Monday, October 4, 2021

Supply Chains before our very Eyes

 When I first came to New York, a period coinciding with being time rich for the first time in my life, I drifted into a pleasant morning routine. On days when I needed to shop for groceries I would arrive soon after the store opened, to marvel at how short the lines were and how quickly I could complete my chore. Even now I pity the poor souls obliged to shop at these establishments at weekends, when the line can snake half way around the store.

 

There was a bit of a contradiction in having completed the chore quickly and efficiently, because in my new life I had no particular need to have done that, since the rest of a lazy day loomed ahead. So I would reward myself by visiting Panera bread for a relaxed café latte and a bagel. Over time, I continued my habit of rapid early shopping, but usually dispensed with Panera, mainly because I linked my consumption there with my expanding waistline. First the bagel had to go, and then I resolved to drink but one coffee per day, and, once our home espresso machine became as good as Panera’s, I reverted to drinking it at home.

 

There are two Paneras near me, one situated above Costco and the other close to Trader Joe’s. I became used to observing my surroundings. I concluded that both branches were well managed, with happy and efficient staff. From my years of experience working with petrol stations, I knew the signs to look for, and both Paneras scored high marks. They each had their distinctive morning clientele, and they were well set up to serve them, knowing the products to have in stock and the number of staff to have on hand to avoid long wait times.

 

This changed suddenly with the onset of the pandemic. I recall visiting a different Panera on Long Island early on, and wondering if nuclear Armageddon had arrived such was the atmosphere in the deserted café. Panera is exactly the sort of establishment that people cut completely from their routine, never being necessary and being rather heavy in human contact. The cafés stayed open, to their credit, but must have lost a lot of money for franchisees and the host brand.

 

Last week I found myself in Panera once again. My new habit has been to shop during the special senior early opening hours that both Costco and Trader Joe’s started, now with the added benefit that avoiding crowds might save me from a deadly disease. But, reasonably enough, as things are returning to normal, both chains are gradually eliminating this perk for seniors. I can only imagine that in 2020 the local budgets were so completely shot to pieces that some extra costs seemed to make little difference, but now as 2021 progresses budgetary pressures make sense once again.

 

So I was caught out, arriving at Costco soon after nine to find the place closed and finding I had an hour to fill. I did not have my newspaper with me, but, even so, a nostalgic visit to Panera beckoned invitingly.

 

But what a sad experience was awaiting me! The tables, closed off during most of the pandemic, lay open and inviting, but in the end I no need to regret leaving my newspaper at home because I never made it into the sanctuary of the table area. Instead, life became clogged up in the service area.

 

Queuing to order in Panera has become progressively more annoying over the years as the chain has sought to enter the digital age. Before there was a single line of people placing orders, so a good manager ensured enough staff and the wait was predictable. Then they introduced computer screens for some to place orders, which seemed to increase waiting times for traditional folk like me. But then they introduced an app so people could order remotely and, worse, those orders seemed to take priority over we luddites. So now we wait longer to order and have to wait even longer for our order to be prepared.

 

I could accept that before the pandemic, but not last week. I reached the front of the ordering line quickly enough, but could already see computer screen listing six or eight orders as under preparation. I ordered my latte and found a quiet part of the collection area, expecting a long wait. But clearly the servers were unable to process orders as quickly as they were arriving, no doubt many from the dreaded app, and the list of orders under preparation grew longer and longer. I did finally reach the top of the list, but by then I counted sixteen items beneath mine.

 

Through the pandemic I have found that most people find it relatively easy to remember to keep apart from each other. However, I have noticed two exceptions. When people are drunk or angry all concepts of social distancing are forgotten. I am not pointing fingers here – I am as guilty as anybody else.

 

The waiting area in Panera proved an instructive example. As the number of people waiting for their order increased, it became harder to stay apart. But we would have managed, except for the fact that many of the people were getting angry at the long wait. They pushed to the front, regardless of who else might be there, and started remonstrating with the poor servers, serving only to confuse and delay things further. Once I finally had my latte in hand, I departed the store as quickly as possible and drunk it after joining the growing line downstairs waiting for Costco to open.

 

Those minutes in line allowed me to think about what I had just experienced, and I found it a microcosm of the difficulties facing the world economy just now. We hear on the news about supply chain issues bedevilling many sectors, but sometimes it is not easy to bring these down to an understandable level.

 

The key concept is predictability. Twenty years ago I was presented a computer system that was to be linked to all the larger Shell shops in the world and could be used to manage inventory and staffing. By using the past as a guide for strong confidence intervals for the future, the system would drive out costs. I am delighted we did not buy it at the time because the technology was not mature enough, but now this is how most retail businesses function, including Panera.

 

By the pandemic threw it all into chaos. The algorithm kept guessing how many people like me would show up at which hours on Wednesday mornings and what sort of products they would buy, but suddenly the guesses became so poor as to be useless. Inventory piled up before recovering too slowly once customers started returning. Staffing models led to surpluses then shortages.

 

I expect my two franchisees will have lost a lot of money, unless Panera bailed them out. Probably they surrendered their agreements and Panera found it hard to recruit replacements, perhaps falling back on existing franchisees taking on extra outlets and appointing managers. These people did not have the skills, training or motivation, just at the moment when smart overriding of the algorithms became vital. Everything fell apart. I witnessed the result during my sad visit.

 

Even when the need for extra staff will have been correctly analysed, fewer people wanted to work in a customer-facing environment doing hours that conflicted with childcare needs. Maybe some no longer needed extra hustles while federal money was swelling their bank accounts, and others had left New York completely to save rent by staying upstate with their parents.

 

So the result was plain to witness, even in a relatively simple business like a branch of Panera. Now multiply that by hundreds or thousands or even millions, add in complexities like shipping and international duties (not to mention Brexit, you poor Brits), and, rather than being bemused at how things are collapsing, instead we should marvel that anything is functioning at all.

 

Old-fashioned sorts will hark back to days before predictive algorithms. I find it more comforting to be impressed by what those algorithms can achieve nowadays in normal times, and continuing to hope that those normal times might resume. Heck, then I might even reinstate my luxurious morning routines. 

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