Getting back to my supply chain… wow, it’s changed!


The end of lockdown may be phasing in, but what happened to my supply chain whilst I was searching for booze and cigarettes? If yours is still there, you’re one of the lucky ones.

WE’RE LEAVING the dining room table – many for the first time, but some industries have been working throughout. They’ve faced customer/product challenges and innovated processes, getting a head start over those who didn’t think laterally and work hard during lockdown.

Industry differences

The kind of industry makes a diference… here are a few anecdotes:

Food: Packaged and fresh manufacture kept going with supply issues for specialist ingredients, changing formulations and packaging text. End consumer behaviour shifted radically – shoppers shopped from home, with online orders increasing 150 percent a day initially for smaller, more select ‘shopping baskets’ of essentials. There was less frivolous selection without the high margin cigarettes, booze and general merchandise. But at least business continued.

In-store shoppers avoided weekends, so manufacturer to DC replenishment days changed. New Uber-style own driver providers emerged, becoming viable services, while many midsize trucks stood empty – micro, local, not macro.

Logistics: Beyond the micro last mile, many imports and exports stopped. Trucks and ships remained stuck at ports, warehouse stock mix got out of sync, trucks, space and employees still had to be paid for or released, with the risk of losing the best employees to competitors.

Fabricated metals: Many factories closed initially due to social distancing concerns, but then 50 percent GDP reduction closed some permanently. Others with cash or credit moved into preventive maintenance and upskill mode to come out of COVID-19 running.

Hospitality: Decimated, then new reopen rules that kept people away – groups and individuals rationalising outlets to survive, but cash flow became a killer.

Financial services: Insurers fighting with discounts to keep lapse rates down, and you paying… for what?

More exclusions than cover. Banking taking risks like us all, but still charging extra for years not sharing. We won’t forget financial services – we need ‘Uber-cash flow’ and lower margins to shake this sector.

Information systems: Still going, but was mostly remotely, less customer facing. Lockdown increased trust/relationship reliance, leading to optimising IT enablement of operations, ready for coming out. A COVID-19 opportunity many companies missed.

Supply Chain 4.0 – the road ahead

Everyone learned to spend on essentials to survive, acclimatising to the aftermath of huge fallout of jobs. Industry has been forced to step up and execute five- year plans now, not tomorrow. Waking up to new supply chains, some started at 6am, others are still getting out of bed. Opportunities abound – apply people, process and IT diferently with your supply chain:

Customer demand

  • End consumers will still mix oice and working from home. Other between-job loyals need our service.
  • Online shopping for mostly essentials is becoming a habit.
  • New, less formal supply channels crept in.
  • Price elasticity – when short, some items sell at any cost.

Sales interface

  • Retail e-commerce, exponential order volume growth – orders shrunk, a real channel.
  • Industrial system-to-system (B2B) – be easy to buy from, be price/value proactive.

Distribution

  • Vehicle changes – micro delivery by new entrants/ systemised and coordinated over the internet.
  • More drops per trip – maybe new trailer/truck design.
  • Border crossing restrictions – land borders closed or very slow; air open and eager.
  • Warehouse stock mix and shelf life critical – give customers time to consume.

Manufacturing

  • Output reduction and staf layof – time for maintenance and clean-up, if cash allows.
  • Bill of materials (BOMs)/formulations caused by diferent supplier cost, potency and delivery condition.
  • Innovation to at least make something – clothing to masks and PPEs, chemicals to sanitizer.
  • Big increase in 3D printing and acceptance/ understanding of what it can do.

 

Supplier

  • Preferred and alternate suppliers – cost may be higher, but work together.
  • Import substitution – new country or, better, local.

Let’s find our new supply chains and wealth together and share them.