Shifting to a flexible channel-based Supply Chain

Retailers are experiencing low-traffic limitation in their Supply Chain (SC.) However, there is much...

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Posted by Dave Food on Jun 15, 2020 4:40:28 PM
Dave Food

Retailers are experiencing low-traffic limitation in their Supply Chain (SC.) However, there is much to learn from the shortages of some products caused by COVID-19. Retailers have to limit the number of specific buying products, set purchasing hours and start cutting store hours; unfortunately, many shops had to close.

Shortage cases

When the World Health Organisation declared COVID-19 as a pandemic in mid-March 2020, a generalised public sense of panic caused by the probable shortage of bottled-water, made purchases radically hit the highest point. As a result, this peak triggered short-term inventory scarcities, and retailers temporarily could not meet replenishment needs. Luckily, the shortage did not last much, and soon consumption behaviour went back to normal.

The same happened with sanitising products which have been reasonably tracked by consumers during 2019. However, supermarket sales had been slowing down; therefore, managers decided to discontinue must of them. 

Consumers’ enormous demand devastated existing stocks quickly; grocers decided to go along with preventing-guidelines from recent virulent-disease episodes and built an inventory of essential products; hand and surface sanitisers, face masks, gloves and paper products were among them.

But, despite the urgent provision, their extra supply stocks were insufficient. Even now, sanitisers are critically out of stock. Something similar happened with other Personal Protection Equipment (PPE) elsewhere.

Multi-channel products shipped to distribution centres

The declaration of COVID-19 as a “pandemic” on March the 11th, the travelling prohibition from several countries on the same day, and governments stay-at-home orders within days, triggered stockouts upsetting grocer’s networks quickly whilst escalating consumer’s demand to the top for a wide-ranging of grocery articles.

Suppliers filled up shelves rapidly, but within hours distribution centres were left empty of several items. The grocer’s already-diminished distribution networks could not go fast enough through replenishment and demands.

With the collapse of the foodservice industry demands, a high number of grocery suppliers chooses to serve both by retail channels and commercial channels. But pressing-pandemic claims exposed these complex processes, making the fulfilment of countless products failed. 

Sporadic shortages might not be so critical when social distancing requirements diminish and decreed stay-at-home orders lose down.

Reallocate commercial-channel resources to maximise production

Retailing through multiple channels offer significant flexibility when demand disruptions strike; many food products can be distributed without problem to either commercial or retail channels.

Distributors of beer and soda, in general, operate flexible multiple-local channels. Beer, soda and snack foods are often delivered and stocked at stores by the supplier. Production of this kind of beverages had to stop despite sales rising by approx—15 % in the course of the pandemic.

Takeaways from the grocery industry and the COVID-19 pandemic

·       Demand disruptions and channel-based SCs have to be flexible

·       Manufacturers have to start strengthening consumer-direct channels.

·       Shortage of products occurs within organised or not economies.

·       Supermarkets chains are diverse and span across multiple cities; therefore, keep an eye on the Domino Effect disturbing retailers.

·       Look into different types of SC challenges undergoing by enterprises procurement, distribution workers, suppliers, supermarket chiefs and their staffs.

·       Consumption habits rapidly come back to normal after consumers store enough wanted-products, as bottled-water, to mitigate the anxiety.

·       Experience probed that panic-buying is a short-term event.

Personal Protection Equipment (PPE) and sanitising products are challenging categories to stock and to have them ready for unexpected disruptions. Consumer-masks and disposable-sterilised gloves have an almost-unlimited shelf life; so, plan, watch out for expiration date and stock them up prepared for unseen interruptions. Sure, people will carry on these protocols and keep emergency kits of PPE and sanitiser at home, from now on; even after health services find a vaccine to control the COVID-19 pandemic. 

As SC management pros, we should mature a way out for shortages of this sort of products, possibly by building a public/private partnership of cross-channel production; stock enough to provide retailers in the course of public health crises.

As the pandemic lessens down, grocery retailers must be aware of mounting potentials of suppliers. When you have only some producers in each category who also provide for the foodservice industry or other markets; they are vital when demand disruptions emerge. Communication among all stakeholders is essential as their cross-channel production supports collective-inventory.

Adapt your SC priorities for difficult times accordingly, integrating suppliers, and releasing cash by diminishing inventory. Hard times are frequently caused by possible poor top management decisions, cost pressure from new competitors, or demands hit by inferior-customer service; a fluctuating economic condition often triggers harsh conditions.

Further comments: Despite frequent shortages of many primary products, supermarket SCs have proven remarkably resilient during this unpredicted pandemic and its enormous disruption to our everyday lives.

The aftereffects of the crisis require SC executives to find out innovative ways to deal with the challenges of these severe times

Are you ready to shift your Supply Chain into a flexible cross-channel production? 

 

Dave Food

Prophetic Technology

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