WASHINGTON -- The Grocery Manufacturers of America and the Food Marketing Institute, both headquartered here, have released a report on year-2000 contingency planning for retailers and their trading partners.
"Supermarket retailers have a long history of working very closely with our trading partners across the supply chain to overcome short- and long-term problems," noted Timothy Hammonds, FMI president and chief executive officer. "Meeting challenges associated with Y2K is no exception, and we are encouraged to see the ongoing dialogue taking place between retailers and their suppliers to tackle this issue."
The study recommends a cross-functional contingency trading partner team, which should include information systems staff. However, the report cautioned that the IT staff should not make up the majority of the team members. "Team members from different functional areas should concentrate on the trading partners aligned to their own department in developing the plan. For example, merchandising should deal with suppliers, while the distribution center should concentrate on transportation providers," the report stated.
Some of the key issues addressed in the report center around demand planning and procurement. Some issues to be addressed include trying to determine which items consumers will stockpile. Also at issue is how the holidays, coupled with Y2K stockpiling, will affect the supply chain.
Retailers should consider if contingency plans are necessary with all trading partners, or just high-priority and high-risk partners. Volume should not be the only criteria for designating high-priority partners. The complexity of services provided and the level of difficulty in finding an alternative source should also be considered.
Retailers and trading partners also need to discuss where excess inventory will be stored and how excess inventory will be handled after Jan. 1, 2000.
Customer service and order management are also areas that need to be addressed by the retailer and suppliers. There need to be some manual alternatives if electronic data interchange systems are not functioning properly.
Sales and merchandising strategies also need to be shared in an effort to minimize the effect of the Y2K bug, according to the report. Advertising and promotion plans may need to be adjusted to stabilize demand. New product introductions also need to be closely coordinated during December and January, because systems along the entire supply chain could be affected.