As COVID-19 continues to impact supply chains, we take a look at the five prority areas in which retail supply chains are taking action to mitigate the risks.
AS the COVID-19 pandemic continues to spread, retailers have stepped up their efforts when it comes to providing consumers with essential goods and to protect the health and well-being of communities.
In order to achieve this retail supply chains are facing challenges that require extraordinary measures to ensure that essential goods continue to be delivered to stores and consumer doorsteps. To mitigate the short term fallout, supply chain leaders are creating transparency and building rapid response capabilities.
Research on consumer spend amidst the outbreak:
With the supply chain industry facing several challenges, including shifting customer demand, restrictions and potential material shortages, the outbreak has forced many to rapidly adapt their supply chains.
Suppliers
Due to surging demand for essential non-discretionary goods, retailers are facing network-wide shortages. To combat this retailers are working closely with companies across their supplier bases.
For the most important products, daily meetings are being held with strategic suppliers to work through the options for securing an adequate supply of essential high-demand items. This is the first and foremost priority for those in the food, drug and mass (FDM) categories, to secure a fast and reliable supply.
Actions taken:
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Simplifying SKU profiles to reduce variety and boost quantities
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Easing payment terms
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Widening delivery-appointment windows
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Relaxing on time and in full (OTIF) requirements
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Redirecting resources
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Merchandising operations
With retailers looking to recalibrate their product orders to be in line with customer demand, they will also need to feed the change across their purchasing, planning and inventory management operations.
Actions taken:
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Revising purchasing plans favouring items in high demand
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Directing inventories towards locations where sales are particularly active
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Bypass or override inventory replenishment and inventory allocation algorithms
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Reassign merchandising operations staff
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Reassigning in-store marketing budgets to build operational flexibility for essential items
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Relocating inventory already owned to conserve cash
Distribution
In this part of the supply chain, distribution is where demand trends for non-discretionary and discretionary goods start to overlap significantly.
Actions taken:
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Reassignment of employees to increase capacity
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Cross-training and reassigning back-office and store personnel
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Temporary movement of office works into distribution centers
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Staggering shifts to maintain worker health and safety as well as improve retention and reduce turnover
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Suspending operations between shifts to deep clean distribution centers
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Conducting health screenings
Logistics
More so than ever before, maintaining flexibility within logistics is essential. The current surge in demand is slowing consuming the excess capabilities.
Actions taken:
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Bypassing distribution centers and ship goods directly to stores and simplifying assortments and packaging processes putting speed ahead of product variety.
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Supplementing non-discretionary transportation capacity via partnership with under used discretionary goods transportation fleets
Fulfillment
Due to self-isolation, quarantining and stay-at-home orders emerging as a result of the pandemic, companies are seeing a notable increase in online shopping and local deliveries for non-discretionary goods.
Actions taken:
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Widening delivery windows from immediate or same day delivery, to two or three day delivery, in order to give retailers time to rationalise the scheduling and routing of deliveries in order to save time and mileage
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Converting some outlets to ‘dark stores’,to compensate for the decline in store traffic
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Hiring full-service shoppers
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Temporarily shifting in-store employees to delivery jobs
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Lower online order size to qualify for free shipments and relaxing return windows to provide more flexibility for customers
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Capping purchases of high demand products
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Reserving periods of the day for high-risk shoppers, as well as for cleaning and sanitising the store
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Shortening the stores opening hours
For more information on procurement, supply chain and logistics topics – please take a look at the latest edition of Supply Chain Digital magazine.
