Major U.S. retailers are looking at ways to make their supply chains stronger, sustainable, and more resilient.
Because of the supply-chain crisis unleashed by COVID-19, they are wanting to do so in a unified way not only for their businesses but for the 42 million workers employed in the retail sector.
Gathering at the National Retail Federation’s inaugural Supply Chain 360 conference at the Huntington Convention Center in Cleveland, Ohio, on June 20-21, retailers also said they are seeking alternatives to expand their suppliers and exploring “near-shore” or “on-shore” suppliers.
Many of the retail executives were featured speakers and spoke to attendees in informal talk show-like settings about their experiences with supply chains and strategies of how they’ve diversified to meet the challenges of supply and demand.
They are looking toward a holistic or “whack-a-mole” approach to address issues in the industry. That way, they believe they will be better prepared when other problems arise in the future.
Washington-based NRF is the world’s largest retail trade association. It represents discount stores, home goods and specialty stores, small businesses, grocers, wholesalers, chain restaurants, and internet retailers from the United States and more than 45 countries.
Improving efficiencies through “real-time” tracking of products from raw materials arriving at the manufacturing plants, port-to-port transport, and delivery also was discussed as a priority.
Some retailers voiced concerns about the West Coast labor negotiations involving 22,000 port workers (the contract expires July 1), Shanghai’s shutdown in China in its 13th week because of its COVID-19 policy affecting the transport of goods, and inflation that retail executives projected will last at least one more year.
Hal Lawton, the CEO of Tractor Supply Co., was the keynote speaker at Supply Chain 360 on June 20.
Lawton spoke on the importance of setting the bar high through investment and upgrading on-shore or domestic ports, noting that many were outdated and not automated.
He described the supply chain and shipping environment as “extremely volatile” mostly because of ongoing geopolitical tensions.
In part, this includes the situation in Ukraine, Lawton said.
“China has been the biggest issue in getting the products out. Supply is very tight. Planning six months in advance is no longer is a viable option. We need to define product priorities, align future orders with sales, and align marketing with supply.”
It will take another estimated six to eight weeks before goods will start being shipped out of Shanghai to the United States where they will arrive at the Long Beach and Los Angeles ports, Lawton said.
“Retailers need to diversify,” Lawton added. “We have moved 10 percent of our work out of China and moved it to Vietnam [where] things are moving more smoothly.”
Lawton emphasized that investment needs to be made in ports throughout the United States.
“Infrastructure in the United States has been lacking for decades,” Lawton said. “There are 378 ports throughout the United States, and some are in worse condition than in third-world countries.”
Despite all the recent challenges companies have faced, Tractor Supply’s sales have been up 52 percent in the last two years, Lawton said.
Tractor Supply is a large seller of gun safes, and sells more animal feed than anywhere in the country. All of the retailer’s animal feed is produced here, Lawton added.
Crate and Barrel chief operating and finance officer Kevin Sierks, who attended the conference, realizes he is not alone in facing supply chain issues and challenges in the retail industry.
Kiersk said challenges were mostly precipitated by the COVID-19 pandemic, but obstacles still are lingering for him and other household-name retailers such as Kohl’s, Tractor Supply, and Walmart.
“Coming here to this conference makes you feel like you’re in the same place as everyone else,” Sierks told The Epoch Times.
Chipotle Mexican Grill was fortunate through the pandemic shutdowns, said company executive vice president of supply chain Carlos Londono.
The restaurant chain didn’t experience any long-term shortages and it already had launched its online ordering app that caused sales to “skyrocket” during Covid, Londono said.
He stressed during his talkon Advanced Supply Chain Mechanics that it’s important to invest in technology and “know where your products are made and where they are coming from.”
Londono told The Epoch Times that although 85 percent of its restaurant equipment comes from China, most of its produce comes from North America, South America, and Central America.
Chipotle purchases 100 percent of its chicken in the United StatES, 50 percent of its beef from America, and the other 50 percent from Australia.
To maintain the freshness of its produce, Chipotle tries to focus on “local sourcing,” meaning it works with smaller farms within a 300-mile radius, many in California, Londono said.
Other issues have affected retailers since COVID-19.
Sierks recalled two other instances that affected Crate and Barrel’s supply chain—when a freeze happened in Texas in February 2021 and caused various machines that made foam for the upholstery to shut down.
Then, in March 2021, the Ever Given, a 1,300-foot-long shipping freighter got stuck sideways in the Suez Canal for six days, stopping freighter traffic in both directions.
“It’s been the perfect storm for the last two years,” Sierks said.
Eighty percent of the foam for its upholstery is made in the United States and most of Illinois-based Crate and Barrel’s foam comes from North Carolina, Sierks said. However, most of Crate and Barrel’s textile, hardwood, and electric products were made in China.
“The challenges we faced have caused us to diversify throughout Asia markets and looking at Mexico to be a supplier,” Sierks said. “We’re not looking to eliminate any one country from contributing to our supply chain, but we’re looking at ”near sourcing“ and better balance among our suppliers.”
“It’s not realistic to think that all of the manufacturing will come back to the United States,” Sierks added. “Finding balance is the important thing for retailers so you’re not depending on one supplier.”
