As the COVID-19 cases continue to rise globally, retailers have stepped up their efforts when it comes to providing consumers with essential goods and to protect the health and wellbeing of communities. In 2020, the global trade witnessed a significant downturn due to reduction of Chinese imports and the subsequent decline in activity. As of March 25, Q1 2020 global trade was expected to fall to over 4 percent, contracting for the second time since the mid-1980s.
In 2021, the Indonesian Logistics and Forwarders Association (ALFI) predicted that the logistics sector will recover in the second half of 2021. Coronavirus vaccine will be produced massively and the purchasing power will go back to normal. In the new normal, ALFI also mentioned that there are several logistics sectors that would continue to grow, including e-commerce logistics service, courier service, warehousing service for basic needs and retail goods, and business to customer and customer to customer logistics service.
Despite the supply chain industry conditions that have gradually returned to normal, there should always be transparency and rapid response capabilities. Based on the McKinsey review, there are five key points supply chain leaders need to focus on to ensure significant growth. The key points include as follows:
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.
- Simplifying SKU profiles to reduce variety and boost quantities
- Easing payment terms
- Widening delivery-appointment windows
- Relaxing on time and in full requirements
- Redirecting resources
See also: Supply Chain Strategic Partnership & Partnership Maintaining
2- 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.
- Revising purchasing plans favouring items in high demand
- Directing inventories towards locations where sales are particularly active
- Bypass or override inventory replenishment and inventory allocation algorithms
- Reassign merchandising operations staff
- Reassessing in-store marketing budgets to build operational flexibility for essential items
- Relocating inventory already owned to conserve cash
Distribution is where demand trends for non-discretionary and discretionary goods start to overlap significantly.
- Reassignment of employees to increase capacity
- Cross-training and reassigning back-office and store personnel
- Temporary movement of office works into distribution centres
- Staggering shifts to maintain worker health and safety, and improve retention and reduce turnover
- Suspending operations between shifts to deep clean distribution centres
- Conducting health screenings
Maintaining flexibility within logistics is essential. The current surge in demand is slowing consuming the excess capabilities.
- Bypassing distribution centres and ship goods directly to stores and simplifying assortments and packaging processes putting speed ahead of product variety
- Supplementing non-discretionary transportation capacity via partnership
Due to lockdown and stay-at-home orders, companies are seeing a notable increase in online shopping and local deliveries for non-discretionary goods.
- Widening delivery windows form immediate or same day delivery to two or three day delivery thus giving retailers time to rationalise the scheduling and routing of deliveries in order to save time and mileage
- Hiring full-service shoppers
- Temporarily shifting in-store employees to delivery jobs
- Lower online order size to qualify for free shipments and relaxing return windows to provide more flexibility for customers
- Capping purchases for high demand products
- Reserving periods of the day for high-risk shoppers, and for cleaning and sanitising the store
- Shortening the store opening hours
Read also: How to Find the Right Digital Manufacturing for Your Supply Chain