COVID-19: A Lesson in Handling Supply Chain Disruptions
The idea of supply chain disruption isn’t new. Everything from strikes to weather to new legislation can cause unforeseen changes to your supply chain, forcing you to quickly adapt. But COVID-19 has taken the idea of supply chain disruption to a whole new level. No longer is it a few retail outlets, a few suppliers or manufacturers in a few places. It’s everyone, and every business.
As a technology provider, we’ve seen the impact of the past few months across our client industries, from dips in retail sales, to an incredible pickup in dropship and eCommerce needs, to food and beverage suppliers who are struggling to keep up with a radical shift in demand. As we continue to help our customers navigate the obstacles, we wanted to share with you what we’ve learned.
Managing Ongoing Supply Chain Disruptions
Some disruptions are short-lived, such as power cuts from local storms. Others may take time to recover from; clean up after Hurricane Katrina went on for years, and some buildings still haven’t been restored. The COVID-19 pandemic has been ongoing for several months, leading to deeper impacts, although we are happy to see the economy beginning to reopen now.
Many businesses rely on a complex system of providers, suppliers, 3PLs, manufacturers or retailers. When that ecosystem is disrupted, some businesses can quickly shift to overcome the limitations by limiting product types or shifting production. For many, however, the issue is not so easily addressed.
We’ve seen this already on a global scale. In a recent survey of companies, the Institute for Supply Chain Management reported that nearly 75% of respondents were experiencing supply chain disruptions, including long lead times, delivery delays, and issues with communication. Consumer packaged goods companies are unable to keep up with skyrocketing demands for items like toilet paper. Farmers are letting literal tons of onions rot because there are no restaurants buying. And thousands of businesses that rely on Asian- or European-produced parts are scrambling to find new suppliers.
The Importance of Business Continuity
Business continuity is the bedrock of surviving any market change. Having a continuity plan can help your employees stay calm and proceed through any situation with confidence. At the same time, both for service providers and retailers, a continuity plan reassures customers that the quality of your offering has not diminished, and provides the transparency you need to garner customer trust and loyalty—both of which are essential in the midst of a crisis and during recovery.
If you’ve been paying attention to your email, chances are you’ve seen plenty of messages letting you know how your favorite brands are responding to the COVID-19 crisis. Those emails are great for keeping customers informed, but they are just a hint of what an effective business continuity plan entails. Your plan should include, among other things, details on critical processes, communication plans for employees and supply chain partners, a list of essential contacts (such as insurance and finance contacts), and steps to protect your inventory and business systems.
You may also wish to have multiple plans that pertain to a range of emergencies. For example, TrueCommerce’s business continuity plan for COVID-19 includes backup and disaster recovery for all data, constant contact with data center providers, processes to enable a fully remote-capable and secure workforce, and ongoing support services.
Keeping Your Doors Open — Even When They’re Closed
When a local disruption occurs, business closures, even temporary ones, have lasting effects. Not only do stores lose sales in the moment, but consumers with continuing needs may flock to other stores that are still open—giving competitors the chance to steal customers in the long term. On the flip side, stores that are able to stay open benefit from a shift in supply and demand, often gaining a temporary monopoly of customers, who may then see their business as a more reliable option simply because it was there in their time of need.
In the case of the current situation, with many brick-and-mortar stores closed, digital eCommerce has provided the next-best option for staying “open.” Digital selling has been escalating for years, with marketplaces like Amazon leading the charge. But the pandemic has driven these lines of business into high gear; in fact, some industries like home goods have seen more than a 220% increase in online sales volume in April alone. Not sure how to get in on the action? eCommerce software can help you create your online storefront, or connect with online marketplaces without needing to be a designer or digital whiz so that you can get back to selling, fast.
Expanding your business online has more benefits than simply allowing you to stay afloat. Not only will you be selling lots of products, but also possibly selling to new customers. This expands your customer base and might also create a positive, lasting impression on buyers who know you’ll be there for them, no matter what.
Creating a Stronger Supply Chain with Technology
During volatile times, communication becomes an immediate necessity to business survival. For large businesses with complex supply chains, it’s not only important that employees understand how to react, and the strategy for moving forward; it’s also essential to make sure your partners and suppliers are kept up to date. By keeping communication lines open and transparent, you’ll be able to quickly respond to changes in any part of your supply chain, from raw material availability to sales channel demand shifts.
In their survey, the ISM also found that 53% of respondents were having trouble communicating with their overseas supply chains. As a result, they are unable to place imperative orders, understand lead times, or make proactive decisions to get parts and products where they need to go. And in times like these, a reactive supply chain simply isn’t enough to stay ahead.
Technologies such as supplier enablement and vendor managed inventory (VMI) are designed to combat supply chain disruptions around communication and provide a platform for proactivity that will help you weather any storm. With automated EDI, you can move through the order process quickly, and effectively communicate your needs to suppliers across technical maturities. At the same time, VMI puts inventory management and replenishment in the hands of your suppliers, so you can spend more time addressing the needs of your customers, and ensuring profitability across your supply chain.
Planning for the Future
It takes a lot of planning, assessment, and dedication to achieve the crisis management expertise that your business needs to survive future supply chain disruptions. No business will be perfect in every emergency, but your ability to respond quickly and strategically will play a critical role in how you fare.
The good news is that it’s never too late to start developing new strategies, even right now as you adjust to the current crisis. Cloud solutions like our Unified Commerce solution can be implemented quickly, and can help you sell your products in new channels, connect with your suppliers and even bring on new partners as you expand. With the right technology and guidance, you can not only “catch up” to the competition, but quickly outpace them!
For those able to shift from defense to offense and take advantage of new opportunities, there’s an even greater benefit. When the chips are down, you want people to come to your business first, knowing that you’ll be able to provide the services and products they need. If you can reach that point, you’ve won; you’ll be able not just to survive unforeseen market changes, but maintain a competitive edge during them and beyond.
To effectively handle supply-chain distress, planning must be done well in advance and across all levels of your organization. This includes ensuring your inventory levels are managed appropriately, outlining what supplies, personnel, and additional resources are needed for each type of emergency and how the aforementioned will be deployed and adjusted in response to supply chain disruptions.
A solid emergency plan will enable you to sell goods to people outside of your customer base, and traditional channels but, more important might be the psychological influence your company wields after the fact. And, finally, these plans will always need improvements. They are never finished. With each response, your team will gain knowledge and be better prepared to save the day.
To all those whose businesses have been impacted by the COVID-19 pandemic, TrueCommerce is here for you. If you have questions about managing your supply chain or expanding your sales channels, contact us to see how we can help.