Name: How the UK’s just-in-time delivery model crumbled under coronavirus
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How the UK’s just-in-time delivery model crumbled under coronavirus

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We may earn a commission if you buy something from any affiliate links on our site. .Stockpiling has upended supermarkets. But they’re already fighting back. A few weeks ago, many people were no longer able to get their hands on their choice of rigatoni, any kind of loo roll or a box of eggs. Aisles were bare and panic buying gripped the nation. Or so we thought.The data shows something else was going on. found that a significant number of customers were just adding a few extra items to their shop had managed to break the typically well-oiled system. The impact from that very small increase in demand from every single shopper early on showed just how poorly prepared supermarkets were for what was about to come.And you can hardly blame them. Supermarkets are used to planning months in advance for seasonal events like Christmas, when people buy more than they typically would at other times of the year. During this time, retailers start using all sorts of space in the stores, says Leigh Sparks, professor of retail studies at the University of Stirling. “You’ll see stock above shelves, you’ll see stock in the backroom, you’ll see trailers outside the store,” he explains. “None of that was prepared for this time because it came with an unexpected surge in demand.”The inability to cope with unexpected demand has resulted in short-term supply issues and exposed the precarious way modern-day supermarket supply chains are run. Sparks says that the majority of what you see on the shelves is all of the stock that the supermarket is carrying. Why don’t they hold more in the back? “If you have lots of stock holding, the price of products that consumers buy goes up quite substantially,” he explains. Customers are the ones footing the bill for the additional cost of prime retail space, which is one of the reasons why stock in local supermarkets like Tesco Express is sometimes more expensive than at larger branches.Most PopularUntil the 1980s, supermarkets held the majority of their stock in back rooms. But during a period of economic downturn in 1977, Tesco changed the game: it found that cash-strapped consumers were shopping far less than normal, and so started ‘Operation Checkout’. Timed to coincide with the Queen’s Silver Jubilee, Tesco shut all of its stores and slashed its prices, and thus kickstarted the price wars we see today between the major supermarkets. The only way that Tesco was able to slash its prices at the time was because it moved to a just-in-time delivery model, the same one that all of the major supermarkets use for many of their products today.Just-in-time relies on supermarkets ordering in stock into their stores on a daily basis, based on the level of demand in each individual store. To do this, suppliers send these goods to the supermarket’s distribution centres, many of which are located in the East Midlands, in an area called the Golden Triangle. Here, supermarkets have easy access to all the major motorways and can reach 90 per cent of the country within four hours. Once they’re in the distribution centres, orders are sorted and loaded onto the trucks ready for delivery to supermarkets.In normal circumstances, the just-in-time supply chain system is incredibly efficient, and essentially saves both the retailer and consumer money. “It’s actually a reasonably complex logistics operation which for many years has worked absolutely wonderfully,” says Richard Wilding OBE, professor of supply chain strategy at the Cranfield School of Management. “It’s a really synchronised flow of goods through that particular supply chain. The challenge that we’ve got is that panic buying creates a massive increase in demand on the particular supply chain, and then you get capacity constraints.”These capacity constraints have a continuous knock-on effect on every link in the supermarket’s just-in-time supply chain. Distribution centres are running low on stock because retailers are ordering more into their stores. But they can’t get more stock into the distribution centres because they can’t transport it into the supermarkets fast enough. All the while the shelves are rapidly emptying, and the supermarkets don’t have enough backroom space to store it all.By the time the stock is put onto the shelves, the items are already gone, which has led to our empty shelves. There is more than enough stock in the supply chain, Wilding argues, there just isn’t the capacity to get it all delivered quickly enough.Most PopularKantar found that sales of toilet paper, for example, rose by 60 per cent year-on-year for the week ending March 8, while the sales of dry pasta were up 55 per cent. In response, Sainsbury’s opted to close all of its meat, fish and pizza counters to free up its delivery network and staff for essential products.In supermarkets across the country, shelves have begun emptying of more than just toilet paper. On social media, photos of aisles, supposed to be full of fresh produce like fruit, veg, fish, meat, eggs and milk instead show barren wastelands. These are all things with a shorter shelf life, they can’t linger in distribution centres for very long and are produced at a more consistent rate than tinned or frozen goods.Alexander Trautrims, professor in supply chain and operations management at Nottingham University Business School, says that the production of dairy products like milk is pretty stable — the rate at which cows produce milk and the rate at which people consume it does not fluctuate that much. This means that manufacturing can’t be ramped up in the same way as tinned goods. In a crisis like this, consumers who would naturally pick the products with the longest expiration date won’t be able to do that anymore because of high demand, and stable production levels.“When we buy stuff at the supermarket at the moment, we would hope to buy yoghurt with a week or two of shelf life. If demand is varying, the amount of shelf life we're going to get is going to start to vary, so we might not have two weeks, we might only have a few days in which to eat it,” says John Perry, managing director at Scala Consulting, which provides management services for the supply chain and logistics sectors.Fresh vegetables may also be more difficult to procure because they’re often imported from countries like Spain. Still, Trautrims is optimistic that our ability to get fresh produce will improve. “I think at this time of the year, more fresh produce would come from the UK anyway. We’re probably quite lucky that [it’s happening at this] time of the year,” he says. “The real question here will become where the seasonal harvest workers are supposed to come from.”Most PopularAnd while toilet paper isn’t a fresh produce, it has its own limiting factors in the supply chain. The problem with replenishing toilet paper stock is that not only does it take up a lot of room, it’s also that retailers don’t perceive much value in it. “The value density means it takes up an awful lot of space, but it's not worth very much money,” explains Wilding. “If we were to prioritise moving toilet roll into supermarkets, what you're going to end up with is all these lorries full of very low value items, and no space for anything else.”Those supply constraints will remain as people begin ordering home delivery as they are told to stay at home. On Friday, as the firm continued to run out of delivery slots. The company found that shoppers had been placing orders of more than 100 items, far higher than the average number of around 60 items per order. Customers are paying more than ever for their food; figures from Blacktower Financial Management showed that people have increased online spending by 25.5 per cent as a result of the coronavirus pandemic.As of the time of writing, Asda has no online delivery slots until April 10, while delivery slots at Waitrose, Marks &amp; Spencer, Morrisons and Tesco are no longer available. Iceland and Sainsbury’s have prioritised delivery slots for the elderly, vulnerable and disabled, but Sainsbury’s says there are no slots available for the next three weeks. The reason for this massive delay is simple: home delivery broadly relies on pickers taking products from the very shelves that have been emptied in supermarkets or arrive from small specialist centres, putting more strain on the system.“In some of the supermarkets, you will see store staff picking customer orders, and it requires people to do that,” Perry says — and delivery drivers then need to be available to deliver those goods.These delivery vans need to be able to carry not only chilled food and fresh food, but also hazardous substances like cleaning products, which all have to be segregated inside the van. “If you're going out to deliver to 20 people, you have to make sure that things are arranged in a particular order and loaded onto the lorry, so that it can be removed from the vehicle in a particular order,” Wilding explains.Most PopularWith all those complexities, supermarkets are having to adapt their model to support the increased demand for food and household essentials. Sparks thinks that supermarkets will begin stripping back their range of product, so that instead of 25 varieties of pasta, there will only be two or three. This way, the retailers can transport the goods from manufacturers which are already based in the UK rather than say, pasta from Italy.Manufacturers could also stop delivering to distribution centres and deliver straight to the store, cutting out the middleman. “There’s been a swing-back to some of that, so Warburtons bread might do a bit more store delivery,” Sparks says.Retailers could also move towards a more efficient system, in which items are rolled out onto shelves by the pallet-load or in boxes, rather than individual items. “I think what we’ll see is that the big retailers will probably be forced to go more to an Aldi and Lidl model where you have fewer lines at a bigger quantity because that tends to be more efficient and needs fewer staff,” says Trautrims.At the same time, drivers delivering food, which was once destined for restaurants and bars, can shift their capacity to deliver stock from the distribution centres, rather than delivering stock from restaurant suppliers. Some have already mobilised: last week, SCALA announced that it was forming a COVID-19 supply chain collaboration emergency working group which will bring together the UK’s manufacturers to help feed the nation.And as of March 19, that it was relaxing competition laws to allow supermarkets to work together on a coronavirus response, allowing competitors to share their stock levels, distribution centres and delivery vans for the first time. The government simultaneously announced that it was relaxing rules around drivers’ hours, so that more drivers can drive longer hours to deliver the necessary goods.Thanks to Coronavirus, a new dawn of supermarket logistics is at hand. Old rivals are going to have to finally scrap 40 years of ‘Operation Checkout’ and kickstart a new system that involves working together to keep the country fed.Alex Lee is a writer for WIRED. He tweets from Coronavirus coverage from WIRED😓 and what happens next?❓ Does alcohol kill coronavirus? 🎮 World of Warcraft ✈️ Flight data shows 👉 Follow WIRED on , , and

We may earn a commission if you buy something from any affiliate links on our site. .Stockpiling has upended supermarkets. But they’re already fighting back. A few weeks ago, many people were no longer able to get their hands on their choice of rigatoni, any kind of loo roll or a box of eggs. Aisles were bare and panic buying gripped the nation. Or so we thought.The data shows something else was going on. found that a significant number of customers were just adding a few extra items to their shop had managed to break the typically well-oiled system. The impact from that very small increase...

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Alex Lee

Wired UK is a bimonthly magazine that reports on the effects of science and technology. It covers a broad range of topics including design, architecture, culture, the economy, politics and philosophy. Owned by Condé Nast Publications, it is published in London and is an offshoot of the original American Wired.

How the UK’s just-in-time delivery model crumbled under coronavirus

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