In a catastrophic event such as an earthquake or other natural disaster, supply chain resilience for food is a matter of supply and delivery. We find that in U.S. cities, the grocery sector has the potential to be a robust partner in supplying the food needed to feed survivors. The key impediment in getting food to survivors, at least during the initial two to four weeks is the transportation to deliver the existing food supply.

Executive Summary

Catastrophic events involving dense urban areas—especially densities exceeding 3,000 people per square mile over a wide area—involve complex collections of socio- technical systems, including demand and supply networks. Any extreme, extended, and wide-area disruption of key supply chains poses an acute threat to dense populations. In effect, supply chain disruption can determine whether an event is “catastrophic” or not. Where supply chains persist, catastrophic consequence is unlikely. Where supply chains experience sustained failure, catastrophe is difficult to avoid.

Current public and private strategies for mitigation, response, and recovery do not adequately reflect supply chain dependencies, interdependencies, vulnerabilities, and potential opportunities for resilience in case of catastrophe. For dense populations under immediate threat, replacing broken supply chains is essentially impossible— the capacity required is beyond the capability of those outside the preexisting system; rather, quick recovery and agile redirection is needed. This is especially true for water, food, selected pharmaceuticals, and, often, medical goods. In catastrophic contexts, there is an urgent need for the operational recovery of these supply chains, or a post-disaster death toll will accelerate.

CNA funded this research and analysis out of recognition of the critical role that supply chains play in enabling effective response to and recovery from catastrophic events, and that non-resilience of supply chains has too often been a weakness in preparedness efforts. CNA is a not-for-profit institution with more than 15 years of experience working in homeland security, emergency management, and national preparedness. From this body of experience, CNA recognizes that supply chain resilience is critical to effective response to and recovery from catastrophic events.

Grocery supply chain resilience

This study focuses on food and, more specifically, on groceries. In most urban areas, approximately half of all calories are consumed at home. These calories are mostly supplied by the grocery industry.

The National Research Council has characterized the United States food system as a complex, adaptive system:

The food system is composed of a variety of actors, including human actors…institutions…and organisms. The decentralized behavior and interaction of these actors shapes and modifies the food system; at the same time, actors respond and adapt to changes in the system around them… Multiple interacting mechanisms across levels of scale can lead to interdependence among actors, sectors, or factors. Feedback loops can also arise… The presence of feedback, interdependence, and adaptation can produce dynamics in the food system with characteristics such as nonlinearity (a small change yielding a large effect), path dependence (dynamics strongly shaped by early events), and resilience (the ability to bounce back after a shock to the system).

As an important part of this system, grocery demand and supply reflect significant resilience and the potential for catastrophic cascades. So, the question remains: How can resilience be enhanced and catastrophe avoided?

Logistics for natural disasters and other catastrophes

The traditional public-sector strategy for disaster logistics has been to fill gaps with replacement supplies. This is helpful in signaling social solidarity and giving preexisting supply networks more time and space to adapt to post-disaster conditions. However, these gap-filling resources are much less than what is needed to meet preexisting capacities.

Recognizing that traditional approaches can be insufficient during response to a catastrophe, some have suggested enhancing capacity through public-sector procurement of Vendor-Managed Inventory (VMI) for disaster response. This approach is designed to integrate the public sector’s need to prepare for low- frequency, high-consequence events with private-sector capabilities in sourcing, flow management, and delivery. Products that are appropriate for survival in the aftermath of an extreme event—and for which there is already significant market demand—can be made "surge-ready" through specific public-sector procurements.

However, to date, VMI has not been a significant aspect of federal preparedness efforts. This study considers the plausibility and feasibility of such an approach for shelf-stable food. If feasible, several benefits could emerge:

• Substantial crisis-contingent resources could be maintained in a way that avoids expiration.
• Because such resources are maintained within the preexisting supply chain, they would (if surviving the event) be immediately present in the impact area and, potentially, accessible to survivors, even in the case of no-notice disasters.
• Planning for and exercising crisis-contingent VMI should enhance the likelihood of effective private-public collaboration in the aftermath of a catastrophic event.
• Implementing VMI could generate fiscal savings in comparison with current practices in disaster logistics.

In a surprising discovery, this study finds that plus-up procurements by the public sector are not needed. Sufficient supplies of shelf-stable products already exist in the commercial grocery supply chain. The problem is not a matter of supply, but one of delivery to survivors following a catastrophic event.

Sufficient Supplies

Grocery inventories at the store level have narrowed over the last 50 years. A much- tighter match exists between near-term demand and available supply at most retail locations, reflecting “Just-In-Time” supply chain disciplines. However, significant inventories (especially of shelf-stable products) exist at the distribution level. The price advantage of volume purchases, among other factors, continues to result in some “warehousing” of products, particularly shelf-stable ones. Of even greater impact is the velocity of demand for many popular shelf-stable products during a crisis, such as peanut butter, canned tuna, and ramen noodles. High demand in dense urban areas requires the staging of significant supplies. Turnover can be quick, but density of flow reflects density of demand. Figure 1 reflects total shelf-stable products on hand in one U.S. Metropolitan Statistical Area (top bar) against what that jurisdiction has projected as being needed to serve 300,000 displaced persons per day in a worst-case natural disaster.

Difficulties of Delivering Food after a Disaster

Given the ongoing level of consumer demand for over 2,000 shelf-stable products, this study found that in most urban markets, on-hand supplies of shelf-stable products far exceed the projected needs of displaced populations in even the most extreme maximum-of-maximum scenarios. However, it is entirely possible that this supply will be trapped in distribution centers and remain undelivered to survivors.

Several sources of concern emerge when considering the provision of supplies to survivors, including:

• Survival of specific products following a disaster in the region;
• Survival of the distribution center and its functionality;
• Accessibility to and from a distribution center;
• Capability to support packaging and allocation of products;
• Availability of trucks, drivers, and fuel;
• Accessibility to survivors; and
• Resupply of distribution centers.

In some cases, it could be helpful for the federal government (or state or local governmental entity) to become a buyer of last-resort supplies that are available, but for which grocery distributors no longer have commercial customers and/or the capability to deliver during a disaster.

In any case, the crucial problem to be solved in the initial days following a catastrophic event is not insufficient supply of shelf-stable products, but capability to deliver this supply to survivors. These survivors include both those who remain in their homes and displaced populations.

Given the abundance of supply and impediments to delivery, further attention should be given to issues of allocation, transportation, and emergency contracting with non-traditional sources of supply for disaster response.