The Herman Trend Alert
June 8, 2022
Supply Chain Issues Revisited
Recently when I visited my favorite local supermarket, H-E-B, I felt like I had traveled back in time to the lockdown when there had been empty shelves. What's behind many of the current supply chain issues is not what you think. It's labor shortages---and much more. One of my sources for this Herman Trend Alert was the manager of my nearby H-E-B, Cory Wacker. An enlightened leader, Wacker is very concerned for the welfare of his employees or "partners," as the chain calls them. (More about that, later)
Shortages of Some Raw Materials
While some cooking oils, fertilizers and pesticides, semiconductors, aluminum, plastics, and building materials are expected to be in short supply throughout 2022, what's behind those shortages is more interesting. The lingering effects of COVID have hit the supply chain hard. From the food conglomerates like Conagra to the trucking companies to the supermarket chains, no one has been spared. Some employees continue to be affected by the ever-mutating variants and others have simply passed away. Looking into the other areas, including plastics, we discover that the changes in the climate that have affected areas where plants are located are another factor. Issues with COVID in China have wreaked havoc on the supply chain of building materials as well as semiconductors.
The Causes of Empty Supermarket Shelves
Given the reductions in staff in warehouses and among driver populations, it is not surprising that chains are choosing to eliminate the slower UPCs (Universal Product Codes). Sadly, some of the casualties have been some of my favorite products.
COVID and Inflation Hit H-E-B Partners and the Company Responded
Over the last three years, three times, the supermarket chain has tangibly expressed its appreciation for its partners. First, there was USD$200/partner bonus at holiday time; second was a post-COVID thank you of USD$500/person, and most recently, there was a USD$100 gift card giveaway that acknowledged the toll that inflation in housing, gas, and food is taking on their people. Some of the partners have experienced rent increases of USD$200 to 300/month, due to Austin, Texas' increased popularity.
Two Things Have Helped a Little
Because my H-E-B is located in an affluent area, they are able to successfully use a digital checkout system. Years ago, I forecasted that these systems would be the future of supermarket checkouts (See the Herman Trend Alert of September 5, 2000). Moreover, about 15 to 18 percent of this store's business is curbside pickup or delivery. The innovation used to accomplish the seamless and accurate pick and pack for these channels is that a small army of partners, each with their own zone, choose fresh produce, package goods, and frozen foods for 12 customers at a time. Then the orders are assembled in the e-commerce area and prepared for curbside pickup or delivery.
A Partner-Focused Company
Being privately held, H-E-B can do more for its employee partners and think more strategically. It came as no surprise to me that this Texas-based supermarket chain was ranked by Glassdoor as one of the best places to work in the state in 2021. When people exhibit any signs of burn out, first they are offered time off, while they are encouraged to access "partner guidance" to handle any mental health issues. As other companies have cut back on these services (as I detailed in last week's Herman Trend Alert), H-E-B has not. Though the company has not been able to hold their Partner Appreciation events due to COVID, it does many things to support its people. So that partners may plan their lives, management drafts schedules two weeks in advance. That may not see like much, but in Los Angeles, the branch bank employees do not know their schedules from one week to the next. (See next week's Herman Trend Alert for more details on these disruptions.) Finally, coverage on holidays is on a volunteer basis. And yes, employees who choose to serve on holidays are paid more. With high levels of tenure, checking the badges of most employees, it is rare to see an ID card with fewer than three years and most have more than five or ten.
An Enlightened Leader
Besides being highly focused on partner welfare and the partner experience, Wacker exhibits effective leadership in a few ways. First, he believes in LBWA (Leadership By Walking Around). His interactions with his people demonstrate that he really, cares about their welfare and that caring is reflected in the relatively low rates of employee turnover his store enjoys. Though even his store has been affected by The Great Resignation, Wacker currently has a full complement of partners (about 500) to serve his customers. It is leaders like Wacker and companies like H-E-B that give me hope for the future.
Next Week's Herman Trend Alert: Banking: An Industry in Upheaval
Digital banking has been a blessing and curse for the big banks. For individual consumers the phone apps and other technological advances like ATMs have been a godsend; for small businesses, not so much. Next week's Alert will talk about what's happening and what will happen in the banking sector and talk about what is really needed to fix the very poor experience that results when business people need to get almost anything done in a local branch.
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