The challenges and solutions of Inventory management in Chinese food supply chains during the Covid-19 Pandemic

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The challenges and solutions of Inventory management

in Chinese food supply chains during the Covid-19

Pandemic

BACHELOR THESIS WITHIN:Business Administration

PROGRAMME OF STUDY: Marketing Management AUTHORS: Xingyu Liu, Yimeng Ma, Yushan Wu TUTOR: Gershon Kumeto

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Bachelor Thesis in Business Administration

Title: The challenges and solutions of inventory management in Chinese food supply

chains during the Covid-19 Pandemic

Authors: Xingyu Liu, Yimeng Ma, Yushan Wu Tutor: Gershon Kumeto

Date: 2021-5-20

Keywords: The Covid-19 pandemic, Food supply chain, Supply chain management,

Logistic management, Inventory management.

Abstract

At the end of the 2019 year, the outbreak of the Covid-19 pandemic changes human life. People have to change their way to be more safer for working and producing. For most industries, the impact of the Covid-19 pandemic is huge. The number of active labor and the order is decreased, moreover, the inventory management issues appeared in this time. Hence, The related company must find a new inventory management solution for surviving in the Covid-19 pandemic.

The subject of this research paper is about inventory management in Chinese food supply chains. And the purpose of this study is aim to dealing with the inventory management dilemma for the most company which related to the food industry during the Covid-19 pandemic. This study uses multi cases study to help readers understand the challenges and solutions of inventory management in the Chinese food industry during the Covid-19 pandemic deeply. Furthermore, this study uses qualitative research to analyze the interview data.

The analysis illustrates that the resilience supply chain and the inventory costs are important for strengthening the ability of inventory management to face the risks. And this study is significant, and it can help many Chinese enterprises find a direction for the inventory management risk during the Covid-19 pandemic. Moreover, this study can also provide a foundation for the further study of risk management for inventory.

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Acknowledgement

Time flies, this bachelor thesis took more than 4 months to complete. The completion of this thesis is inseparable from the efforts of all participants. The authors would like to express their most sincere gratitude to all relevant people who participated in this thesis. Thanks to Yonghui supermarket and Beijing Zhongde Cold Chain Logistic Co Ltd. for their help in this thesis, and to the relevant employees interviewed for providing effective information for the research of this thesis. In particular, the authors would like to thank the tutor of this article, Dr. Gershon Kumeto. Dr. Gershon Kumeto has put forward a lot of valuable and professional opinions from the topic selection of the thesis, to the writing of the opening report, and finally to the writing of the text. Every problem pointed out by Dr. Gershon Kumeto and every thought of guidance made the authors feel empowered. At the same time, the authors are very grateful to Dr. Gershon Kumeto for his rigorous academic attitude. Whether in terms of format specifications, the main points of the paper, or the structure of the article, Dr. Gershon Kumeto is not tired of giving the authors timely help so that the authors can finish the paper successfully.

Furthermore, the authors would like to thank all the classmates in every seminar. Thanks to the classmates for giving serious feedback to the authors in every seminar. This allows the authors to continuously realize their shortcomings and make improvements to the shortcomings during the period of writing the thesis.

Then, the authors want to thank all the family, friends, and lovers who care about us. Thank you for your support, tolerance, and company during our three-year undergraduate study at Jönköping University.

Finally, the authors wish everyone peace and happiness in the future. The writting is not full, thanks everyone again!

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1. Introduction

This part introduces the background of Chinese food supply chain inventory management during the Covid-19 pandemic, expounds the problem statement, emphasizes the purpose and research questions, clarifies the delimitation and definition of key terms.

1.1 Background

The emergence of the Corona Virus (will be written as the Covid-19) in 2019 has made an enormous difference to people's lives. The Covid-19 is a novel virus that spreads rapidly. Since December 2019, it has spread to dozens of countries and multiple continents including Asia, Europe, North America, South America and even Africa have also been affected. After the Covid-19 pandemic emerged, there are over 110 million cases of infections around the globe (WHO, 2020). On 8 February 2020, WHO officially revised the global risk level for Covid-19 to very high. The social, economic and political changes and turmoil caused by the Covid-19 have hit the development of many industries. In an effort to slow the spread of the Covid-19, quarantines and cancellations of large public events became the norm in 2020. Consumers, trapped in isolation at home due to the closure of most entertainment and consumption places, bought and hoarded goods due to excessive panic and lack of supplies. For example, panic shopping, such as running out of toilet paper and hoarding cans, dominated headlines in 2020 (Hall &Prayag, 2020).

The fragility of the supply chain makes the impact of the supply chain which under the Covid-19 pandemic becomes more obvious (Sarkis, 2020). The supply chain can be seen as a closed loop, in which companies connect upstream companies upward and downstream companies downward. The traditional supply chain covers the product integration process from raw material production to finished product sales (Harrison & Hoek, 2008). In the process of supply chain integration, it includes many different business entities, such as suppliers, manufacturers, distributors, and retailers (Beamon, 1998). Nowadays, with the highly developed environment of information technology, competition among enterprises has gradually shifted to competition in the supply chain. At present, many companies have gradually expanded their traditional supply chains in order to improve their competitiveness. As the supply chain becomes more and more complex, companies will also become more vulnerable to supply chain disruptions (Zheng, Shou & Yang, 2020).

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In order to reduce the risk of supply chain disruption in the sudden disaster, we have to consider the supply chain management. Supply chain management is the planning and controlling the various links and processes in the supply chain. And it includes linking the partners to collaborate to satisfy the needs of the end customers (Harrison & Hoek, 2008). Since the end customer is a very important link, it is necessary to increase the end customer's satisfaction with the finished product. While the end customer's satisfaction with the finished product depends on the management of the material flow and information flow in the supply chain (Harrison & Hoek, 2008). And this is exactly what logistics management does - satisfying the end customer’s need by harmonizing the supply chain (Harrison & Hoek, 2008). Therefore, logistics management can be regarded as an important part of supply chain management.

For carrying out the logistics management and better to deal with the emergencies in supply chain management, it is also critical to improve the ability of inventory management. Inventory for an enterprise is the part of its assets that is ready to be sold. And it is one of the most important assets of the enterprise (Singh & Verma, 2017). Therefore, inventory management is the core of logistics management section in the modern enterprise. Singh and Verma (2017) believes that inventory management, as a part of supply chain management, is a continuous process of planning, organizing and controlling inventory. Inventory management is the supervision of the supply and availability of commodity inventory to ensure that the supply of goods is sufficient, and there will be no shortage or oversupply phenomenon (Singh & Verma, 2017). Inventory management includes ABC classification, demand forecasting, assembly orders and replenishment strategies. Generally, the traditional inventory models focus on the replenishment to maximize the profits (Chen et al., 2006). For example, Just-in-time (JIT) and materials requirement planning (MRP) are the methods of inventory management, and the aim of them are to help the company balance the difficulties of inventory surplus or inventory shortage and minimize inventory costs.

Due to end-customers having high demand for the high-quality food, the food supply chain needs more efficient inventory management. Inventory management is an essential part of the supply chain, and a good inventory management can help the food supply chain reduce inventory costs. As a branch of the supply chain, the food supply chain is facing huge challenges in all countries during the period of Covid-19. Food supply is particularly important for a country with a large population like China. As the first country in which the Covid-19 broke out, the Chinese government has implemented rapid and strict anti-epidemic measures, such as lockdown the city. These blockade restrictions directly affect China's food supply chain. The food supply chain

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was affected by both supply-side and demand-side during the Covid-19 (Singh et al., 2020). While, for the demand-side, people will always reserve a lot of materials under the uncertain factors, which we call it as panic shopping. The Covid-19 is a sudden disaster obviously, and people have also begun panic shopping under the uncertain judgment of the future trend. For instance, in China, people were hoarding rice, noodles and other food at the beginning of the epidemic. This has also led to a significant increase in the demand for food in a short period of time. But due to the limited inventory reserves, there is a shortage of supply also. At the same time, the supply side has insufficient supply inventory due to lack of labor (Singh et al., 2020). For example, restrictions such as lockdowns may hinder farmers from farming, reduce labor, and prevent food processors from starting production. Transportation restrictions have led to shortages of fertilizers, veterinary drugs and other inputs, which may also affect agriculture and food production (Torero, 2020). These are all problems related to inventory management in China's food supply chain caused by the Covid-19. Since China was the first country to break out of the epidemic, the measures taken by China on inventory management in the food supply chain under the Covid-19 are also useful for other countries (Min, Zhang & Li, 2020). A detailed analysis of the challenges encountered in the food supply chain and inventory management can provide other regions also suffering from the epidemic with relevant experience in the food supply chain and reduce their difficulties in inventory management.

1.2 Problem Statement

According to the research of Plinere and Borisov (2015), inventory management has existed for a long time, and all companies want to use good inventory management to reduce the total cost. As Signh and Verma (2017) mentioned, inventory is an important area of concern for every company. Signh and Verma (2017) argue that if a company wants to survive in the long term, it should pay more attention to the supply chains and inventory management. Even though most companies are concerned about inventory, there are still many companies that did not use an accurate and efficient inventory management method (Plinere & Borisov, 2015). Thus, Plinere and Borisov (2015) proposed a proxy system for the automation of inventory management processes. This system is a new reform, the automatic management can save cost, avoid the waste of time and improve the efficiency of the system. But there are limitations, such as the inability of automated management to respond to emergencies and analyze difficulties in a short time to find solutions. So, at the face of a sudden crisis or a major epidemic state it cannot be based on different circumstances to adjust the program at any time.

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The inventory management in food supply chains under the Covid-19 is becoming more important. During the Covid-19, due to the city blockade, a large number of workers were isolated, and the food supply chain rupture was widely discussed (Min, Zhang & Li, 2020). Min, Zhang and Li (2020) believes that the lockdown caused by the Covid-19 will cause some short-term negative effects on the food supply chain, but it can be regulated through transportation control and other measures. However, the focus of many similar literature discussions is still on the impact of the food supply chain under the Covid-19, and there is no more detailed explanation of the role of specific inventory management in it. Therefore, an in-depth analysis and detailed research on inventory management are helpful for follow-up research.

1.3 Purpose and Research Question

The purpose of this study is to study inventory management in the food supply chain during the covid-19 pandemic. More specifically, the authors want to have an in-depth study of food inventory management in the face of Covid-19 pandemic challenges and solutions. At present, the Covid-19 is still ongoing, and lockdowns and shutdowns are still the issues that many countries and regions around the world have to face. Our research may be helpful for inventory management of the food supply chain management, and it could help the countries and regions where still suffering from the Covid-19 pandemic.

Hence, the authors narrow down the research scope and designed two related research questions as follows：

RQ1: What inventory management challenges are faced and what solutions were adopted by Chinese enterprises in the food supply chains during the Covid-19 pandemic?

RQ2: Why were there disruptions in the inventory management systems and why were the adopted solutions effective in Chinese enterprises in the food supply chain during the Covid-19 pandemic?

1.4 Delimitation

For conducting more detailed research and improving the operability of the research and the accuracy of the research results, this study defines the research scope of food supply chain. The study designates the time and geographic scope of the study as China under the Covid-19. First of all, as a country with a large population, China has a high demand for food, so the food supply chain is very concerned in China. Secondly, as the

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country with the earliest outbreak of the Covid-19, China has taken longer to respond to the Covid-19 than other countries. Furthermore, according to the research purpose and problem description, this study will focus on inventory management of food supply chain. In summary, this study will not consider the inventory management phenomenon of other countries, and the study will not describe other parts of supply chain management too much. This study will focus on describing the current situation and problems of inventory management in China's food supply chain. Moreover, this study is also to propose solutions to the current inventory management dilemmas in China's food supply chain.

1.5 Definitions of Key Terms

Supply chain: A network that connects upstream and downstream partners in the industry. These networks collectively transform basic goods (upstream) into finished products (downstream) that end customers value and manage returns at each stage (Harrison & Hoek, 2008).

Supply chain management: Plan and control all processes involved in the entire supply chain, including procurement, conversion, transportation and distribution. It includes coordination and collaboration between partners. Partners can be suppliers, intermediaries, third-party service providers and customers. It integrates supply and demand management within and between companies to meet the needs of end customers (Harrison & Hoek, 2008).

Logistic management: The task of coordinating the material flow (physical goods) and information flow in the entire supply chain to meet the needs of the end customers (Harrison & Hoek, 2008).

Inventory management: Inventory management involves replenishment lead time, inventory book cost, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price prediction, physical inventory, available physical space, quality management, replenishment, return of defective goods and demand forecast (Singh & Verma, 2018). Balancing these competing needs can enable the company to achieve the best inventory level, and this is a continuous process that will be affected by changes in business needs and the overall social and business environment (Singh & Verma, 2018).

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2. Frame of reference

In this part, authors will review and summarize the existing literature from three aspects: logistics management, food supply chain in China and inventory management. At the same time, it introduces the theory and the corresponding tools.

Table 1 for the search parameters of this study

Search Parameters

Database and search engines Jonkoping University’s library (Primo), Google

Scholar

Search words Logistic management, Food supply chain management, Inventory management, China, Covid-19

Literature types Academic articles, Academic journal, peer reviewed article, Related books, Offiical website

Publication period 1982-2020

Languages of publication English

In this part the authors will mainly elaborate on the three major aspects of logistics management, China's food supply chain, and inventory management. At the same time, the focus of this study will be on inventory management. First of all, the authors will give a detailed introduction to inventory management and its processes. Next is a description of the theory and tools of inventory management. The authors of this part will mention the elasticity of the supply chain and the flexibility of the supply chain, as well as the importance of the elasticity of delivery and changes in demand for the elasticity of the supply chain. Simultaneously, it also mentioned the status of inventory cost in inventory management. While, this study will mainly choose two inventory management tools: ABC analysis method and just-in-time system. Both of these tools are related to inventory management, and they have been used in many studies in the past. For example, in a large company, there are usually many types of inventory, but there may be hundreds of thousands or even hundreds of thousands. Non-centralized management methods have little effect and may cause confusion. The ABC analysis method can effectively prevent this from happening. However, some people think that inventory is a waste of resources, and just-in-time system can reduce the hidden costs in inventory. Meanwhile, the authors will also mention how inventory management will respond to emergencies. In addition, the authors also elaborated on the particularity of food inventory management.

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2.1 Logistic management

Generally, logistics management is a part of supply chain management. The main task of logistics is to coordinate, plan and control the flow of raw materials and information in the supply chain to meet the needs of the end customers (Harrison & Hoek, 2008). Logistics covers many activities that occur in the food supply chain (Pullman & Wu, 2012). Hence, the logistic management is particularly important in the fierce competition in the food industry (Márquze, Pardo & Nieto, 2013). Based on the view of Lambert, Cooper and Pagh (1998), logistics is usually manifested as supply chain orientation, and the difference between the supply chain management and the logistics management is that the logistics management is a functional tool within the company rather than just a concept. The current market advocates decentralization of business, and the diversification of business geographic location makes it scarce to produce and consume goods in the same place (Dondo, Méndez & Cerdá, 2008). What is more, the market is not limited to domestic customers anymore, the future trend will be the globalization (Kubon, & Krasnodębski, 2010). Hence, for the logistics management, determine the best transportation routes are very important, which can help companies minimize costs and time to maximize profits (Márquze, Pardo & Nieto, 2013). Controlling logistics costs is the basis for companies to gain competitive advantage (Kubon & Krasnodębski, 2010).

Figure 1: Logistics Providers and Logistics Management (Fleetconcepts n.d.)

As shown in figure 1, in the logistics management process, transportation, distribution and storage are the core of the process, while loading and unloading, handling, packaging, and sales are all additional functions (Novack, Rinehart & Wells, 1992). Novack, Rinehart and Wells (1992) believe that the logistics management process refers to the basic process that composed of planning, organizing, and

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coordinating well in the process of logistics operations. And the aim is to maximize the use of limited resources and improve the efficiency of logistics management (Novack, Rinehart & Wells, 1992). The flow of logistics operations has different forms such as logistics management in the production field, logistics management in the circulation field, logistics management in the retail field, and logistics management in the life field. Among them, the most frequently encountered by consumers is the logistics management in the retail field, which involves a series of activities from procurement to sales (Novack, Rinehart & Wells, 1992).

The basic flow of logistics in the retail field consists of four parts, which are inbound logistics, warehousing logistics, distribution logistics and reverse logistics.

Among them, the inbound logistics is the process of purchasing and receiving goods. The supplier will transport and deliver the goods to the storage warehouse according to the terms of sale and may further transfer the goods to the consumer-facing shelves (Andersson & Norrman, 2002). The whole process is mainly centered on handling and transportation as the core management, such as receiving, packaging, loading and unloading, handling and coordinated management of different functions (Andersson & Norrman, 2002). And the warehousing logistics is dedicated to the storage, management, classification, and sales management of commodities. During this process, it will continue to supplement and replace commodities according to market changes and needs (Dadzie & Johnston, 1991). For distribution logistics, it is the process of delivering the products directly to the buyer after accepting the order (Zhou & Guo, 2010). Zhou and Guo (2010) pointed out that, distribution logistics unlike the traditional sales process, the distribution logistics does not have middlemen. The goods will be directly transported in large quantities from the supplier to the customer, or the retailer will transport the goods to the designated place after receiving the order to complete the delivery (Zhou & Guo, 2010). Finally, the reverse logistics is a problem that all logistics activities will face, such as return of goods, recovery of unsalable goods, and waste flow. When the customer receives the purchase order product, it will request the return of the unqualified product. During the sales process, it is found that the defective product of the expired product needs to be recycled (Rogers et al., 2002).

2.2 Food supply chain in China

The food industry is a very important part of the business in China. It is the foundation and necessity to support other human activities (Zhong & Xu, 2016). Food enters the

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food supply chain after it is produced. It must be stored, delivered, and retailed, and delivered to the end customer before the deadline (Zhong & Xu, 2016). At the same time, in the process of the supply chain, the basic requirement is that the food must guarantee its quality and safety (Kim, 2013). In China, consumers have been paying more and more attention to food quality and safety issues (Yang et al., 2020). This also push China's food supply chain to pay more attention to food safety issues (Kim, 2013). In order to make the food supply chain more standardized to ensure the quality and safety of food, the Chinese government has established a food safety supervision system (Kim, 2013). In addition, the rapid growth of China's population has led to China's continuous development of food production (Lee, 1982). Furthermore, a large number of cheap labors has made China becoming a major food manufacturing and supplying country in the world (Roth et al., 2008). However, for many years, China's internal food supply has been very tight (Yu et al., 2020). Therefore, the issue of food waste in China's food supply chain continues to receive attention (Liu, 2014). In summary, how to ensure food safety and avoid food waste is an inevitable topic in China's food supply chain. At present, although the Chinese government has introduced a series of supervision policies on the food supply chain, there are still many areas for improvement in the food supply chain in China (Zhong & Xu, 2016).

2.2.1 Chinese food supply chain under the Covid-19

The impact of Covid-19 in China is huge and far-reaching. Among them, the impact of Covid-19 on China's food supply system, such as the food crisis and food security, is worthy of our attention. In terms of the food crisis, China’s grain production achieved a great harvest in 2019, with grain production reaching 663 million tons (Fan et al., 2020). This also let China under the pressure smaller on supplying food during the Covid-19 epidemic. However, as the first country to be affected by the Covid-19 epidemic and gradually resume the normal food supply operations, China has set up a strict urban blockade and restrictions on the movement of people during the Covid-19 period. Although these measures are very effective in controlling the spread of Covid-19, they have disrupted the supply chain of many food industries (Fei, Ni & Santini, 2020).

The food supply chain has been disrupted due to restrictions, which will cause many suppliers to give up production, and finally lead to limited supply in the Chinese food market, and a situation of insufficient supply (Yu et al., 2020). Moreover, due to the social panic caused by the Covid-19, people began to hoard food (Yu et al., 2020). This behavior exacerbated the shortage of food supply chain, and the increase of hungry population in 2020 has become an inevitable phenomenon (Fan et al., 2020). Take Wuhan as an example, as the first city where 19 broke out. During the

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Covid-19, about 53% of food sources in Wuhan were in short of supply (Min, Zhang & Li, 2020).

For the supplier, the short-term shelf life of vegetables and fruits cannot be sold in time due to the policy restrictions in China, so that the inventory costs have increased (Min, Zhang & Li, 2020). At the same time, affected by the Covid-19 pandemic, most of the production labor force is compelled to restrict their operations (Zhou et al., 2020). And it is impossible to carry out production and transportation when most of the labor force are working at home (Zhou et al., 2020). In addition, due to the traffic control restrictions between various regions in China during the period of Covid-19, foods cannot be transported as usual (Zhou et al., 2020). In response to these phenomena, the Chinese government has introduced some facilitation policies for the food supply chain, such as opened a fast lane and ensuring the speed and safety of food transportation as much as possible (Min, Zhang & Li, 2020).

Food safety has always been a national priority. And there is no data to suggest that the COVID-19 pandemic is transmitted through food (Olaimat et al., 2020). However, the long-term existence of Covid-19 in the environment increases the virus through contact with food packaging. The possibility of transmission (Olamiat et al., 2020). And this possibility increases the difficulty of China's food supply chain, because it must ensure that every link of the supply chain is safe and avoid exposure to the virus.

2.3 Inventory management

Inventory is owned by all companies (Müller, 2011), and generally exists in a tangible state. Inventory includes the raw materials that the company need, finished products or materials needed through the supply work (Müller, 2011). The existence of inventory can help a company to cope with market uncertainty to a certain extent (Jammernegg & Reiner, 2007). Müller (2011) states that the inventory will bring certain consumption to the company, which includes uncontrollable risks such as space, money, labor and the risk that the goods is stolen. At the same time, Samak-Kulkarni and Rajhans (2013) are considering that the inventory cost consists of four costs, which are purchasing costs, ordering costs, the costs of inventory carrying and shortage cost. Therefore, reducing inventory costs, maximizing profits and optimizing customer service experience is one of the most important goals of inventory management (Viale, 1996).

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In the inventory system, the control and maintenance of inventory levels are the most important things (Samak-Kulkarni & Rajhans, 2013), since the demand is uncertain, and it will make the inventory difficult to maintain and control (Samak-Kulkarni & Rajhans, 2013). Generally, inventory management is dedicated to transforming the expensive inventory assets into the relatively cheap information assets (Viale, 1996). It has to be said that information technology has a strongly impact on the supply chain, especially on the inventory management, and it played a major role (Cachon & Fisher, 2000). The development of the information technology has provided more intelligent help for inventory management personnel. As described by Özer (2011), on the one hand, staff can obtain timely information about delivery time, inventory assets, and available capacity. On the other hand, consumers can also know the inventory information about the goods they bought in time.

Classification, allocation and replenishment are the three important components of inventory management (Pullman & Wu, 2012). Pullman and Wu (2012) believe that, as a supplier, use the information technology to classify and allocate existing goods can effectively reduce the waste of time cost and transportation cost. In addition, timely replenishment of goods with information can also effectively minimize the inventory (Pullman & Wu, 2012). In order to better classify, allocate and replenish, correct forecasting is essential. If a company has a correct forecast of its own product sales, then the company's predictive classification, allocation and replenishment of inventory in advance will be more correct (Viale, 1996). As a result, the inventory of goods can also be more flexible Meet the needs of customers under circumstances (Viale, 1996).

2.3.1 The process of inventory management

Inventory management is a very important work in the process of production and operation. The quality of inventory management has a very important influence on the production efficiency, capital turnover rate and cost control (Bose, 2006). Operating a good inventory management requires real-time updating of the inventory management expertise, and the enterprise inventory system is optimized from time to time (Bose, 2006).

The workflow of inventory management is generally to handle the storage list, check the detailed list, check the inventory periodically, check the out list with the contract/invoice, check the inventory at the end of the month (Atieh et al., 2016).

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1. Stock purchasing: Make stock planning according to stock data analysis, calculate reasonable order quantity and stock cost budget according to company budget (Bose, 2006).

2. Acceptance check ：The quality of the goods needs to be checked before they are officially put into storage. Which means the company need to check the contract quantity to ensure the quantity and quality of the stock are in accordance with the contract standard (Waller & Esper, 2014). In this step, the company needs to establish a complete acceptance process such as acceptance procedures standardized, clear standards of inspection especially for the contract content of the number of goods, invoices, original documents and other documents (Waller & Esper, 2014). The key point of acceptance is to ensure the correctness of inventory quantity, the quality of goods and the consistency of product specifications and contracts (Waller & Esper, 2014).

3. Storage: During the storage of goods in all products flow between the various warehouses to ensure that the contents of the storage to make a specific record (Wild, 2017). The record of in and out of storage is also a guarantee to avoid errors in the record and to help in the timely disposal of lost goods in case of trouble (Wild, 2017). The more important part of the storage process is to ensure the integrity of the goods and make reasonable storage methods according to different products (Wild, 2017). For instance, temperature control management for sensitive items and fire prevention for inflammable items, there are waterproof goods and goods for the protection of the security guarantee against theft (Wild, 2017). At the same time in different batches and different contract models, the validity period of goods should be reasonably classified storage, to ensure that the goods will not be overdue, overdue to reduce operating costs (Wild, 2017).

4. Out of the warehouse link: It has to has a clearer standard for avoiding the error in the out of the warehouse link. And all goods have a complete out of the warehouse procedures to goods out of the warehouse (Ballis, 2006). Also follow the content of the contract and the uniform notice of the company to carefully examine the documents of the name of goods, specifications, number of consignees, shipper and other details (Ballis, 2006). Responsible for the proper handling of receipts and signed documents for all deliveries (Ballis, 2006).

5. Inventory link: Enterprises to their own inventory for regular and non-periodic inventory for the inventory of the quality of goods for regular inspection and deterioration of goods in a timely manner (Eroglu & Hofer, 2011). The specific

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capacity of the inventory should be kept in accordance with the record in the system (Eroglu & Hofer, 2011).

2.3.2 The theory and tools of inventory management

Theory

Resilient Supply Chain

When the supply chain network is interrupted, the ability to quickly restore normal work, including production, service, and supply ratio, is the elasticity of the supply chain (Considine et al., 2011). Because the occurrence of the Covid-19 Pandemic has a great negative impact on global supply chain management, a sufficiently flexible supply chain is a direction that companies need to strengthen, which can withstand more unpredictable risks in the future.

Resilient Supply Chain can be defined as the ability of the supply chain to respond to environmental changes and uncertain events (Considine et al., 2011). Compared with maintaining redundancy, flexibility has different cost and service characteristics, and there is no need for reconfiguration of resources (Considine et al., 2011). Enhancing the flexibility of the supply chain is a low-cost, high-efficiency, and consistent approach with "lean" thinking. It will not only help companies better cope with fluctuations in daily demand, but also enable companies to understand the existing supply chain after an interruption occurs. The ability to redeploy to minimize the impact of unplanned outages (Considine et al., 2011).

Delivery Flexibility

The delivery flexibility always refers to the supplier's ability to flexibly respond to the customer's constantly changing and fluctuating needs. In other words, the supplier needs to face the demand change and the demand fluctuation (Considine et al., 2011). It is based on the core enterprises of the supply chain and builds an integrated Agile Supply Chain management system.

Demand Change

the food supply chain is divided into retail and catering services (restaurants, cafes, fast food chains, delicatessen, bars and pubs). The availability of space for storing small retail goods is insufficient. For example, the availability of stored flour, milk and even canned food is insufficient to cope with the increase in retail demand (Christopher &

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Ryals, 2014). These major changes in consumption patterns are affecting the resilience of all industries related to the food supply chain (Christopher & Ryals, 2014).

Soaring demand caused by panic buying is usually a short-term problem. The long-term impact of changes in demand on the food supply chain is based on the impact of changes in consumer’s income on overall demand and changes in product category demand (Christopher & Ryals, 2014). For example, we can expect consumers to be more price-sensitive, and as consumers replace expensive goods, the demand for income-elastic products will drop sharply. It can be expected that this will affect the retailer's buyer behavior in terms of product category management and contractual relationships with suppliers. If there is a severe economic recession and a decline in demand, retailers may suppress the supply chain to improve cost efficiency (Christopher & Ryals, 2014).

Inventory Costs

Inventory costs include the cost of ordering and keeping inventory, as well as the cost of managing related paperwork (Samak-Kulkarni & Rajhans, 2013). The ordering costs includes the salaries of the employees in the purchasing department and the labor costs of other related personnel. The keeping costs are divided into space costs. Such as the daily maintenance and repair of the warehouse (Smak-Kulkarni & Rajhans, 2013). The cost of scrapping generally means eliminating damaged warehouse equipment and oxidizing them into worthless equipment. Generally, the administrative costs include salary expenditures for staff in relevant departments of the company. Inventory cost is also used as part of the inventory evaluation, which may cause changes in the customer's order fulfillment rate and lead to changes in the production process (Samak-Kulkarni & Rajhans, 2013).

Tools

In the modern business society, a company usually has a lot of inventory (Ng, 2007). While, when the company face with many and complex inventories, how to use appropriate methods to manage them is what every company that owns inventory needs to think about.

ABC analysis

As shown in the Figure 2, the ABC analysis is an extended theory based on the Pareto theory. It is a commonly method that used in the inventory management. The ABC analysis is an effective method to classify inventory items (Chen, Li & Liu, 2008). ABC analysis is a major discovery made by Villefredo Pareto in the 18th century when analyzing the wealth distribution of Milan-20% control 80% of wealth

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(Chu, Liang & Liao, 2008). This finding is applicable to many situations, among which its use in inventory management is correct (Chu, Liang & Liao, 2008).

The traditional ABC analysis is based on a single metric. While, with the development of the times, the multi-standard inventory classification has now appeared (Ng, 2007). The ABC divides inventory into three categories: A, B and C Class (Ravinder & Misra, 2014). And in the ABC analysis, most of the work and supervision should be spent on Class A inventory, less work is spent on inventory B, and work attention for inventory C At least (Ravinder & Misra, 2014). Generally speaking, Class A inventory accounts for 15-20% of the company's inventory, but Class A inventory accounts for 80% of the company's business. Class B inventory accounts for 30-35% of the company's inventory and 15% of the company's business. The inventory of category C commodities accounts for 50% of the company's inventory, but it only accounts for 5% of the company's business (Rusanescu, 2014). According to Ravinder and Misra (2014), ABC analysis mainly involves three steps. The first is to determine the distribution weight, the second is to score different items, and finally the score and the weight are combined to form a weighted score (Ravinder & Misra, 2014).

Of course, there are voices of doubts about the ABC method. Pandya and Thakkar (2016) believe that ABC analysis has only three categories, and the classification is not detailed enough. Moreover, the accuracy of ABC analysis is not enough to support its optimal inventory management (Pandya & Thakkar, 2016).

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Figure 2. When to Use a Pareto Chart (Minitab Blog Editor, 2016.Sep)

Just in time

Just in time, which will be written as JIT in the following description of this study, is derived from the Toyota production system (Pegels, 1984), a Japanese automobile manufacturing company. After World War II, most factories in Japan could not accept a large number of orders from the United States, hence, the emergence of Just-in-time solved this problem (Singh et al., 2010). The JIT supply chain means timely production and delivery the products for sale (Matson & Matson, 2007). In other words, JIT is to have the right production parts and assemble the right quantity of products at the right time (Lee & Ebrahimpour, 1984). Generally, JIT can bring a high productivity, high quality and high profit to manufacturers (Callen, Fader & Krinsky, 2000). JIT is suitable to produce a variety of products, and it can be used in various economic conditions and run efficiently (Lee & Ebrahimpour, 1984).

In most manufacturers, they are generally accustomed to manufacturing many products to the next part of the supply chain, whether they needed or not, which will lead to a large inventory backlog (Lee & Ebrahimpour, 1984). JIT can help suppliers eliminate inventory waste and improve production efficiency (Vokurka & Lummus, 2000). In the JIT system, the company increasing their reliance on the suppliers. Since the company relies on suppliers’ timely production and on-time

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delivery (Yang et al, 2021). In this situation, the operation of the JIT system needs to be customer-oriented (Yang et al, 2021). And the production is triggered by demand in the final stage (Wang & Sarker, 2006).

On the other hand, the operation of the JIT system is inseparable from a strict replenishment system, for instance, Toyota only adds parts when needed (Tommelein & Li, 1999). Kanban technology is a core technology of the JIT system, and the company can use the Kanban technology to reduce the inventory and production waste and improve the customer service (Wang & Sarker, 2006). Kanban uses a card system that not only controls the inventory in the process, but also controls the production process and inventory process of the supplier which producing the element of the product (Pegels, 1984). In the JIT system controlled by Kanban, each intermediate stage is triggered by its subsequent stages - this process is carried out from the final stage to the beginning (Wang & Sarker, 2006).

2.3.4 Food inventory management (particularity)

Food inventory management is a special inventory system to track food storage. Food inventory are corrosion-prone normally require cold chain and temperature-controlled (Bottani et al., 2014). The emphasis of food inventory management is to store and prevent perishable items reasonably. Because the quality of food is the root of sales to prevent spoilage and reduce the cost of food is also a profit, so good food inventory management for the business is very important (Bottani et al., 2014).

The challenge of food inventory is the variety of products, large quantities of storage is not easy, short shelf life (Gendron & Reichman, 1995). Therefore, the company needs to carry on the fine management to the food stock. At the same time, the particularity of food inventory management lies in the fact that food cold chain logistics, such as fresh and perishable agricultural products (vegetables, fruits, meat, aquatic products, etc.) need to be kept at low temperature in the circulation links of production, storage, transportation and sales, to maintain the original freshness, color, flavor and nutrition of food as much as possible (Liang, 2013).

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3. Method

In this part, the applicable methodology and research design are introduced. This study will adopt the method of multi case study.

3.1 Methodology

3.1.1 Research philosophy

In the process of research, there are many philosophies of science that can provide the basis for research. Saunders et al (2009) believe that the philosophy of science in the social field includes Positivism and Interpretivism. The choice of philosophy of science depends on many factors, including the academic subject, type, and complexity of the research (Saunders et al, 2009).

Positivism is a philosophical perspective that emphasizes objectivity. Comte (n.d.) believes that positivism depends on specific science and observation of ordinary things to obtain a correct understanding of reality. In other words, people know facts through observation or sensory experience. Moreover, the purpose of positivism is to establish the objectivity of knowledge. While interpretivism comes from idealism. Interpretivism is mostly used in social sciences (Williams, 2000). Since people and groups of people are always changing, there is no immutable "fact" in the world, so the most important thing for researchers in social sciences is understanding, namely, different concepts, ideas, and language of research will affect the researcher's cognition of the social phenomenon being studied. The researcher of interpretivism believes that there is no absolute objectivity. The knowledge is understood by the person as the subject (Williams, 2000).

The scientific philosophy suitable for this research is interpretivism. Williams (2000) believes that interpretivism is more about finding and studying the meaning from subjective personal experiences and feelings, and that interpretivism is more likely to depend on the context in which it occurs. The background of this study is based on China's food supply chain under the epidemic. In order to better understand the inventory management of China's food supply chain under the epidemic, the author conducted interviews with two companies engaged in related industries.

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3.1.2 Methodological approach

Choosing an appropriate research method is an indispensable link in the research process. There are three types of research methods: deduction, induction and abduction (O’Brien, 1998). The deductive method is based on general theories as the premise to demonstrate individual things, thereby deriving new theories (O’Brien, 1998). Generally, the deductive method uses the syllogism method to draw conclusions through the major premises and minor premises. For example, the major premise: Human need sleep. Small premise: Stella is human. Concluded: Stella needs sleep. While, Induction is more focused on understanding the causality of things and phenomena. It collects some information and observes some phenomena to infer conclusions (Bergold & Thomas, 2012). At the same time, induction is a process from special to general from different angles. It focuses on summarizing the law of occurrence of events and drawing conclusions accordingly. there is an example for the induction: because the sun rose from the east yesterday, and today the sun also rises from the east, it is concluded that the sun will also rise from the east tomorrow. Abduction means that researchers start from the observed objective phenomena and interpret the conclusions summarized (Dubois & Gadde, 2002). It is a way of reasoning to find reasons or explanations for things and deduce the reasons through known rules and objective facts. For example, the known rule: people who catch a cold will have a runny nose, the fact: Lisa has a runny nose, it can be inferred that Lisa has a cold through the known rules and facts. The authors believe that the deductive method is more suitable as the research method of this article. Because this article takes some inventory management theories as the major premise and the inventory management behavior of China's food supply under the epidemic as a minor premise, to draw conclusions on how to improve China's food supply chain by improving inventory management during the epidemic.

3.1.3 Research Data Type

Generally, Research Data Type can be divided into qualitative data and quantitative data. Generally speaking, quantitative analysis is a method of establishing a mathematical model based on statistical data and using the mathematical model to analyze various indicators of the object (Brandon-Jones & Slack, 2008). As qualitative data, the research object can be divided into several parts, and the researcher can obtain an understanding of the whole by observing these components. Qualitative analysis is a method that mainly relies on the intuition and experience of the analyst, including the past and present continuity of the analysis object and the latest information, so as to make judgments on the nature, characteristics, and development and change laws of the

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analysis object (Kuzmanovic & Bandak, 2015). Focus groups, participant-observation, interviews and questionnaires are all good methods for collecting qualitative data. This study uses exploratory qualitative research to collect qualitative data. And the authors chose to use interviews as a tool for collecting qualitative data. Because logistics management and inventory management are two important links in supply chain management. According to the characteristics of logistics management and inventory management, the authors chose two different cases for research. This study conducted interviews with two related companies in China to gain an in-depth understanding of the current situation of inventory management under the epidemic, so as to conduct subsequent research and analysis.

3.1.4 Data Acquisition

There are two major categories of data sources, namely primary data and secondary data. The primary data refers to the data from the primary source. It can help data collectors answer their research questions (Deshpande et al., 2004). The primary data can be data collected in the form of questionnaires, face-to-face interviews, telephone interviews and focus groups (Deshpande et al., 2004). And the primary data can usually provide the investigator with tailored information, but it often takes a long time and is expensive.

Secondary data refers to the previously collected data that is not originally acquired to answer the current research question (Deshpande et al., 2004). This type of data is generally easier to collect and costs less to collect (Deshpande et al., 2004). Secondary data can be collected in the form of records, reports, books, etc. (Deshpande et al., 2004). Unlike the primary data, the secondary data can usually be obtained and analyzed in a short period of time.

However, since the initial purpose of secondary data acquisition may not be related to the purpose of this question, it is necessary to sort out the information to extract the content. The primary data can provide answers to specific questions that the secondary data cannot provide, and the reliability of the main data is higher than that of the second-hand data. Therefore, this article will collect the main data through interviews with the company. This data collection can provide more basis for subsequent analysis.

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3.2 Research design

3.2.1 Multiple Case Study Design

In order to better investigate the reasons for the interruption of inventory management during the Covid-19 pandemic, and to understand the effective solutions adopted by Chinese food supply chain companies. The authors believe that a case study is a very suitable method in this study. The case study is a study based on analytical induction and the principle of copying (Yin, 2018). Yin (2018) believes that a case study has a quasi-experimental nature, which can be used to explore the status of a phenomenon under actual conditions. Therefore, case study can better help authors answer the research questions that related to "why" and "how" in this study. Case study are divided into two types, namely single case study and multiple cases study. Generally, single case studies need to find a more representative or mature key case in the selection of cases (Yin, 2018). In a multiple cases study, two or more cases can be selected for analysis (Yin, 2018). Therefore, compared with single case study, the conclusions of multiple cases study are more reliable and more universal. In order to conduct better research and ensure the reliability of the research, the authors chose to use multiple cases study as the research method. At the same time, multiple cases study methods can also help authors better answer the research questions previously raised.

3.2.2 Cases

Case 1

Beijing Zhongde Cold Chain Logistics Co. Ltd is a local logistics company in China that focuses on cold chain transportation. During the Covid-19 pandemic, Beijing Zhongde company had to face many challenges and problems in inventory management during transportation. This case will conduct an in-depth study of the impact of its supply chain management changes during the Covid-19 pandemic period on inventory management through interviews.

Case 2

Yonghui supermarket is a large supermarket chain in China, with branches all over China. The inventory management problems of Yonghui supermarket also gradually emerged during the Covid-19 pandemic. This case will study the management adjustments of Yonghui supermarket in response to inventory changes during the Covid-19 period.

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3.2.3 Interview Design

For better understanding the inventory management of China's food supply chain under the epidemic, the author selected two companies related to inventory management. The authors chose a relatively well-known local supermarket and a local logistic company as two representatives. First, the authors visited the supermarket on the spot and tried to communicate with the warehouse manager. After many efforts, the authors made an appointment with their warehouse manager for an interview. At the same time, the authors got in touch with a cold chain company in Beijing through a personal network and got the opportunity to interview the company's logistics manager. After the authors decided to interview the two companies, they negotiated again with the two interviewees. At the same time, in order to ensure the credibility of the information obtained in the interview, the authors selected five employees in total for each company to interview. Selecting five people from each company to conduct interviews can better help authors collect more accurate and credible data. Therefore, there are a total of ten interviewees in this study. The authors of this study have two research team members living in China. Therefore, the interview in this article is conducted offline, depending on their time, and the interview time is limited to 10-30 minutes. This interview is a semi-structured interview. A semi-structured interview usually refers to an informal interview in which the interviewer asks questions of the interviewee according to the interview outline (Kallio et al., 2016). The advantage of semi-structure interview is that the interviewer can flexibly adjust the interview content according to the situation during the interview (Kallio et al., 2016). It ensures the interviewer's control over the entire interview process, and also ensures that the interviewee has a larger space to express their views.

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Table2 for the basic information of the interview

Case companies Interviewee Interview Date

Mode

of Interview

Duration

CASE1:

Beijing Zhongde Cold Chain Logistics Co. Ltd

Manager of Logistic Departmant 2020-04-20 Face to face 25 minutes Team Leader 2020-04-20 Face to face 25 minutes Employee A 2020-04-20 Face to face 15 minutes Employee B 2020-04-20 Face to face 15 minutes Employee C 2020-04-20 Face to face 15 minutes CASE2: Yonghui Supermarket （Branch in TASKIN） Warehouse Manager 2020-04-25 Face to face 20 minutes Employee A from Warehouse Department 2020-04-25 Face to face 20 minutes Employee B from Warehouse Department 2020-04-25 Face to face 20 minutes Employee C from Purchasing Department 2020-04-25 Face to face 15 minutes Employee D from Marketing 2020-04-27 Face to face 10 minutes

Furthermore, before the interview beginning, the authors also prepared an informed consent form, which was sent to respondents via WeChat or email. It detailed introduces the purpose of this interview, the research plan and the research direction of this study. Also, the form illustrates the confidentiality of the interviewee’s private information in this study, all content is only used for the author’s research and will not be disclosed. Due to the limited time for interviewees to accept the interview, they hope that the time of the interview will not exceed 45 minutes. So, considering this situation, the authors also introduced that this interview should try their best to control the interview time to about 30 minutes, but the interview must be recorded. If the interviewee understands and agrees, they can contact the authors and determine a suitable interview time. In the end, this study was agreed by ten interviewees and the interview time was determined.

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In the interview section. The authors first introduced the informed consent form to the interviewee and emphasized that the interview process will be recorded. Since the language of interviews are Chinese, the authors recorded the entire interview process and then recorded the interview notes in Chinese. The authors then translated the main points into English for further analysis.

3.3 Data analysis

Qualitative research is simply to collect information through in-depth interviews. Interviews can achieve the depth of questions and the accuracy of answers through multiple interviews. Broadly speaking, there are some common methods in qualitative research, such as participation observation, action research, historical research method, ethnographic method, etc. (Silverman, 2020). Because qualitative research is a theory based on logical theories, it is used to analyze observable patterns in the collected data and to clarify the logic and connection formation theory between the data. The purpose of qualitative research is to analyze the views of the researched object or the interpretation of social phenomena, and to pay attention to the connection and reasons between the interviewee and social phenomena in order to discover the particularity of the phenomenon (Silverman, 2020). In order to better analyze the qualitative data, the authors will filter and summarize all the available data collected.

3.4 Ensuring Validity and Reliability during the Study

In qualitative research, reliability and validity relates to the credibility of research results. They are two different tools. Bryman and Bell (2007) believe that credibility is measured from within the research organization. The team members in the team have a clear division of labor, and the content of the data collected has been tested multiple times to achieve the accuracy and consistency of the research data. Effectiveness can be measured from the research process outside the organization. The design of research method design interviews and the collection of research data should be referenced on the basis of previous related research (Bryman & Bell, 2007). The value of the reliability of research results is that it can contribute to future research and can be compared under the same environment and research direction. For example, this study studies the challenges and solutions faced by China's food supply chain inventory management during the new coronavirus pandemic. The authors have maintained consistent data collection directions and theoretical ideas. In this study, all interview processes are recorded, and text conversion is performed. All interview content will be returned to the interviewee and content review and approval will be sought to ensure the validity and credibility of the interview data. All in all, although

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there is no universal standard to evaluate the credibility of research results, the authors can maximize the credibility of the research during the process of research design and implementation.

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4. Empirical Finding

This part is the normalization and summary of the data obtained from the interviews. Based on the method of multi case study, this part will be divided into two part according to cases.

4.1 Beijing Zhongde Cold Chain Logistics Co. Ltd

4.1.1 Presentation of company

Beijing Zhongde Cold Logistics Co., Ltd. is a local Chinese company, which established in 2000 (it will be called as Beijing Zhongde company in this study). Beijing Zhongde focuses on the development of the cold chain logistics industry in China. In order to ensure the quality of fresh and frozen products with high requirements for distribution temperature control, Beijing Zhongde uses professional refrigerated trucks and equipment to carry out the whole city cold transportation and distribution and aim at e-commerce customers. Moreover, Beijing Zhongde exclusive service launched. This service not only meets the personalized and customized needs of the fresh food industry, but also enables consumers to obtain a high-quality express delivery experience. Beijing Zhongde has launched an operation mode including priority stowage, priority delivery, direct delivery operation, special packaging, and so on. In order to ensure the timeliness of fresh express shipments, the company arranges special personnel to follow up and monitor fresh express shipments, develop supporting and applicable system tools, and provide special claims. Beijing Zhongde will set up a special operation area for fresh fast-match express in the transfer link, so that the express will be given priority, and in the delivery link, the receiver is required to give priority to the fresh fast-match express. Beijing Zhongde has built a cold storage of more than 50,000 square meters, which can fully guarantee the cold chain processing of the goods from the package to the delivery to the customer.

4.1.2 Problem faced by Beijing Zhongde Cold Chain

Logistic Co. Ltd during the Covid-19 pandemic period

Before the Covid-19 pandemic, Beijing Zhongde Company's inventory management was mainly focused on the entry and exit of products. Generally, after Beijing Zhongde Company receives the purchase order from the customer, the warehouse manager will arrange the warehousing operation according to the scheduled date on the purchase

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order and update the warehousing information when the products are shipped out of the warehouse. At the same time, the warehouse manager will check the content of the purchase order again to determine that the quantity of products that are shipped out of the warehouse matches it. If there is an error, it will be modified or processed in time, and then the data will be recorded in the warehouse archive. Meanwhile, inventory control is generally based on delivery time, and Beijing Zhongde Company will set the purchase time to purchase goods that have been shipped out on time.

Most logistics companies are having the characteristics that has a large number of fix assets, high debt costs and week asset liquidity. Beijing Zhongde company also has those characteristics, and due to the impact of Covid-19 pandemic, Beijing Zhongde company’s cash flow for operating was interrupt and it has to face the pressure from renters, wages and operating costs. The related employee from Beijing Zhongde company told authors that Beijing Zhongde cold logistics company inevitably faced some challenges during the Covid-19 pandemic period. Through the interviews by authors, this study learned that in the early stage of the Covid-19 pandemic outbreak, the government adopted isolation measures for some people for safety reasons, which resulted in some workers needing to be isolated and unable to work. In addition, the government has implemented some traffic controls in places where the epidemic is more severe. According to the description of the logistic manager of Beijing Zhongde, due to the implementation of these related policies, some of Beijing Zhongde's front-line staff were unable to work, and traffic control made the company's external transportation difficult. A front-line employee from Beijing Zhongde told the authors that in the early days of the Covid-19 pandemic outbreak, foods such as vegetables and fruits were backlogged in warehouses due to some policy issues and could not be delivered to customers on time. And because the shelf life of most foods is relatively short, such as the backlog of vegetables and fruits in the warehouse, the company has a large amount of inventory waste. Through an interview with a team leader, the authors were learned that in the middle of Covid-19 pandemic period, the company's supply capacity could not keep up due to the massive increase in people's demand for food, and there was a shortage of food inventory. This makes Beijing Zhongde Company unable to complete unexpected orders from customers.

4.1.3 Solution taken by Beijing Zhongde Cold Chain

Logistic Co. Ltd

Through interviews with the managers and the front-line employees of the transportation department of Beijing Zhongde Cold Logistics Company, authors can learn that the company has taken response actions and solutions to problems in inventory management during the Covid-19 pandemic. Beijing Zhongde adopted a series of related measures to deal with the issue of inventory waste caused by factors such as short shelf life due to the backlog of food in the warehouse at the early stage of the Covid-19 pandemic. First of all, Beijing Zhongde Company tried to contact and

The challenges and solutions of Inventory management in Chinese food supply chains during the Covid-19 Pandemic