Omicron outbreak: Gloom looms over capabilities of NZs grocery supply chains

Supermarkets are said to be scrambling to regain control of their supply chains as shoppers clear shelves of staples as Omicron spreads in the community.

Ahead of the country’s shift back to the red Covid setting, supermarkets around the country have faced emptying aisles of toilet paper and baking supplies, among other goods.

Signs at some Countdown stores warn of meat shortages and item limits per shopper have been reinstated, while click and collect shopping slots have become scarce and online orders for home delivery delayed.

As supermarkets move to reassure customers that they have enough stock to go around and that supply won’t run dry, experts say panic-buying is just the start of stock troubles.

Insiders say real issues could be realised if cases numbers of the highly transmissable Omicron Covid-19 strain soar to highs recorded across Australia and Europe.

Katherine Rich, chief executive of New Zealand’s Food & Grocery Council, said she was concerned about shortcomings behind the scenes of the supply chain and the knock-on effects for keeping staple foods on shelves.

“On the surface of it, it looks like panic buying, but actually that’s only a small sub-set,” Rich told the Herald.

“When we’ve spoken about shortages [in the past], I recall previous commentary where I’ve talked about the robustness and resilience of the supply chain, but I’m at a stage where I’m very concerned about it.”

Rich is concerned that there could be a breakdown within the supply chain, with Covid affecting workers across all key areas, including manufacturing, distribution, dispatch and logistics, which could result in continuing shortages at the shops.

She told the Herald there was a strong likelihood that the supply chain could become weakened due to possible “high absenteeism” of workers as they fall ill with the virus.

Across the ditch in Australia, this had already played out, resulting in widespread stock issues across a range of staple grocery items at mainstream supermarkets, she said.

“Amongst our membership we’re calling it ‘Operation Do Your Best’.

“We’re moving to a position where we have to be realistic.”

Factory closures were inevitable, if current Government framework and stand-down periods for close contacts of Covid-positive cases were not reviewed by officials, she said.

The current stand-down isolation period for a close contact of a Covid-infected person is 10 days. This has recently been reduced in Australia.

“If you’ve stood down distribution, logistics, freight, manufacturing and merchandising people, it is not long before parts of the supply chain network break down.”

Rich said some New Zealand Food & Grocery Council members had already been dealing with staff absenteeism in excessive of 20 per cent – this was even before the Omicron variant of the virus spread in the community.

She urged the Government to review current stand-down periods for close contacts, the definition of a close contact and enable businesses to readily access rapid antigen testing to ensure New Zealand’s food and grocery supply chains continued to operate seamlessly through the next wave of the pandemic.

Retail NZ chief executive confirmed Greg Harford supermarkets were grappling with “pressures in the supply chain” as customers stockpiled groceries. This had put “real pressure” on some supermarkets, because they could not keep up with demand from customers, he said.

Despite a busy couple of days pending changes in traffic light settings, the supermarkets appear upbeat about their supply chain capabilities.

Kiri Hannifin, director of corporate affairs, safety and sustainability at Countdown, said Omicron was likely to “throw a few more challenges” but she was confident in its supply chain capabilities.

“We’ve been able to learn a lot from our previous experience in these situations and, while Omicron is likely to throw a few more challenges our way, we’re working closely with our suppliers and supply chain partners right across our supply chain – from our growers and food manufacturers through to our transport and logistics partners, distribution centres
and store network – to ensure we are prepared and can keep as much stock flowing onto shelves as possible over the coming weeks,” Hannifin said.

“Other than the ongoing global supply chain issues due to the impacts of Covid-19,
our stores are in good shape at the moment and we don’t currently have any limits in place.”

Emma Wooster, corporate affairs manager at Foodstuffs NZ, the owner of Pak’nSave, New World and Four Squares, said its teams had been actively preparing for Omicron and building stock levels in anticipation of a move to the red setting.

“We have enough for everyone as long as we all shop normally, there is no need to stock up, even if preparing to self-isolate,” Wooster said in a statement.

“Gaps on the shelves and queues at the supermarket can be caused by buying more than is needed. Over the last couple of years, we’ve proved our fully integrated supply chain is extremely robust and our buying and supply chain teams will ensure there is enough for everyone, as long as we continue to #shopnormal,” she said.

Harford believes it will become common to see shelves empty more often in the months ahead as Omicron spreads further into the community. The coronavirus pandemic had, he said, for the past two years impacted the flow of product into New Zealand, and some supply chains overseas and locally were “starting to creak”.

“The big issue is going to be people not being able to be at work rather than goods not being available.

“As workers become sick it is going to become more challenging to keep the shelves stocked.”

Source: Read Full Article