There are hidden opportunities in developments that seem to threaten a business or an industry. - Peter Drucker, Managing for Results, 1964.
The COVID-19 situation has unleashed a nightmare for supply chains. It is impossible to get in and get out of affected or quarantined zones. This translates to a lot of inventory being stuck – and if the inventory consists of perishable goods, the damage can be potentially catastrophic for a cash-dependent supply chain.
To add to the woes of supply chain managers and retailers, commercial establishments ranging from large to small have reduced or limited working hours, or worse, are closed entirely. Several countries and states across the world also have mandated lockdowns that restrict supply chain movement. However, there are exceptions granted which can be leveraged by supply chain operators to keep their operations running smoothly.
For example, essential supplies, medicines, and healthcare-related products are allowed to transport from and deliver to containment zones. Although these products form a minuscule amount of overall supply chain deliveries, during uncertain times, they have tripled or even quadrupled in volumes. To make the most of the opportunity, they will have to harness a trait that may or may not have been exercised so far in ample amounts — flexibility.
Flexibility might seem like an abstract term in the supply chain domain. However, it is the most important trait that the function must exhibit to survive through uncertain times. Here are some possible ways of how flexibility can be built into supply chain processes.
One habitual shift that COVID-19 has brought about? Luxury spending has plummeted while essential buying has been maximized. The purchase of everyday groceries, medicines, personal protection equipment like gloves, face masks, etc. increased at unprecedented levels. Incidentally, demand for art and hobby supplies, baking items, and fitness equipment for home workouts also increased.
The point is that all these purchases, excluding the non-essential items, must be home-delivered with maximum safety and precaution. Delivery personnel have to ensure contactless delivery without taking away the positive experience in customer service.
That calls for flexibility in existing operations. For example, how can a supply chain ensure contactless delivery when every single package has to be literally handpicked, dropped into respective bins, and moved to cargos for delivery?
Perhaps, this is why digital transformation and automation of the supply chain have become prominent today than ever before. These uncertain times also showcase why the future of delivery made up of drones and automated delivery vehicles like droids might happen sooner than expected.
But, until that future becomes a reality, retailers need to be flexible in the way they operate and resource their staff.
The first challenge that a crisis imposes upon the supply chain is the shortage of staff. Mandatory lockdown, lack of transport facilities, or unwell employees can leave a large chunk of employees unable to report to work.
However, as we have seen in the previous point, there could be a spike in activity in selected segments of the business. To cater to the spontaneous needs of those segments, the business would have to engage temporary staff. The good thing about hiring temporary staff is that it gives the much-needed flexibility for supply chain operations. Moreover, the employer does not have to incur healthcare or other allied benefits that are applicable to permanent employees. Temporary staff is, in other words, the most flexible option available to keep a supply chain alive.
In fact, e-retailers like Amazon have been engaging temporary staff when orders spiked during the pandemic (Adweek).
So far, home delivery was at the top of the chart fulfillment option. With the crisis restricting home deliveries and also customers becoming wary of accepting parcels from unknown delivery personnel, new fulfillment options have to be identified.
These fulfillment options offer customers the best of both worlds: eCommerce and offline deliveries. The prevailing fulfillment options that are seeing a surge include:
Curbside pickup has been a savior for restaurants. When COVID-19 forced restaurant closures, the only option left was to focus on take-out business. However, with delivery businesses stretched to the maximum with staff shortage, customers had to step out themselves to pick up the orders.
The curbside pickup, which usually happens alongside the storefront or a dedicated delivery dock, became the go-to option. Curbside pickup is a modification of the BOPIS model.
Until recently, BOPIS was a fulfillment option that very few retailers offered to their customers. It did not attract much fanfare from customers since the last-mile delivery was something that they wanted the retailer to take care of.
However, given the uncertain circumstances and the long delays in deliveries, customers are resorting to BOPIS with renewed vigor. The fact that it gives the best of online shopping and scheduled offline pickup makes things easier for all.
For retailers, this helps ease the pressure on their supply chain as the resources to keep the last-mile deliveries is reduced. However, to make full benefit of BOPIS, operational workflows have to be integrated into the retail POS.
Imagine the supply chain to be an aging machine. The lack of routine use can cause wear and tear to it. Similarly, keeping it idle would rust its fine parts. It needs to be oiled with the lubricant ‘flexibility’ from time to time to keep it in top shape.
During uncertain times, supply chain operations go for a toss. Either it will be pushed to its limits with excessive activity. Or it will be forced to be idle causing its finer parts to turn to rust. But, with innovation, flexible models can be integrated into the supply chain system that will keep them in fine shape.
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