Next Thursday is Thanksgiving, which is a time for FFFTT – family, friends, football, thankfulness, and turkey. Thanksgiving is also a time for supply chain headaches. The holiday is centered around the big family meal, and the food and non-food supply chain tied to that meal is complex. There are a number complexities associated with these supply chains. Let’s examine some of them.
Feast Supply Chain Headaches
For the third year, LendEDU, an online marketplace for financial products, has conducted a survey to examine Thanksgiving spending. The average American plans to spend about $185 on Thanksgiving, up about 6 percent from last year. The bulk of that $185 (about 82 percent) will be spent on food, drink, and other costs associated with the feast. The main item at the feast is the turkey. Americans consume more than 50 million turkeys over Thanksgiving weekend, which amounts to more than $1 billion spent on the birds. The turkey supply chain can be a complicated one.
For retailers, the holiday shopping season started long ago. Imports at West Coast ports soared through the summer, especially as retailers tried to stockpile goods before new tariffs came into play. While China is not a big exporter of food to the US, it does produce many consumer goods – from table clothes to cutlery – that are used at Thanksgiving. Getting all these goods into distribution centers and warehouses in time for the holiday rush is a constant struggle for supply chain executives. This season it was particularly was tough for retailers to balance the need for holiday items with the need for other seasonal items.
Retailers plan up to 6 months in advance to ensure they have all the birds they need in stock come Thanksgiving. This requires contracts, transportation, and deliveries from both large-scale turkey producers (think the Butterballs, Jennie-Os, and Perdues of the world) as well as local turkey farms. Retailers also need to balance the two varieties of birds: frozen and fresh. Frozen turkeys account for roughly 90 percent of Thanksgiving sales. These turkeys can be bred, slaughtered, and frozen year-round, which helps ease the demand fluctuations.
Fresh turkeys, which make up the remaining 10 percent of turkeys, take more planning. Producers need to ensure that eggs laid in the spring are incubated properly, and the turkeys are given adequate time on the farm before being sent to slaughter. This way, producers can deliver fresh turkeys to retailers just in time for Thanksgiving sales.
A popular Thanksgiving dish is the pumpkin pie. In fact, some estimates put the number of pumpkin pies consumed during the holiday at 50 million+, making it as popular as turkey. The fall is certainly the season for pumpkin – from Halloween jack o’lanterns and pumpkin spice everything (coffee, beer, muffins, etc.), to the dessert mainstay the pumpkin pie. The sheer volume of pumpkins sold between Halloween and Thanksgiving is mind-numbing. And pumpkin farms need to balance demand over the course of the two months. There are clearly two avenues for pumpkins – fresh, full pumpkins and pumpkins sold to manufacturers to be pureed and canned. But the volume of pumpkin products sold makes this supply chain daunting as well.
Whether it is fresh turkeys or frozen, retailers perform better if they have an integrated business planning process in place. This process needs to make sure that in addition to have enough turkeys to satisfy projected demand for both the turkeys and the market basket of goods typically purchased with the turkeys (dressing, instant gravy, etc.), that there will be enough space to store the turkeys in the retail warehouses, enough workers in the warehouse to handle peak demand, and if they control inbound freight, enough transportation capacity to get the turkeys to their distribution centers. Refrigerated trucking becomes scarce this time of year. Forecasts of what will be needed must be shared with carriers and shippers may need to pay extra to lock up surge transportation capacity.
A similar sort of labor and capacity planning analysis that is done for inbounds shipments to retail warehouses, also needs to be done for goods that move between the retail distribution center and the store. The stores too, must insure they will have enough workers to unload the trucks at the store dock, and labor to move the goods from the back room to the shelf on an ongoing basis. If a shopper does not see a turkey in the cooler, the retailer risks losing not just the sale of the turkey, but the sale of all the associated market basket of Thanksgiving items.
Turkeys and Social Responsibility
Consumers have shown an interest in better understanding where their food is coming from and whether the animals were treated humanely. Turkey producers have turned to technology to answer this call. Jennie-O, a subsidiary of Hormel Foods Corp. and the nation’s second-largest turkey brand, uses labels that help to provide traceability for its birds. The label includes a code that can be entered on the Jennie-O website, which will give the customer the region of the farm. Cargill, the third largest turkey provider, has turned to blockchain for improved traceability. This gives consumers more detailed information about the origin of their bird, such as the exact name and location of the farm. Aside from the name and location of the farm, consumers immediately receive any images and other information that the producer wants to share.
In many parts of the US, it is possible to source locally raised turkeys. Where I live, until a few years ago, it was possible to buy birds ethically raised right in town. Compare this 15-minute trip from a local poultry farm to factory-farm turkeys that are raised in big poultry producing states like Arkansas, Missouri, and Minnesota. Those factory-farm turkeys often travel 1500 to 2500 miles to cover the population centers on the East and West Coasts.
Final Thought
The Thanksgiving supply chain is vast and complex. Preparing for the actual Thanksgiving feast takes up a lot of time, money, and resources. And the supply chain efforts required to ensure that all your favorites are available is no easy task. Thanksgiving also kicks off the busiest retail season of the year, as retailers put their months-long plans into action to handle the influx of shoppers. I think it is safe to say that Thanksgiving indeed causes headaches and lost sleep for supply chain executives. But Americans love this holiday. While we give thanks this Holiday, let’s not forget all those that work in the Thanksgiving supply chain.
And, I would like to thank Chris Cunnane who was the lead author of this article.
Recent Comments