The front page of The Wall Street Journal (Oct. 14, 2020) highlights yet another fallout from the pandemic. Just when we thought there were enough paper, pasta, and PPE supplies, we are given 7 reasons the coronavirus has hobbled the supply chain for canned corn.
Problem 1: Sweet Corn Supplies Are Finite. Corn for canning makes up the smallest portion of the U.S. crop. Fresh corn is canned right after the harvest in late summer, and that yield is the entire supply for the year.
Problem 2: Land Is Limited. The small number of farmers who specialize in growing sweet corn have set planting plans for the year already.
Problem 3: Corn Is Only Harvested Once a Year. The March surge in food demand led some consumers to stockpile food. Retailers quickly blew through inventories. The next corn harvest is months away, making it hard to restock.
Problem 4: There Aren’t Enough Trucks. Trucking companies shrank their fleets last year to improve profitability. The fleet that remained was too small to handle the March surge in demand.
Problem 5: Truckers Are Rejecting Contracts. The decrease in trucking capacity drove up prices, prompting some transportation companies to reject existing contracts.
Problem 6: Corn Is Irreplaceable. Food makers can substitute ingredients in some products, like soup or boxed dinners, when an ingredient is scarce. That’s not an option for the main ingredient in foods that are canned individually, like peas or corn.
Problem 7: Hoard Mentality. Sparse shelves begot empty shelves, as people hoarded, fearing shortages. Many products haven’t returned to pre-pandemic inventory levels. Out-of-stock levels for groceries have risen recently, indicating that supply-chain problems persist.
Canned-corn brands expect to increase production 25% over last year. But retailers are starting off with lower inventory, and they don’t know if they’ll be able to keep up with demand through the winter season.
Classroom discussion questios:
- What are the OM issues involved here? (Follow the 10 OM decisions outlined in your Heizer/Render/Munson text).
- What control do grocers have, if any?