How retailers should respond?
As retailers plan their holiday season, they need to start thinking about flexibility since there will likely be continued unplanned disruptions throughout the rest of the year. That means having a backup plan if they can’t get the items they want.
Retailers should also place orders much earlier to make sure they have the right products in stock for the holiday season, Valente said. Echoing Singh, she said the risk of doing that, however, means they might misjudge what is trending, she added.
“Retailers will have to rely on their technology and the ability to predict, plan and optimize and [they] will also have to factor in the dynamics” of what the supply chain looks like today, she said. For consumers who are used to getting something off the shelf of a bricks-and-mortar store, the new normal is having to wait for months for items.
“From a brand perspective [retailers are] going to have to manage risk in their supply chains better and the visibility into the risk that affects all their supply chains better and use that information to better plan, predict, allocate and improve that experience,” Valente said.
A longer-term strategy is to incorporate risk management into their supply chain, she said. It’s not enough for them to just manage the risk inside their supply chains today related to not being able to get the best price or not planning or ordering efficiently.
“I’m also talking about the risks that come from their ecosystem of suppliers and making sure those suppliers have business continuity and backup plans,” Valente said. Larger suppliers need to ensure they are working with their suppliers, especially those struggling financially to make sure there are no bankruptcies, she said.
“It’s about managing risks you can’t control,” such as geopolitical fluctuations, climate risks, economic uncertainty and changing customer preferences, Valente said.
“What happens when you have consumers buying based on their values and things that are sustainably sourced?” she said. “If you’re not keeping an eye on how those trends unfold you’ll find yourself stuck with the wrong products and inventory and products that don’t appeal to your customers in the way they once did.”
In a time of high-demand variability, if a retailer cannot increase inventory, the best way to cope would be to smooth customer demand, Dai said. “In fact, we have already seen this trend: ‘Black Friday’ is no longer a thing and retailers now operate under a much longer holiday shopping season, knowing that people do their holiday shopping at very different times and over a much wider period of time.”
Retailers should also manage customer expectations—not lower them, Dai said. “The key is to provide operational transparency so that customers’ expectations are just about right and match retailers’ strategic objectives.”
Singh offers some other tips for retailers:
- Think and strategize about how to stick through and survive the pandemic rather than generate revenue. Think more in terms of crisis management and business continuity.
- Tap more into digital’s potential.
- Embrace a working model that is agile and accommodating.
- Utilize omnichannel marketing that is inventive and responsive.
- Overhaul physical store experiences completely.
Why hasn’t my parcel arrived yet?
Does it feel lately like your parcels are taking forever to arrive? You might have seen online suppliers warning customers to expect delays, thanks to COVID-related pressures on the postal system and other delivery services.
E-commerce is booming but despite rerouting deliveries and staff working extra shifts, delays are becoming the norm. So what’s happening, and will all your purchases make it in time for Christmas?
Manufacturing troubles
A lot of what we buy these days is made overseas. Many products get to us after a long international journey, which has been made even more complicated by COVID-19.
The first crack in the system is at the manufacturing level.
Manufacturers can’t always guarantee volumes at the moment. Some are out of parts, with critical suppliers pausing operations due to lockdowns. Some are out of power, with many factories in China having to stop production for hours each week due to power shortages. Some are out of cash, with many commodities doubling their prices in just one year.
Transportation woes
Transportation is not a given.
Shipping containers sit for two weeks or more waiting for a berth and the cost of transporting it is four times as much as in 2020.
While international commerce rebounded quickly after the initial shocks caused by COVID-19, repositioning containers and ships take time. Also, there just aren’t enough of either.
With crews unable to go onshore in several countries, there are fewer hands on the deck.
Storage is struggling
Storage services have also been profoundly affected by COVID-19.
Retailers have to adapt from working with large stores in bricks-and-mortar retail stores to sending parcels to individual consumers from the online channel.
It is a new mindset. The equipment is different, the flow is affected, processes must be redesigned, and complexity increases.
Additional obligations apply to warehousing and distribution centers.
If COVID-19 finds its way into a retailer’s facilities, doors must be closed for hours for deep cleaning. Sick employees and close contacts go into quarantine, removing entire shifts from the operation. Mandatory vaccination rules are updated constantly.
The last mile is suffering
Delivery services represent the crucial “last mile” to get the product to the buyer.
But since the pandemic struck, truck drivers have been scarce and must contend with new delivery protocols, COVID-19 tests every few days, movement restrictions, long hours, and soaring fuel prices.
So if your package is late or you can’t find a product, don’t just blame the official Post or the purchasing platform. The delay may be caused by problems much further up the supply chain.
Supply chains are used to find solutions to problems. What’s new is these problems are now happening everywhere, at the same time, and staying for longer than expected.
Wrapping up
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