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When the coronavirus (COVID-19) pandemic hit the UK, operations management came under duress. Panic buying led to empty shelves, stressed shop workers, and a population that questioned whether it would ever see toilet roll again.
Overnight the means by which we bought and consumed food shifted from a split of supermarkets, restaurants, takeaways, and hotels, to almost entirely supermarkets, alongside an array of delivery drivers rushed off their feet to feed a nation.
Why coronavirus panic buying created an operational nightmare for supermarkets
Though the amount of food we consume didn't change in that time, the demand surged.
Andrew Parker, a module leader on the University of Birmingham Business School’s Online MBA and the director of online content for both the Online MBA and distance learning MSc Interantional Business at the school, says it’s the kind of scenario that’s impossible to plan for from an operational point of view.
“That over stresses the system, both within the store and the supply of products to the store,” Andrew (pictured right) explains. “If you look at the supply that comes mainly from massive warehouses and distribution centers that feed into supermarkets and small stores.
“They’ve effectively been set up since time began with a certain amount of capacity, in terms of logistics, trucks, and people. Any kind of chain like that would have flexibility in it if, say 1,000 tons rose to 1,100 tons, maybe 1,200.”
But not when it reaches a surge in demand that was seen at the break of March, when the panic buying set in. Whereas before people might go to the supermarket once per week, individuals were going day after day—a consequence of not finding the products they were after the day before.
In the UK, BusinessInsider reported that British supermarkets brought in a record $13.25 billion in March 2020, and sales were up the four weeks to March 22nd by 20.6%.
On top of a surge in sales, the social distancing measures brought in by governments worldwide meant that the physical space a supermarket has was squeezed, as people suddenly had to be at least two meters apart.
That, explains Andrew, means they were dealing with operational stress that went from “nothing to a total explosion in two weeks.”
Can supermarkets prepare for this type of crisis?
Essentially, supermarkets can’t prepare for this kind of crisis. Although, as Andrew points out, there will be the capacity to deal with a temporary surge in demand around Christmas, or Easter, the demand increases brought about by the coronavirus (COVID-19) pandemic is something that can’t be planned for.
If you were in charge of operational contingency planning at Tesco, Sainsburys, or Aldi, for example, and went to your boss and said, ‘I have this contingency plan in case there’s a one in a billion chance we might have a virus in next few weeks, so I propose we double our inventory and hire 10,000 more people and change the layout of our supermarket,’ they might look at you as if you’ve lost your marbles.
“I don’t think you can plan for something like this, as no one would ever approve it or invest as much in it just because we might need it,” says Andrew.
He thinks that we may see a similar pattern when government’s give the green light for people to revert back to some degree of normality. “You might find initially there is another mini rush to the supermarkets or clothes shops because people think, quick I’ve got to get everything now while it’s open, before it closes again—it might actually get worse yet, who knows.
“Releasing us from this control, coming down the curve, is more of an operational challenge from what we’ve done so far.”
What impact will this have on the Online MBA at Birmingham Business School?
On the operations management module on the Online MBA, students talk about demand changes and inventory management, and are asked to solve a business case for a growing company facing an increase in demand.
They stress test the business and, Andrew points out, use a lot of management theory that could be adapted for the coronavirus pandemic.
The Online MBA at Birmingham Business School is also positioned as a leader in responsible management.
So, how does that apply to the coronavirus pandemic?
“Nothing has changed apart from the size of the problem, so every responsible leader now has to make sure their people are safe, they have the right working conditions, are paid fairly, and look after the customers who come onto the premises.
“There is a conundrum here for the individual leader. You’ve got to keep your people safe more so than ever but you can’t have a viable business operating at a loss—that trade-off is what every business will have to go through.”