“We used to pride ourselves on a just-in-time system,” said United Dairymen of Arizona CEO Keith Murfield on the May 6 episode of DairyLivestream. “But that turned out to be just a disaster.”

COVID-19’s upheaval of daily life as we knew it has created a tremendous number of questions for the future. One weighing on the minds of many food producers is how food supply chains can become more flexible to prevent shortfalls like those that have occurred recently.

Just in time
The just-in-time system makes sense because it is efficient — suppliers don’t have to make and keep excess packaging, processing plants don’t need to invest in additional expensive refrigeration equipment, and grocery stores don’t need as much space for inventory. The system chugs along and fills the holes as they open.

That is, until it can’t.

Breaks in the chain of the magnitude the ones COVID-19 has imposed wreak havoc on this system when multiple aspects get backed up quickly and then affect others. Unfortunately, nearly every agricultural industry has experienced those backups in recent weeks.

Choices and cushions
As a result, food supply chains have had to quickly adjust to be able to maintain as much production as possible. Sometimes, that means producing quality products requires sacrificing some quantity.

On the May 6 DairyLivestream, Jay Bryant, CEO of Maryland & Virginia Milk Producers, reported that some of the cooperative’s retail customers were asking them to “just run whole and 2% milk.” Filling some orders is better than filling none while waiting on parts. Might those adjustments to processing lines become a more regular occurrence? Possibly, Bryant said.

“The changes that are happening now . . . you’re not just going to go back and forget about all that.”

In some parts of the country, logistical challenges resulted in empty shelves. Murfield mentioned that this situation may be a wake-up call for processors and grocers to keep more inventory on hand in the future to prevent similar shortages.

Bryant advised, “People are going to take a step back to think about making a cushion.”

An ongoing series of events
“Where are dairy exports headed?” will be the focus of the May 13 DairyLivestream. Former Secretary of Agriculture and current CEO of the U.S. Dairy Export Council, Tom Vilsack, will be the featured guest. This episode is sponsored by Lallemand.

As always, the panel of experts will discuss over 30 minutes of audience questions. You can also submit questions ahead of time by emailing livestream@hoards.com. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering for previous broadcasts registers you for every week.

To comment, email your remarks to intel@hoards.com.
(c) Hoard's Dairyman Intel 2020
May 11, 2020
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