One of the industries that has been hit hardest by the quarantine is foodservice. This white paper by Technomic estimates a drop in 18 to 26% of consumer spending in 2020 for the sector.
The paper also discusses how different market segments are expected to reopen and recover over time. The short answer is that it will be a very mixed bag with some segments recovering much faster (e.g., hospitals and refreshments services) than others (e.g., recreation and hotel).
With the expected high variability in the location and volume of demand, foodservice distributors will struggle with maintaining transportation efficiency (maximizing pieces per trip) if they use a fixed routing methodology. The graphics below show an example of changes in demand for a foodservice distributor in Baltimore, MD. Aside from fewer deliveries, it is also expected the deliveries will drop in size. Routes that were efficient on March 8th are completely inadequate for the deliveries on May 8th.
What To Do?
Here are some ideas for foodservice distributors, or any other distribution business operating their own fleet, to alleviate the issue:
- Develop regional and localized strategies to determine the vulnerability of the business and the likely timeline for reopening.
- Work with your customers on payment flexibility, order minimums, etc. Operators that survive this pandemic will look to work with distributors that displayed partnership with them.
- Adopt dynamic routing as a means to adapt to the changing demands of your customers.
If you have questions on how to take these steps, JBF Consulting can help you with the selection of the right technology, setting up your team with the necessary knowledge to succeed or doing the analytics (e.g., dynamic routing) for you.
Founded in 2003, JBF Consulting is a supply chain execution strategy and systems integrator to logistics-intensive companies of every size and any industry. Our background and deep experience in the field of packaged logistics technology implementation positions us as industry leaders whose craftsmanship exceeds our client expectations. We expedite the transformation of supply chains through logistics & technology strategy, packaged & bespoke software implementation, and analytics & optimization. For more information, visit us at www.jbf-consulting.com
