Overcoming Disruptions: 3 Attributes All Produce Supply Chains Must Have

Overcoming Disruptions: 3 Attributes All Produce Supply Chains Must Have

I think we can all agree that 2020 has been an unusual year with a pandemic, social unrest, and economic ups and downs. While I’m new in my role as president of Robinson Fresh, I’ve been part of the produce industry for my entire career—over 20 years—and I have never seen a year that compares to this one in terms of the number of disruptions produce supply chains have faced, and continue to face this year.

As a global company involved in both fresh produce and logistics, we at Robinson Fresh certainly had to develop many ways to deal with 2020’s challenges. We’ve learned there are three key characteristics for any business looking to overcome disruptions to their produce supply chains. These characteristics are agility, visibility, and capability/capacity.

Agile produce supply chains

Companies with fresh food supply chains already know what disruption means. When we’re not in the middle of a pandemic, produce is already one of the most complicated, fast-moving industries to be involved in. Weather can change an entire season’s crop and outcome, political unrest can impact a country’s import and export capabilities, and consumer demand is constantly reacting to changing trends and promotional activity.

Even “normal” years often mean significant disruptions on a very regular basis. However, this year’s events created change and volatility within our supply chains at an out of cycle time and with a level of impact that is abnormal. It quickly became apparent that teams accustomed to managing through difficulties maintain a great deal of agility.

This year has shown us that agility needs to extend beyond having financial and asset agility. It now requires an ability to manage product mix and SKU rationalization, especially as SKUs in produce are difficult to transition quickly between foodservice and retail. Retail packs must be scannable and smaller; they’re packed and handled differently than bulk and foodservice. Often, a foodservice pack is prepped in the back of the house, and a retail pack is ready for consumption. While retail was able to adapt relatively quickly through bulk product sales, product mix and style short term was an issue.

What we saw in the fresh produce industry over the first three to six weeks of the COVID-19 disruption was less about the origin of the product, and more about the last mile. We saw a huge shift in retail at the beginning of social distancing, then mid-April, some capacity slowly moved back to foodservice, but we remain in an over-indexed position toward retail. While we know that it will shift again, it’s impossible to predict how much or when. Maintaining an ability to adapt quickly will be important whenever this—and other shifts—occur.

Real-time, order- and item-level visibility

Unfortunately, all too often when companies try to force agility on their supply chains, it comes at the cost of true, detailed visibility. Quickly changing supply chain requirements mean you always need to know where your product is—and how to access it when you need it. The fresh produce industry and its supply chains have been operating in a just in time world for years. However, what the COVID-19 outbreak showed was that we must balance this environment with a “just in case” mentality.
When COVID-19 started, so many companies needed to solve just-in-time problems that many lost sales. To prevent future sales losses, supply chains are challenged to have multiple product options closer to distribution—moving from a first mile to a last mile focus. As an industry, we need to plan last mile transportation and product management strategies just as much as we plan for first mile shipments and the normal distribution of products.

Do you have order-level, shipment to item level with real time information? It’s about knowing not just where your truck is but where your raspberries are. Data down to the SKU level now matters, especially when shoppers are purchasing in-store, online, and click and collect. This can create a messy supply chain and loss of customers without full visibility.

Disjointed or not fully visible systems within the overall supply chain were exposed quickly once COVID-19 hit. These disjointed systems led to an overabundance of inventory when restaurants shut down. Many supply chains couldn’t shut down their purchase orders fast enough.

Combination of capacity and capabilities

In today’s environment, most receivers desire contractual commitments, proprietary items, or proprietary packs. Which means, the supply chain must have plenty of inventory on hand to meet those commitments. When the receivers stopped taking these orders, it resulted in too much produce inventory at distribution and produce in the field waiting to be harvested.

When this happens, there is still a week of on-shelf/on-hand inventory at distribution and 60 to 90 days of product in the field. Once visibility is in place to keep the produce supply chain moving, both capacity and the ability to organize and move goods is needed. I group capacity and capability together because it’s not just trucks that are needed.

To be successful, new, final mile drivers and shippers were needed. Some local processing warehouses needed to be set up, then a delivery cadence established. Each supply chain needed to be adjusted, revalued, and both capacity and capability adaptations had to be made. This was due in large part due to increases in online ordering as more consumers started shopping online.

Systems need flexibility and capabilities in delivery time, quantity, online offerings, flexible sourcing, warehousing, local to stores, consolidation, space on outbound trucks, refer truck space, last mile, and more. It’s also about more than the technology, facilities, or equipment; it’s the people. Drivers, warehouse workers, data analyzers, and your own employees are all needed to move goods. All these capabilities need to combine with available capacity in order to keep goods around the world moving.

Final thoughts

The most pressing supply chain hurdle right now is overcoming disruptions and challenges caused by the pandemic. But the entire fresh produce industry also needs to be ready for what’s next.

We need to be able to manage inventory properly—balancing our just-in-time approach with a just-in-case mentality. The proper balance will allow us to flex in either direction when needed to maximize efficiencies, and more importantly, sales. To truly achieve this balance and build the produce supply chains of the future will require the three characteristics I’ve discussed above, agility, visibility, and capacity/capability.

If you’re ready to prepare your supply chain for what comes next, connect with one of our produce supply chain experts today.

Michael Castagnetto

Michael Castagnetto - President of Robinson Fresh

Michael Castagnetto is the President of Robinson Fresh. He has built and sustained relationships with growers, suppliers and customers with a goal of helping them build, develop and evolve their supply chains. Michael uses his almost 20 years of experience and knowledge to open up global perishable supply chains and continue to build relationships with those in the fresh produce industry. His specialty is complex supply chains with a focus on fresh produce and integration of logistics to drive growth for customers.

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