Tomorrow is Thanksgiving, a time for family, friends, and turkey. Lots of turkey. Just how much turkey? According to the National Turkey Federation, over 730 million pounds of turkey will be consumed in the United States during Thanksgiving. Given that the average weight of a Thanksgiving turkey is 16 pounds, that is about 45 million turkeys, or about 17% of all turkeys raised in the United States. So how do all these turkeys make it to market on time? With lots of planning.
The Thanksgiving turkey supply chain is intricate. Retailers plan up to 6 months in advance to ensure they have all the birds they need in stock come turkey time. This means establishing contracts, transportation, and deliveries from both large scale turkey producers (Butterball, Jennie-O, Perdue, etc.) as well as local turkey farms. And there are two varieties of birds that retailers need to stock. The most common is the frozen turkey, which accounts for approximately 90% of Thanksgiving sales. Turkeys that are destined to be frozen are bred, slaughtered, and frozen year round. Year round production means producers do not necessarily need to ramp up production as much coming into the holidays. Instead, frozen turkeys may be as much as three years old when they are finally sold through retailers. This makes keeping a safety stock level easily attainable for producers, as they ship them off to retailers. Fresh turkeys make up the remaining 10% of turkeys. These turkeys take more planning, on the part of producers and retailers. Producers need to ensure that eggs laid in the spring are incubated properly, and the turkeys are given anywhere from 10 to 18 weeks’ time on the farm before being sent to slaughter. This way, producers can deliver fresh turkeys to retailers just in time for Thanksgiving sales.
This is where retailers need to delicately balance supply and demand. Overstocking frozen turkeys is not too big a deal. The remaining birds can be saved for the Christmas holiday season, which is the second leading time for turkey consumption. Or, they can be sold below market value after Thanksgiving. Many grocers will actually sell their frozen turkeys below cost anyways, using the frozen bird as a loss leader just to get the customer in the door. In fact, unlike most other meats, turkey prices per pound are actually down year over year. This makes the Thanksgiving bird that much more enticing to most consumers. Fresh turkeys, on the other hand, pose a different problem. These turkeys need to be delivered, stocked, and sold quickly to ensure freshness. This is even more important considering that fresh turkeys are more expensive and actually profitable.
So the supply chain is just as busy as the rest of us planning for Thanksgiving. Due to the holiday, Logistics Viewpoints will not be publishing articles tomorrow or Friday. Happy Thanksgiving, and since there will not be a song of the week in the Friday edition, enjoy Adam Sandler’s Thanksgiving Song.