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March 16, 2020

How the Grocery Supply Chain Is Responding to Coronavirus

In FMI's blog, Doug Baker, VP, industry relations, writes in part: "Depending on the local situation, shoppers are in either preventive-mode or response-mode. For instance, communities experiencing their first reported cases of coronavirus may be securing sanitizing wipes, hand sanitizer, etc. Communities that have already seen several cases of the virus are in more of a response mode, perhaps self-quarantining and securing supplies that bring them comfort and preventive care. This means we’re seeing spikes and plateaus in certain product purchases across the country... the grocery supply chain responds with manufacturers and retailers working together to find efficiencies and secondary supply. For example, some of the pumps for hand sanitizer bottles are made overseas, so manufacturers explored packaging options domestically that would help them maneuver in parallel with demand. The same level of efficiency is being applied to high cube products like paper towels and toilet paper when possible, as manufacturers may skip the warehouse entirely to move pallets that are shrink-wrapped and dropped directly at a store. As manufactures receive increased orders for products in demand, they work closely with retailers to pace the supply accordingly. This ensures that there is an equal distribution of product across the supply chain during a crisis — one store doesn’t get a 100% of their order while another store only receives 30% of their product order. Now, just like in a natural disaster, temporary product shortages can and likely will happen, but supply pacing helps ensure these out-of-stocks are short-lived and that the supply chain can respond... In recent days much has been written about issues associated with price gouging. FMI has focused on the fact that many states have consumer protection laws in place to address price gouging, and the bad actors in the supply chain are being identified and taken offline both by law enforcement and by FMI member companies. FMI has also been working closely with state retail associations to monitor for concerns. Consumers should continue to feel empowered and be encouraged to report unfair practices to their local Office of the Attorney General hotline"...


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