gaps left by labor shortages. Order fulfillment speed also becomes less dependent on the physical capabilities of employees. Existing staff can then be elevated into new roles in managing and overseeing automated systems. These are safer and far more enriching positions that can draw a whole new pool of technical talent.

3. Better Space Utilization

As mentioned, there is a growing trend towards product diversification, where companies are now offering more options to consumers, such as additional sizes, flavors and health-conscious choices. As a result, the number of SKUs in most distribution centers is exploding. Some facilities once designed to house a few hundred SKUs are now dealing with thousands, leaving little room to spare.

Those challenged by SKU proliferation can consider an overhead robotic system that uses high-density, floor-based storage, where goods are stacked on the warehouse floor. This eliminates the need for racking or traveling around aisles. Plus, it reduces the number of movements required to pick an order. Facilities can store more products within their existing space, offsetting the costs of possible new construction. An overhead robotic system can also clear all products from the warehouse floor for easy, hygienic cleaning.

4. Flexibility to Keep Up During Seasonal Peaks

In all consumer goods industries, there are times of the year when demand spikes and orders come pouring in. For the food industry, companies tend to see spikes during the holiday season and in the summer months—times when people commonly host get-togethers.

Seasonal peaks can take a heavy toll on manual warehouse operations. Some try to hire temporary employees to get by, but that comes with challenges in providing proper training in a short span of time. But automated systems—particularly those with a modular design—are flexible and scalable, enabling facilities to adjust their number of robots to meet fluctuations in order volume—during seasonal highs and lows.

A notable example of a food company that is successfully leveraging automation is grocery leader Kroger. Namely, Kroger wanted to develop a state-of-the-art, automated plant and distribution center to achieve many of the benefits discussed above, including ensuring product quality and reducing employee risks of injury.

Built in Denver, Colorado, Kroger’s “Mountain View Foods” facility processes fresh conventional and organic milk, and packages aseptically processed milk, creams and juices. Within Mountain View Foods, Kroger has installed an end-to-end automated system that can store up to 36,000 crates and pick 32,000 crates per day. Cases are picked according to specified sequences on one end of the facility and then palletized for truck loading at the other, with significant storage buffering in between.

Cimcorp, Kroger, Automation
Having installed an end-to-end automated system, Kroger benefits from orders picked with 100-percent accuracy, at faster speeds, which results in shorter lead times and optimal product freshness for shoppers. Image courtesy of Cimcorp.

A warehouse control system (WCS) controls all robotic movements and serves as the brains behind the automation. The software also collects data on each processed order, giving Kroger traceable information to meet food safety requirements. Kroger benefits from orders picked with 100-percent accuracy, at faster speeds, which results in shorter lead times and optimal product freshness for shoppers.

Kroger’s story demonstrates the power of automation in enabling more streamlined order fulfillment. Those that choose to automate can overcome the many challenges that inhibit efficient product flow and thereby bolster their supply chain velocity. Simply put, faster fulfillment means fresher products in stores. And, fresher products are safer products for consumers to enjoy.

GREG BALESTRIER, Green Rabbit
Retail Food Safety Forum

Solving Food Safety Challenges in Today’s eCommerce Driven World

By Greg Balestrieri
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GREG BALESTRIER, Green Rabbit

Think about this number for a second: Consumers spent more than $19 billion on online grocery in 2019. While this is still a small segment of the overall $800 billion U.S. grocery market, more consumers than ever before are turning to eCommerce for the fulfillment and delivery of perishable goods, positioning the grocery delivery market to grow dramatically, especially as companies like Amazon continue to innovate in this area.

Adding to this, a recent survey found that 68% of consumers feel the freshness of perishable items is the number one quality they look for in online grocery retail. This is where things become complicated, as shipping perishables introduces an entirely new set of quality challenges for eCommerce brands. This is hindering the market from reaching its full potential until the biggest problem is solved: Ensuring food safety and freshness in every order.

This is a double-edged sword for retailers, grocers and CPGs: Interest in their service is taking off, but it takes just one package of spoiled meat or wilted vegetables to potentially lose a customer to a competitor—or even worse, get someone sick.

Today, spoilage and food safety issues are primarily driven by breakdowns in the cold chain, and it only takes one mishap to affect the quality of food throughout the rest of the delivery lifecycle. To achieve optimal freshness and keep customers happy, grocers, retailers and their trusted partners need to focus on three primary food freshness factors: Temperature, storage and packaging.

Controlling each of these issues starts at the warehouse.

Freshness Starts at the Warehouse

For most parcels, such as clothing, books and other commonly ordered goods, temperature control is rarely an issue. However, facilities that store perishable foods have a constant component to manage—temperature fluctuation.

According to the NRDC, cooling and refrigeration inconsistency is one of the biggest contributors to food spoilage and waste. This is because every food item has a definable maximum shelf life, and storing them at less than optimal or constantly changing temperatures can exacerbate and drastically shorten its timeline.

Mistakes with heightened temperatures on items like meat and poultry can also lead to bacteria growth and foodborne illnesses. In fact, the CDC estimates that 48 million people get sick, 128,000 are hospitalized and 3,000 die from foodborne diseases each year in the United States, putting a spotlight on how seriously food safety issues need to be taken.

The Need for Proper Rotation Processes

First expiration, first out (FEFO) is a motto all organizations should live by when stocking inventory. In addition, it is a critical process when working to avoid the food spoilage crisis. It may come as a surprise, but not all distribution centers have this type of rotation system in place. This means organizations could send spoiled food to consumers because an item was pushed to the back of a refrigerator during the re-stocking process and unknowingly shipped passed its expiration date. Not only does this create massive amounts of food waste, tarnish a brand and eat into a company’s profits by replacing low margin products, but consuming a spoiled food item can also be detrimental to one’s health.

While it helps to keep these types of costly errors in mind, as warehouse operations grow, there’s no possible way to manually scale this system.

Luckily, breakthroughs in cold chain technology have produced automated solutions that help organizations track everything from expiration dates to potential recalls. These types of technology support the entire cold chain lifecycle and ensure that warehouses and their grocery partners have the visibility they need to ensure freshness from fulfillment to the customer’s doorstep.

However, when the product is ready to leave the warehouse, it’s arguably about to enter the hardest portion of the cold chain lifecycle: Delivery.

Key Considerations for Packaging

For fragile items, packaging is all about keeping the item protected from drops and damage, but for food the focus should be on keeping the item fresh and at optimum temperatures throughout the duration of transit.

Given many grocers outsource delivery, they have little interest in whether food spoils, mainly because they are unaware of the package contents and are more focused on getting the item to the right location fast and effectively.

Yet there are many obstacles that need to be addressed during the last leg of delivery. What is the temperature in the delivery vehicle? If no one is home or at the office, will the package spoil outside in the heat?

For perishables, it is imperative that spoilage rates, delays in shipping schedules and unattended delivery scenarios are important factors in determining the amount of cold pack and protective stuffing that goes into the package. If these factors are not considered, customers could return to spoiled, melted or even crushed perishables.

Getting Food Fast and Fresh

Today, grocers and retailers are bullish on building out omnichannel food initiatives. However, balancing brick and mortar locations while developing profitable and efficient online delivery systems is often more than one organization can take on. While there are trusted partners designed to support eCommerce fulfillment and delivery, few are purpose-built to handle perishable foods.

Either way, in order to see wide-scale adoption of online grocery initiatives, grocers, retailers and ecosystem partners need to start prioritizing the key temperature, storage and packaging considerations and challenges associated shipping perishable foods. Acknowledging these challenges and implementing solutions for them will not only keep your products and deliveries fresh, but they will also keep customers coming back for more.