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Grocery bill format in word for Logistics

This video was made possible by CuriosityStream. Sign up for the CuriosityStream/Nebula bundle deal to watch the extended cut of this video with everything we cut for time at CuriosityStream.com/Wendover. Supermarkets are a marvel obscured by banality. Nearly everyone in the developed world uses them regularly, so we have no basis of comparison—we just don’t know a world without supermarkets. We don’t know how it was a century ago, when grocery stores took the form of small storefronts, found every few blocks throughout towns and cities. You’d hand the clerk a list indicating you wanted, among other things, apples. They’d then gather you apples—assuming they were in season and in stock. Nowadays, however, you are confronted by an aisle rivaling the size of those historic grocery stores, displaying a tantalizing, sprawling selection of Honeycrips, Fujis, Granny Smiths, Galas, Braeburns, and more—all the varieties, always in stock, all year long. They sit next to pineapples from Costa Rica, avocados from Mexico, and mangos from Brazil. Further on, there’s beef from an entirely different hemisphere, and fish that was alive in an ocean thousands of miles away just days ago. A century ago, you could certainly buy a jar of peanut butter, but now, you can buy regular peanut butter, or chunky peanut butter, or smooth peanut butter, or organic peanut butter—and it doesn’t stop there. You can get the chunky Jif brand, or the chunky Smucker’s brand, or the Skippy brand, the store brand, or one of so many more. You have dozens upon dozens of choices of peanut butter, dozens of choices of other nut butter, dozens of choices of other sandwich spreads, and all of that is just one part of one aisle. Put together, the stability and variety of choice in modern supermarkets is incredible. In big cities and small towns alike, American supermarkets offer an average of some 30,000 different product choices which stay in-stock about 92% of the time. While the concept of the modern supermarket first appeared in the US, it's since proliferated across the entire developed world. The fact that this has become not only normal, but expected globally is the greatest indicator of the robustness of the modern global supply chain, but that’s not to say that it’s easy. For consumers, it’s simple—we can get everything we want, anytime, from a single store—but the complexity behind that is truly stunning. This is a typical American supermarket—a City Market brand store in Glenwood Springs, Colorado. While this brand is small, it’s part of the larger King Soopers brand, which itself is part of Kroger’s—the largest American supermarket company. The entire American supermarket landscape is incredibly consolidated, with the top four companies holding 45% of the market, which certainly has massively negative consequences, but this market concentration has led to the huge scale and complexity of our current food supply chain. Even independent grocers now tend to rely on gigantic cooperatives to amass buying power and supply their shelves, so industry-wide, scale and complexity is the norm. Now, supermarkets like this are involved with a perpetual balancing act. Keeping items in stock is of paramount financial concern—research into the matter has found that on the third instance of a desired item being out of stock, consumers will go to an alternate store 70% of the time. Being located just five minutes from a Walmart, this store can’t afford to go out of stock of a single item, push a customer to a competitor, and lose out on thousands of dollars in annual sales because they decide they like Walmart more. Therefore, the task is to keep everything in stock as much as possible, while having as little extra product as possible. So, the way this Glenwood Springs City Market, along with essentially any grocery store, keeps those 30,000 products continuously on its shelves is simple, at least on the surface. You see, every item in a supermarket is labeled with a barcode—usually that code is standardized industry-wide, except with some white-label products. When products arrive at the store, they are checked in to its inventory management software. From there, it’s simple math—as products are checked out and paid for, they’re subtracted from the inventory count, and as that count gets low, the store knows it’s time to reorder. It’s a straightforward concept—except when you actually implement it in the real world. There’s more than one way a product can leave a store—it can get stolen, go bad, get damaged, or more. That means there’s always a slight disparity between how many items there are on paper, and in reality. Inventory management software can account for some of that, assuming employees feed it accurate data, but stores also conduct a manual count every month or two to determine the actual disparity. This is most important for financial reporting reasons—the retailer can’t know how profitable it actually is until it knows how much product it lost—but it can also be used to tell the inventory management software how much it’s typically off, and correct for that in the future to make sure re-orders happen on time. Then, there are other factors. For example, if a supermarket runs a sale on a given item, that product will likely sell more, so inventory management software needs to account for that in its ordering process to make sure that it correspondently ramps inventory up. Then, incoming unseasonably warm weather could mean that barbecue charcoal sales, for example, are about to increase, while hot chocolate sales will decrease, so more complex inventory management software can account for external factors like these and make ordering decisions based upon them. Now, some products are simple to keep in stock. Oreos, for example, have a long shelf live and come from a massive manufacturer with multiple production facilities spread out across the world. There’s plenty of slack and flexibility in that system. That’s not the case with all foods. Take, for example, grapes. Table grapes are quite difficult to keep in stock. If there’s a sudden surge in demand for grapes, you can’t just order more from the factory—their global inventory levels are essentially decided years before as growers decide whether to add or subtract vines from their vineyards. What’s more, grapes are highly seasonal. They don’t ripen off the vine, so they have to be picked exactly when they’re best for eating—effectively meaning growers have a one or two week window to get a given vineyard harvested. Of course, grapes are found in grocery stores for far more than two weeks a year—in fact they’re almost always available. What makes that possible is a massive production cycle spanning across the entire western hemisphere. Now, the easy part of the year for the Glenwood Springs City Market to get its grapes is late summer. That’s because California’s central valley, where the vast majority of the country’s grapes are grown, has its natural harvest season between mid-August and late-September. That’s extended earlier into July by “ultra-early season” varieties of grapes, such as Sharada UA, and then later into November by late-season varieties such as the “autumn king.” Therefore, there’s about a four-month window when the entire country’s grape supply is largely fulfilled by California. Once that ends, though, things get trickier, but the industry has learned to take advantage of global climate patterns. Peru, thanks to its fairly equatorial climate, begins its harvest just when California’s ends, early-December, and saturates the market until mid-February, when Chile, with its more seasonal climate, takes over. They essentially act as the southern-hemisphere equivalent of California, also using early and late season varieties to stretch their massive harvest all the way until May. Next, California’s Imperial and Coachella valleys, as well as various locations in Mexico, fire-up their harvests. These areas have year-round warm weather that allows for a year-round growing season, but time their vineyards specifically to line up with this gap in the market until mid-July, when California’s more seasonal Central Valley begins its harvest—starting the cycle once again. While the overall path a given food product takes varies dramatically, the one constant is that every item that ends up on the Glenwood Springs City Market’s shelves comes via here—the distribution center. Now, how distribution centers work on the surface level is fairly standard—they bring in pallets of a single product, break them down to the box level, and create pallets with smaller quantities of everything a store needs. How each distribution center accomplishes that, however, differs. Kroger’s Aurora facility, operated by a company called Windigo Logistics, uses a fairly high degree of automation. Trucks arrive from all across North America, delivering pallets worth of product from Kroger’s different vendors. For example, a truck might arrive from Nabisco’s plant in Chicago carrying pallets worth of Oreos. These pallets are immediately placed on an induction conveyor belt, where a scanner determines what they actually are. With that information, the warehousing software determines whether it thinks it will need more Oreos in its system in the next three days, or later. If the answer’s later, the pallets just make a quick stop at a pallet exchanger machine, which swaps each onto a fresh storage pallet, before the conveyor belts take them to an automated longer-term storage system in a separate part of the warehouse. If one pallet worth of Oreos is needed sooner, though, it will go to a de-palletizing machine, which breaks them down to the box level, each of which carries dozens of units of the actual product. Those boxes are injected into a network of conveyor belts, which takes them to a machine that places each onto an individual tray. That tray is then automatically stored somewhere in a cavernous hall of shelving—essentially, a massive vending machine. Sometime in the next three days, some King Soopers or City Market store will place a re-order, indicating that they need Oreos, and so the warehousing software will automatically remove some trays of Oreos from the shelving and place them on another conveyor belt, which will take them to a smaller automated shelving system closer to the palletizing area, which acts as interim storage, keeping items no more than a few hours. Then, when it comes time to build an actual pallet worth of product for a given store, the trays are removed from the shelving in a specific order. You see, the system knows the composition of the shelves of each of their stores, so it knows what order to build a pallet in. They’ll put items for one side of a store aisle at the bottom of a pallet, items for the middle of that aisle in the middle, and items for the other end at the top. That way, the stockers in the store can break down a pallet, and put things immediately on the shelves in the most efficient manner. At the distribution center, this palletizing process is still completely automated, and in the end, the system will deliver completed pallets to the humans responsible for loading outbound trucks. Finally, once that’s all completed, a truck will take the three-hour journey west to Glenwood Springs’ City Market, where an overnight crew restocks the shelves with fresh product. Now, even as automation is making significant inroads, plenty of grocery distribution centers still use a far more manual approach. That process is essentially the same—pallets are taken in, stored, and outbound pallets are built with smaller quantities of each product—but each step is just completed by humans instead of machines. However, both the automated and manual processes are not perfect. Specifically, they present an issue for what’s referred to as “slow moving inventory.” You see, grocery distribution centers are traditionally configured to work by the pallet load—it just isn’t efficient to take in a smaller amount—but sometimes, products just aren’t that popular. However, unpopular products are actually crucial to the business strategies of modern supermarkets. The reason why they might have dozens upon dozens of types of salsas is that some niche brand on the bottom shelf is probably at least one person’s favorite. The City Market in Glenwood Springs might carry that salsa, but the Walmart or Target might not. Even if that one consumer can get everything else they need at one of the competitors, they’re going to keep coming back to the City Market because they know they can get that one, niche product that they love. Supermarkets view niche, slow-moving products as key differentiators, and key to customer retention, so they’re certainly willing to sell these products even at a loss. In fact, Walmart experimented with reducing its product variety by 11%, but quickly reversed course as it became clear that this ultimately had a negative impact on their bottom line—even if it simplified their distribution logistics. On the warehouse side, though, if each store that sells that niche salsa only sells a dozen of them per week, it’s going to take quite a while for even the entire company to work their way through a single pallet. In the distribution center, though, a single pallet in the picking area takes the space of a single pallet, regardless of whether it’s used up in a day or a month. Therefore, every additional niche product stocked increases the amount of storage space needed, and increases the overall distance that pickers have to travel to assemble an average pallet—in the case of manual warehouses. To mitigate these effects, while still maintaining their offerings of niche products, some supermarket chains, including Kroger’s and H-E-B, have set up entire, dedicated distribution systems for slow-moving inventory. By setting up these facilities, they can ship out less than box-load shipments of certain products, and stock them without slowing down the process for fast-moving inventory. Of course, this process does still require a certain amount of scale to work better than the alternative—while Kroger’s has set it up in densely-populated areas of the US east-coast, it has yet to do so in the more sparsely-populated rockies region home to their King Soopers and City Market brands. There just isn’t enough overall demand in the region to justify a dedicated setup. The pure scale at which the supermarket industry operates is what has led to this level of supply-chain complexity. When a single facility is responsible for distributing a sizable portion of a state's food supply, tiny, incremental efficiency improvements can lead to huge savings for companies. While such commoditization and consolidation of food supply is viewed as problematic by many people, ultimately, the average consumer just want a wide variety of food at a low-cost. That’s what this system provides. Any modern supply chain is molded into what leads to commercial success, and as long as people continue to view the convenience of having 30,000 options of what to eat at a moment’s notice as paramount, this is how the developed world will continue to get their food. So, anyone who stayed to this point in the video probably enjoys watching Wendover videos, and would enjoy watching as much of them as possible, but unfortunately, the YouTube algorithm doesn’t feel the same. For any channel, there’s a sweet spot of video length—for us, it’s about 15 minutes—and whenever we do anything longer than that, the algorithm actually punishes us. We always have to cut for time, but in order to not feel like that work was for nothing, we’ve started to upload extended cuts of our videos, including this one, to Nebula—the streaming site home to all your favorite educational creators, founded by those same creators. In addition, their unique business model allows for big-budget projects, of which we’ve made plenty across HAI and Wendover. Of course, the best way to get access to Nebula makes it even better. Signing up through CuriosityStream’s bundle deal means you also get access to CuriosityStream, which is a fantastic streaming site that I regularly use—home to a huge selection of non-fiction TV shows and documentaries, such as this one about the barcode, and how it shaped our modern economy. 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