Q&A: How can you deal with shipment and supplier delays during this pandemic?
By Bianca Gutierrez
These past months on ECQ/GCQ have not been easy on anyone. For the retail industry in particular, movement has still been limited even if it is considered as essential. Many witnessed massive out of stock issues, due to both pantry loading (aka panic buying), and manufacturing/logistics constraints.
The GCQ is also not business as usual. It is the time to prepare for business continuity, since surely the pandemic is not yet over and the New Normal will require retailers to reassess their supply plan. The typical knee-jerk reaction would be to load up on inventory while movement is less restricted. However, this is a risk, particularly for cash-starved businesses that have borne the brunt of the effects of ECQ.
The other common tip would be to improve forecasting. However, we are facing unprecedented times, which makes forecasting based on past statistics nearly futile.
Here are some ideas that may help retailers manage their supply chains:
It is always wise to not to put all your eggs in one basket. Particularly for non-branded goods such as fresh produce, rice, sugar or raw materials like cloth for apparels, retailers can purchase from multiple suppliers to get the best deal in terms of both price and availability. Bear in mind that pricing and availability may be mutually exclusive in these times, so perhaps a retailer may need to shell out a bit more for immediate replenishment. Try to synchronously negotiate for supplies to come in later but at a cheaper cost.
2. Reach out to suppliers’ suppliers
Being in control of your supply chain means being in touch with both your consumer and your supplier. Do not stop there. Go beyond your supplier and find out what is happening to the raw material supplier. For example, if you are selling computers, you’d usually be purchasing from a local distributor. However, it would benefit you to know where the assembly plants are, and even where the parts are coming from – perhaps they are shipping out from a country that has even tighter quarantine guidelines than most other regions. This way, you will be able to estimate realistic leadtimes, and assess the current viability of your supplier.
3. Be wise on assortment
Keeping your full assortment at this time would definitely give you a competitive edge. However, shoppers, in general, have become more forgiving, and are willing to substitute brands or variants. For example, a typical grocery shopper may be looking for lemon-scented dishwashing liquid. But if that’s not available, they’d be willing to go with calamansi scent, or even antibac variant. Look into your trends prior to the pandemic, understand the behavior of your shoppers, and decide to keep inventory and focus your cash on only the fastest-moving SKUs. Most likely, these are also the SKUs that manufacturers will continue to produce. From a manufacturer’s standpoint, producing more variants will require changeovers that mean machine downtime and manpower to switch parts and ingredients.
Manufacturers that are short on manpower will most likely choose to just run the fast-moving SKUs.
4. Manage shopper expectations
As mentioned, shoppers in general are more understanding during these times of crisis. For those engaging in ecommerce, this is a great opportunity to engage shoppers and retain them. Retailers just need to ensure that expected lead times and availability of products are declared outright so as not to disappoint.
For example, loading inventory information in your online store will already show shoppers what is out-of-stock, so they can make decisions on substitution at the onset of the ordering process. This will lessen the back-and-forth discussion that has to happen with disgruntled shoppers due to low fill rates, and possibly having to process refunds.
Another is to announce the expected date of delivery prior to beginning the ordering process. With this, shoppers can decide to proceed with tempered expectations.
5. Ramp up Customer Service
Now, more than ever, excellent customer service is what will differentiate a retailer from its competitors. In a time when everyone is experiencing supply outages and delays, what will allow you to be top-of-mind and be the preferred retailer will be how shoppers feel valued by your staff. Train all your staff, not just customer service, on the science of product adjacencies so that they can immediately recommend substitutes to in-store shoppers. This could even be an opportunity to upsell.
Crisis brings out the true character of an individual or organization. Despite so many things we cannot control at this time – shipment delays, factory shutdowns, border closures – there are still things that we CAN control. By understanding the upstream supply chain, making smart choices, and keeping a level head, recognizing that this pandemic is not over by a long shot, we can find the sweet spot that will allow businesses to survive and thrive in the New Normal.
Bianca Gutierrez is the E-Commerce segment head for iRipple.
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