Lifting spirits during difficult times: interview with Bobby Burg
Despite significant operating and market disruptions, Southern Glazer’s Wine & Spirits has managed to keep the beverages flowing throughout the pandemic. The secret, says Bobby Burg, is in the planning.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
No one was prepared for Covid-19. But some businesses were “readier” than others, particularly those that had experience with disruption and had an emergency plan in place.
Such is the case with Southern Glazer’s Wine & Spirits, one of the nation’s largest distributors of spirits, wine, beer, non-alcoholic beverages, and food products. Like businesses from coast to coast, Southern Glazer’s saw its operations upended when the pandemic hit, bringing a host of operating restrictions and shutting down the bars and restaurants that made up a big chunk of its customer base. But unlike some of the others, the company didn’t have to create an emergency plan on the fly. A decade ago, following a string of natural disasters, Southern Glazer’s had drawn up a detailed crisis management protocol that laid out policies and procedures. And it had more than just the processes in place; it also had the people—in this case, a team it could swiftly mobilize to direct and oversee the company’s response.
The head of that crisis management team is Bobby Burg, who also serves as the company’s senior vice president of operations and chief supply chain officer. Burg recently spoke with DCV Editorial Director David Maloney about the company’s efforts to quickly shift gears when the pandemic hit and the lessons his team learned from the experience.
Q: Could you give us a brief overview of the company and your distribution operations?
A: Southern Glazer’s is a middle-tier marketing, sales, and distribution operation that supplies wine, spirits, water, beers, and food products to stores in 44 states, the District of Columbia, and Canada. As of 2018, we ranked as the 37th largest importer into the U.S.
Our distribution network includes 42 DCs with a total of 14.8 million square feet of space. The facilities are staffed by 6,000 employees and serve some 250,000 customers weekly. To support that operation, Southern Glazer’s maintains a fleet of 2,600 vehicles that make 6.5 million deliveries annually.
Q: You had an established crisis management plan in place when the pandemic hit, with a team ready to swing into action. Can you tell me about its role?
A: The crisis management methodology was adopted by the company about 10 years ago and is overseen by 12 senior leaders representing various functions in the company. I am the team leader, and I am supported by the chief information officer, the chief human resources officer, the senior vice president of operations, the controller of finance, our legal department, and others who represent our labor and customer functions along with communications and social responsibility.
Once the team is activated, these leaders come together to develop, discuss, and promulgate all of the company’s crisis-related policies and protocols. So, the foundation was there, the people were there, and the process was there. We activated the team on March 12. It was the first time the team had been activated for a public health emergency.
Q: Typically, crisis management teams focus on regional events, such as a hurricane or tornado that affects a specific geographic area. But the pandemic has disrupted business throughout the world, including all of your operations in the U.S. and Canada. How did this change your team’s focus?
A: There’s no question it made things much more difficult for us—not only because of the scale of the disruption but also because of a lack of alignment in guidance from public health organizations like the CDC [Centers for Disease Control and Prevention] and World Health Organization and even federal, state, and local governments. So, a lot of stuff we had to develop on our own. Plus, we were operating across a wide swath of states, all with different Covid risk profiles and operating restrictions. We had to do what we thought was best even though a particular safety measure might not be mandated or required in a given market.
Q: During the pandemic, you were designated as an essential business. What did that mean for your operation?
A: A large part of our business is distributing water and foodstuffs in addition to alcoholic beverages and beers, so we were designated as essential by the government. In the beginning of the pandemic, being an essential business meant we weren’t required to adhere to any of the regulations related to closures or even social distancing. Then, things got worse, and state and local jurisdictions began handing down guidelines that didn’t differentiate between essential and nonessential businesses.
Having said that, I should note that we conducted our operations as if we were not an essential business in the sense that we first determined what we needed to do to protect our employees and then decided how we were going to operate with those protective measures in place.
Our business is really made up of two different pieces. We have the “on-premise” piece of the business, which is essentially supplying alcohol to restaurants, bars, and hotels for consumption on site, and then we have the “off-premise” part of our business, supplying beverages to retail stores for off-site consumption. One part of our business did very, very well and continues to be strong. The other part of our business went from a hundred to zero in a matter of weeks because of restaurant and bar closures in most parts of the country.
Q: Are you still feeling the effects from that? Have you had to change your distribution strategy?
A: The interesting thing is that liquor consumption in the U.S. did not decline. When people stopped going to restaurants and bars, they bought more from their local retailers. So, our overall orders actually got bigger, with fewer stops and larger deliveries. You can deliver a whole truckload to Costco, for example, where you might be delivering only 10 cases to your local steak and ale establishment—and because restaurants don’t have much storage space, you might be making multiple deliveries per week. So the number of deliveries declined dramatically, which was the big change. There was definitely a difference in the dynamics of our operations.
Q: Given the lack of consistent government guidance and the patchwork of state and local regulations, how did you develop your processes? Did they vary by location and the severity of Covid in the area?
A: We set a foundational standard across the entire country. While other people and agencies were busy debating whether to, say, make masks mandatory, we came together as a team and agreed we would make our own decisions based on what would provide the best protection for both our employees and our customers. So, there are standard policies, and then we have an enhanced protocol for what we call “hot markets,” where Covid cases are high. We re-evaluate these markets every two weeks to determine whether we need to keep the enhanced protocols in place.
All of Southern Glazer's Wine & Spirits facilities do thermal temperature testing.
Q: Could you tell us about the policies you instituted?
A: In the hot markets, employees who can work from home are required to do so. In the other markets, they are allowed to work from home but not required to. We suspended visitors and vendors from entering any of our buildings. We’ve got thermal temperature testing at all of our facilities. We have a company-sponsored testing program that provides results in two days.
Within the warehouse, we suspended our individual bottle picking through last July because it’s an area that is harder to keep clean. And while that was suspended, we re-slotted the bottle rooms. In other areas, we extended the work zones to increase the distance between workers. We were able to procure aerosol-type equipment to clean those areas both before and after use. We increased the amount of PPE [personal protective equipment] the employees wore in each area, meaning they’re required to wear face shields in addition to face masks and gloves.
We also set protocols for cleaning our equipment—whether it’s hand trucks, the cabs of our delivery vehicles, or the tablets used for deliveries. We no longer require drivers to come into the building to pick up paperwork. We now put it in the truck, so they can go straight from their car into a clean truck.
We’ve also begun making “no-contact” deliveries, meaning that customers no longer have to sign a document or a tablet—or have any contact with our drivers whatsoever. We require our drivers, of course, to wear masks and gloves in all of the delivery establishments.
Q: Are you using technology to help maintain social distancing between pickers?
A: Yes, our technology does the largest part of that distancing. We run voice picking in the bottle room, and we run wireless scan guns in the warehouse, so there are screens on all the forklifts, the order pickers, and other pieces of equipment. Workers in those areas are limited to selecting picks from a single aisle, and we don’t have two pickers in the same aisle.
Automated equipment has allowed SGWS to manage increased volume without putting team members at risk.
We also have automated equipment in our larger markets, which has allowed us to navigate the increases in volume without putting any of our team members in harm’s way. For example, our Northern and Southern California facilities have very large automated storage systems, allowing some 30% to 40% of our volume to be picked mechanically. We also have high-end automation in a new building we opened last year in Katy, Texas.
Q: Given the size of your operation, it’s inevitable that some of your workers will contract Covid-19. How do you deal with those cases?
A: We have a fairly comprehensive protocol for presumptive exposure or positive tests. Employees are required to inform their immediate supervisor and their local HR business partner. That triggers an immediate response by the crisis management team. The team manages an aggregate list of all potential cases.
We also have a robust tracking and tracing system that allows us to determine who that individual might have come in contact with and what surfaces they might have touched—whether it’s in our building, in a truck, or at a customer’s facility. After gathering all of the data, the crisis management team then determines the notification requirements.
As a result, we have a very good track record. In the past 170 days, we’ve canceled only 13 of 4,000 planned “shipping nights” across the country out of safety concerns.
Q: Did you have any trouble getting PPE?
A: Yes. In the early days of the pandemic, we certainly faced shortages of masks and cleaners. One advantage we had was that a lot of our suppliers who produce and distill alcohol were able to convert some of their production from alcohol to hand sanitizer and other cleaners.
After the first four to six weeks, we got our supply chain figured out. We then stocked up pretty aggressively to make sure all of our buildings and all of our people had enough PPE.
Q: What are some of the lessons you’ve learned, and what would you do differently?
A: I think we probably should have started accumulating supplies and developing pandemic-specific protocols a little bit earlier—maybe in February versus the middle of March. We had taken our guidance from some others who didn’t think this was going to be a big problem.
We also ran into staffing issues due to the expanded unemployment benefits. With the $600 federal stimulus payment added to the checks, unemployment benefits exceeded workers’ actual pay, which made it tough to get people to come to work. So, there were quite a few instances where we had to initiate what I would call “hero pay” in order to boost attendance so we could complete our mission. In retrospect, that’s probably something we should have addressed a bit sooner.
Then there’s the technology aspect. Although our technology is good, I do think we need to improve some of our methods of internal communication. A lot of our employees get the information they need from our internal website, but some of them—like drivers and warehousemen—don’t have internet access at work, so we probably need to develop a multi-pronged approach to communication.
One of the nice things is that the leadership and ownership of our company really took a hands-off approach. It is quite unusual for somebody at my level in a company to make those types of widespread decisions with their full endorsement. That kind of support was pretty extraordinary.
Q: Let’s talk about what happens once we get past Covid. Will your business model change?
A: I believe our industry is forever changed. There’s a good possibility that as many as 30% of the on-premise independent restaurants, local neighborhood restaurants and bars, and even chain restaurants in the U.S. may never reopen. It has been devastating for them.
In July, the on-premise channel was down 50% compared with a year ago. That number is now about 48%. I don’t think anybody can really say what things will be like 12 months from now, but it definitely will not be the same as it was at the start of 2020.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”