The sudden surge in retail food purchases caused by panic-buying over coronavirus (COVID-19) created a distribution crisis that had bakers rethinking their strategies.
Some bakeries were well-suited to make needed adjustments and feed consumers through the unprecedented and unpredictable surge in bread sales. By adopting logistics strategies that combined direct store delivery (DSD) with foodservice routes, some bakeries had a built-in level of flexibility in case demand spiked in either channel. However, nothing could prepare them totally for what hit in March. The immediate and dramatic shift to DSD-only put some bakeries into overdrive. The long-lasting effects could forever change distribution models.
Bakeries with established DSD infrastructures met the increased need well when stay-at-home orders were issued and consumers began stockpiling staples like bread. Still, the dramatic cutback in foodservice deliveries prompted massive adjustments in the services bakeries with DSD infrastructure provide.
Aunt Millie’s, Fort Wayne, Ind., operates a DSD network throughout the Great Lakes area and was well-
positioned to serve its customers. Many of its restaurant and retail customers were already on the same routes. This aided the company as it shifted volume to retail grocers.
“We were prepared with our transportation and distribution as we are when we prepare for big summer holidays,” said J. Bohn Popp, executive vice president of quality and brand strategy, Aunt Millie’s. “So, we were ready to handle that aspect. But the biggest challenge and necessity was the safety of our sales team.”
Aunt Millie’s instituted a temperature testing program for all sales and delivery team members before they go to work at its bakeries and distribution centers. For those team members, the company set a schedule of balanced orders to allow them to be in the stores early, ahead of opening, to keep them away from the public.
“This was a particular challenge due to the increased demand, so we had to develop a bakery cutoff time to meet the branch/depot schedule,” Mr. Popp said.
Additional steps included implementing a staggered employee rotation at depots so no more than three associates are in the same location at the same time. The bakery is also providing gloves and masks as they are available.
Mr. Popp explained that the DSD infrastructure already in place to help handle high-volume holidays kept the company’s team prepared for the unknown. The question remains as to how long the additional safety measures will need to stay in place.
On the West Coast, La Brea Bakery, San Leandro, Calif., also had strong retail and foodservice supply chains in place when COVID-19 hit. However, due to the nature of its business, the bakery didn’t completely shift to a retail focus because of the crisis. Chris Prociv, vice president of marketing, La Brea Bakery, said the company shifted to a takeout and delivery business model at its café on S. La Brea Avenue in Los Angeles. And for its retail arm of the business, La Brea Bakery ramped up production to meet consumer demand. That created several challenges as it looked to distribute more Take & Bake artisan breads, which are sold prepackaged and ready to bake in consumers’ homes. It also bolstered production of packaged sliced bread sold at in-store bakeries.
“The need for additional trucks due to the spike in demand at certain locations has caused the procurement of additional spot market carrier capacity at an increased cost,” Ms. Prociv said. “Securing appointments at both our inventory centers and customers’ warehouses has been challenging due to the increased volume and reduced availability.”
These challenges required creative solutions. La Brea Bakery began working with its retail customers directly to identify their priorities.
“Based on these conversations, we have adjusted our production to be more efficient and increase the production of key breads, allowing us to get our foods to our customers faster,” Ms. Prociv explained. “Given our strong sales, customer service and supply chain teams, we are getting high marks from our key retail customers for our quick reaction time to ensure all orders are fulfilled completely and on time during these challenging times.”
The key to meeting the increased demand, Ms. Prociv added, was adaptability.
“All of our customers are extremely important to us, from QSRs to foodservice to, of course, retail,” she said. “As their needs change, we adapt quickly. That has been a hallmark of our past and will continue as we move forward into this new environment.”
In Puerto Rico, another well-established DSD network helped Pan Pepin, Bayamon, PR, maintain operations and deliver bread to meet the increased need.
“The majority of our business is retail, but every single sales route has a mix of retail and foodservice customers, so as demand has shifted from one channel to the other, each route driver has made the necessary adjustments as to the product variety they carry in their trucks,” said Mario Somoza, president, Pan Pepin.
The pandemic exposed several distribution challenges that are omnipresent yet rarely rise to the level of a crisis. The availability of items like trays and the man hours required to meet distribution needs are at the forefront.
Companies typically keep stockpiles of supplies on hand for seasonal surges. But finding enough bread trays in March was a particular challenge for H&S Bakery, Baltimore. It tapped into additional tray supply for the cluster hamburger and hot dog season — 110,000 trays usually kept in storage.
“All that got wiped out, too,” John Paterakis Jr., co-principal and senior vice president of sales and marketing, told Josh Sosland, editor of Milling & Baking News and president of Sosland Publishing Co. “We called the tray companies to order more just in case we don’t get all the trays back.”
While pleased by the strong demand, Mr. Paterakis cautioned that it would be a mistake to characterize the flood of sales as a positive for the business. He said the blitz has disrupted the company’s and many others’ entire distribution operations. Specifically, it forced delivery drivers to make two to three deliveries in a single day.
“It is difficult to find enough drivers to satisfy the additional demand,” Mr. Paterakis said. “We have had to go to second- and third-party distribution companies. That’s been a huge issue and a problem.”
Pan Pepin did not add any drivers or trucks but they too needed to increase their workload.
“The only challenge was the long hours that some drivers and merchandisers were working to meet the demand at retail,” Mr. Somoza said. “Fortunately, we’ve started to see that taper off, which has allowed the drivers to work shorter days recently to regain some energy.”
Although difficult, bakeries needed to rely on their delivery drivers to put in more hours. To help bakers around the country, the American Bakers Association worked with the US Department of Transportation to waive the Hours of Service rule to give distributors additional resources. The Hours of Service rule limited the hours a driver could work per week. The option to let them work overtime proved critical in some cases.
While consumers stockpiled goods through April, the current and future demands remain unknown as consumers settle into their post-pandemic lifestyles.
A giant question mark remains as to how the rest of 2020 will unfold in the wake of COVID-19 as bakeries deal with distribution challenges that change week to week, or even day to day. In some cases, the strain and cost of outsourcing distribution and complications with shifting to a majority DSD system will burden bakers. In other cases, the creation of an adaptable distribution model will provide benefits.
Aunt Millie’s relied on its flexible distribution network throughout March and April, but the company is not resting on its laurels.
“A special task force made up of department leaders has been meeting every day to review our strategic direction and our execution,” Mr. Popp said.
The task force will examine best distribution practices to continue to meet demand in the future.
“We have been and are in an unprecedented event that none of us want to go through ever again,” he said.
At Pan Pepin, its distribution model also proved beneficial and will operate as-is into the future.
“We have discussed in the past the merits or risks of going to a channel-service structure, with routes designed for retail or foodservice, but this situation has proven that our current geographic-centered strategy gives us the flexibility to respond to sudden market shifts like what we’re seeing,” Mr. Somoza said.
Critically, the company is now more aware of all the points of contact involved in a distribution chain. From the bakery to a delivery person to the clerk stocking shelves at a grocery store to the check-out line, each product transfer presents a potential safety risk. Mr. Somoza is now aware of how those risks can impact employee and consumer health … and a baker’s bottom line.
“To the extent that systems and processes can be designed to minimize contact, it will be easier to contain these types of viruses in the future,” Mr. Somoza said. “I think the next step will be how to reduce, or eliminate altogether, contact between our service personnel and customer representatives at the point of sale.”
From additional personal protective gear to new delivery times to staggered distribution shifts, bakers must be able to shift into overdrive at the flip of a switch.