Managing-Supply-Chain-Pandemic

Managing Supply Chain Challenges in Times of Pandemic

COVID-19 turned out to be a black swan event that has left the Retail industry scrambling to maintain the supply-demand equilibrium. Retailers are still grappling with multiple challenges, including lack of visibility into supplier inventory, an inability to accurately forecast local consumer demand and employee absenteeism caused by illness or staggered working set-ups (59% and 48% of warehouse and store workers, respectively, have been affected by illness or quarantine). They also struggled to ramp up transport capacity to meet the sharp increase in online demand, flex in response to a disproportionate and skewed demand (non-discretionary vs discretionary items) and make up for a shortage of raw materials, ingredients and components caused by delays in international shipments.

These challenges can be tackled to a great extent by adopting a new set of operating and business protocols and through the use of technology.

The table below highlights some key business initiatives and technological investments that can help retailers survive the current challenges and be future-ready.

Supply chain activities

Business initiatives

Technology investments

Supply

  • Simplify assortments (on the same SKU pallets) to enable quicker shipment time
  • Opt for an inventory strategy that can provide buffer instead of just-in-time models
  • Hold daily progress meetings between category managers and strategic suppliers
  • Move from single-country, single-supplier sourcing to multi-country, multi-supplier sourcing
  • Supply chain control tower solutions
  • Supply chain planning solutions
  • Algorithmic retailing (a smart algorithm-driven network model that can dynamically switch among suppliers based on fulfilment capacity)

Distribution

  • Consider warehouse automation work in staggered round-the-clock schedules
  • Hire temporary staff to scale operations up and down
  • Intelligent assistive technologies (IATs) for new employee onboarding and training
  • Digital twins for distribution centers to gauge multiple outcome scenarios
  • Warehouse automation technology such as picking and sorting robots

Logistics

  • Ask suppliers to deliver goods directly to stores
  • Increase non-discretionary goods transport capacity by using the excess freight capacity of logistic providers
  • Explore alternate delivery options, switching, for example, to a sea + rail route, if air freight is interrupted
  • Vehicle tracking software
  • Proof of delivery (POD) systems

Merchandising operations

  • Retrain store employees to support e-commerce operations
  • Allocate store marketing and promotional budget spend to digital marketing technologies
  • Create purchasing plans based on current demand rather than seasonal or historic trends
  • Scrutinize product mix and assign priority levels (for planning, purchasing and inventory management)
  • Dynamic order management systems (that place orders based on availability at distribution centers)
  • Inventory allocation and replenishment systems that use AI/ML algorithms to cater to regions with the highest product deficits
  • Algorithmic retailing to achieve automated hyper localization of assortments and dynamic pricing

Fulfilment

  • Establish partnerships with on-demand delivery companies (like Quiqup)
  • Repurpose certain stores into micro-fulfilment hubs
  • Ensure that store employees can also work as delivery agents
  • Limit the quantity/number of high-demand articles
  • Robot-based deliveries (use of cameras, sensors and GPS)
  • Dynamic order management systems (select the fastest last-mile fulfilment option)
  • Route optimization algorithms

 

Adapting your operating and business protocols and using the latest industry-specific technology will ensure you have adequate built-in flexibility in the supply chain and the right degree of automation to respond to fluctuations in demand and unforeseen crises.

ISG is working with multiple retailers to understand and adapt to the quickly changing landscape. Contact us to get started.

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About the Author

Ashish Chaturvedi brings more than 11 years of experience in digital advisory, IT sourcing, technology and industry research. He is a digital expert at ISG, responsible for authoring thought leadership papers and ISG Provider Lens™ reports on application outsourcing and enterprise retail. Ashish advises senior executives on digital strategy, product planning, emerging tech and IT procurement. He is also a program manager for custom research engagements for enterprise clients and IT providers. Ashish has authored 50+ research reports in the realm of retail technologies, digital benchmarking, enterprise applications, analytics and IT outsourcing. Ashish is a member of the IDG influencer network (cio.com).