Where's the Beef? How COVID-19 Has Disrupted the U.S. Supply Chain
“Where’s the beef?” asked that iconic 1984 Wendy’s commercial. Thirty-six years after the launch of this advertising campaign, American consumers are not just asking where the beef went but also what happened to t their toilet paper, cookies, milk, cheese, cleaning detergents and almost everything we have taken for granted would just be an easy trip to the store. What happened seems to be a topic of hot debate on social media with keyboard warriors claiming every conspiracy under the sun from “the Commies are taking over” to “The New World Order is trying to starve us out.” The answer to what happened to the lack of food and goods in America’s grocery stores during the COVID-19 pandemic is much simpler. The virus, and more notably, the US response to it, stressed our supply chain to the point where it broke. This blog will use the meat packing industry as an example of how easily the factory based, lean supply chain model preferred in the US can easily lead to disaster if disrupted.
Prior to the 1980’s meat packing was provided by small family owned shops that were close to the stockyards and found on major railway nodes. The largest meat packing centers in the US were Chicago, Kansas City, Omaha, St. Louis, and New York City. [1] Around 1980 a shift in supply chain management happened. Now retailers were expecting the processors to complete the breakdown of the meat, pack, and ship in more ready to use formats. Traditional processors did not have the funds, or the space, to keep up with this new type of supply chain and were eventually made obsolete. What took their place was processors that prepped the carcass, broke it down, and would ship what was needed throughout country. Where a small family operation could handle between 500-1000 carcasses per day, large processors can handle between 2000-6000 per day with as many as 20,000 per day running double shifts.[2] This moved the meat processor out of the cities and into rural lands. These centralized, larger companies also streamlined processes and removed 45% of the meat packing jobs from the US between 1959 and 1985.
Like most supply chains in the US, the meat industry runs on a lean supply chain model. This system cuts redundancy and limits inventory to the lowest levels possible. In theory, a lean supply chain would get fresher food to people faster and at lower cost. However, as we have seen with COVID-19, the lack of redundancy and inventory, coupled with the precision and timing of the industry, can cause massive disruptions in the entire chain if just one part goes down. In the case of the meat industry, the few, but large, processors are the bottleneck. If more than one large processor goes down, the whole system fails. And here we are… there are reports of farmers slaughtering animals that Americans would love to eat; if only there were some way to get them to the table, or at least, store them until the processors can reopen. There is just no way to get the meat to the consumer without the processors. Farms get overrun with animals while consumers see a lack of food available. Unfortunately, our whole economic system, not just our food processors, has been reconfigured to minimize storage and run as lean as possible. The meat packing industry is just one example of hundreds of industries where we are seeing systemic failure. [3]
Even if we had COVID-19 under control at this point, which we most certainly do not, it would take months for our supply chain to heal and things to get back to normal. The American Dream is built on making things bigger, faster, and cheaper. While this model has worked for almost 40 years, the pandemic has forced us to acknowledge the weaknesses inherent to the lean supply chain. Now the question is, are Americans willing to pay higher prices for items in order for us to go back to a system of smaller operation, redundancy, and robust inventory control so we never suffer the almost crippling disruption in our foods and goods again.
[1] Recent changes in the structure and location of the US meatpacking industry. Michael J. Broadway and Terry Ward. Geography. Vol. 75, No. 1 (January 1990), pp. 76-79
[2] Temple Grandin: Big Meat Supply Chains Are Fragile. https://www.forbes.com/sites/templegrandin/2020/05/03/temple-grandin-big-meat-supply-chains-are-fragile/#31a78fc9650c
[3] America’s coming meat shortage shows how vulnerable all of our supply chains are. https://www.washingtonpost.com/opinions/we-cannot-fix-the-flaws-in-our-supply-chains-with-an-executive-order/2020/04/29/6edab7dc-8a51-11ea-9dfd-990f9dcc71fc_story.html
