Discussion

Hello Class –

This week’s discussion question examined how inventory and the performance of a supply chain impacts an organization’s operations.  The COVID-19 pandemic has disrupted inventories and supply chains across many industries. As we prepare for the upcoming school year, I found an interesting article from Wall Street Journal titled, “Supply-Chain Woes Come to School Cafeterias,” which discusses the impacts of food inventories shortages.  

Briefly summarize the issue, including what went wrong and the impact this had on customers.

During the height of the pandemic, many schools offered meals to students attending school from remote or hybrid learning. As schools prepare for a 100% headcount, officials expect not to provide breakfast or lunch to their students. The deficiency is a result of food and labor shortages, transportation challenges, and limited food preparation supplies. Food items requiring more hands-on labor are challenging because manufacturers do not have enough workers to produce foods for the schools. The “to go” orders from restaurants have priorities (1).  Rising transportation costs, food ingredients are also factors.  

What steps did the organization and/or its supply chain/logistics partners take to address the issue? What was the outcome?

To cope with the shortage, all elements of the supply chain will require a level of adjustment. Management will need to coordinate across external and internal functions, including transportation, distribution and logistics, marketing and sales, and IT (2). While this is an evolving situation, here is a list of ongoing steps that the organization and suppliers are currently implementing:

• Schools are modifying the breakfast and lunch menus to accommodate items that are low in stock.
• The U.S. Department of Agriculture (USDA) is waiving nutritional values to remove some of the strict requirements of the types of food and how food is prepared; however, this may have long-term health impacts for students (1).
• Schools are consolidating deliveries and making faster payments to attract more vendors.
• Distributors are reducing flavors to cut the number of ingredients used to prepare and make foods items.
• Distributors and schools are stockpiling fruits like pears, but this introduces additional challenges because schools don’t know how much inventory they need.
• Some distributors downsize their education business or leave the market altogether, while others say they can adjust and cope with the situation. “We do this every year regardless of whether we’re in a pandemic or not,” Mr. LaMotte Sodexo’s Vice President of Supply Management (1).

Given the information available at the time, what could have been done differently to mitigate the impact on the supply chain?

They are implementing strategies that are flexible and can adapt to the ongoing situation. The global COVID-19 pandemic is the root cause of many of the challenges that schools are facing. Therefore, the customers (parents, students, vendors, and distributors) are all being impacted in their daily lives outside of the supply management system and, in most cases, understand that this is the new normal.

However, they should implement a contingency plan to ensure operations continue. Organizations should like to diversify their manufacturing portfolio to ensure that they can receive inventory from multiple vendors. Implement risk management protocols across the entire supply chain network. For example, create scenarios that disrupt one part of the supply chain. If all of the cooks were sick, who would the students receive their meals? Focus on cash flow. For example, how long can a distributor last if there is a disruption in the chain and they cannot create or move their product? Do they have the cash to cover an inventory shortage? (3) These black swan events are rare and unpredictable disruption that causes lasting damage (4).

References

1. https://www.wsj.com/articles/supply-chain-woes-come-to-school-cafeterias-11627205402?mod=searchresults_pos5&page=1 
2. JWI 550 Week 6 Lecture Notes
3. https://www.forbes.com/sites/allbusiness/2021/06/29/5-steps-to-protect-your-business-from-supply-chain-disruptions/
4. https://mitsloan.mit.edu/ideas-made-to-matter/6-steps-to-handle-supply-chain-disruption