Many people today agree that we do not have the relationship we used to have with food just a few generations back. Today we take for granted where products come from and simply go about life thinking pineapples are grown in a back room of our local grocery store. Some say that we should be more responsible about the way we consume and where the products we put on our tables come from; people say that the way we spend our money can in some instances make a bigger impact than the way we cast out the ballot in the election year. Today in David Kiger’s Blog we want to take a closer look at the logistics that dictate the place of grocery stores within the supply chain that brings the food to our tables.
Distribution is perhaps one of the most important components of the supply chain. Distribution is everything that has to do with getting the products from the manufacturer all the way to the customer. Sometimes people believe that the only thing you need is a good product to be successful since customers will understand the clear quality advantages and just flock to purchase the superior product. However, none of that really matters if a successful distribution is not in place.
Supermarkets and grocery stores, in general, rely on distributors in order to get products onto their shelves. While some people believe that the elimination of this “middlemen” is necessary in order to lower prices by creating a smaller gap between the manufacturer or farmer and the end consumer; that is not always the truth. Intermediaries and wholesalers can add a number benefits to the experience due to their specialization in some tasks, making them better at them than consumers and manufacturers.
Retailers, for example, can break the bulk quantities and offer customers products in quantities that fit their budgets and their needs. Imagine as a consumer who wants tomatoes, having to buy them by the crate instead of pounds or the units you need.
Another efficiency added by intermediaries is the fact that they can consolidate products under one roof. That way you do not have to go buy your tomatoes somewhere, and then drive across town to get cucumbers and elsewhere for dressing if you want to make a salad. Retailers receive the same treatment from wholesalers who can help them restocking their supplies without having to deal with several vendors every time they are short on inventory.
Distributors help grocery stores automate their reordering protocols by allowing them to simply scan the codes of items they are running low of, and then making sure those are present in the next shipment. Think of them like virtual backrooms where the smaller retailers are able to back order in smaller quantities and at a moment’s notice. Some perishable items like dairy products, for example, come from smaller distributors with specialized operations focused on transporting and warehousing items that need special storage needs.
There are also some products that are ordered in such small quantities that the manufacturer sometimes ships them directly to the store; some examples of these products are artisanal goods, baked items, and locally produced foods.
Fresh produce usually comes from many different places depending on the season and the location of the store. Regional distributors have facilities that are specialized in maintaining the produce under the right environment in order to make sure they arrive at the store in the best moment of their life cycle. During a season, the grocery stores tend to rely more on locally grown products than what is provided by the large distributors, but even that depends highly on the prices offered. Sometimes it is cheaper to bring the produce from overseas than buying it locally. That is something to keep in mind when you buy from larger retailers.
When it comes to meat and seafood, the process is not that much different. Local farmers offer products that travel less time and that could make them more affordable and at the same time offer you as a consumer a more transparent look into the supply chain and the story of what you are consuming. Large chains can give better deals to grocery stores and not limit purchases by allowing them to buy by the cut instead of by the steer. Something else to consider is that during certain holidays like Christmas or thanksgiving, there are certain products that gain demand and have to become available for a shorter period of time. For these types of situations, the stores have already made deals with their distributors in order to meet the demands for the holidays and not run out of those particular products, something that could be very detrimental to business in general.
The proper delivery of the product to customers at affordable prices, in the right place at the right time and under the right conditions will always end up being good business for every link of the chain.
* Featured Image courtesy of 1Flatworld at Flickr.com