For retailers and manufacturers, supply chain disruptions can take many forms. Anything from a weather event (such as a hurricane), a global health crisis, a trade war, or any number of localised problems such as a transportation delay or production breakdown, can mean it’s difficult to either get sufficient stock into inventory or to get orders out to customers.
While the current global pandemic has had a massive impact on supply chains, some businesses have kept their operations running and even found new opportunities amidst the crisis. Analysing what kept them going provides important lessons that can help others stay resilient in the face of future disruptions.
The importance of supply chain diversity in retail
It’s clear supply chain diversity and flexibility have been crucial for those businesses that have remained largely unscathed, and even thrived, during the crisis.
The retail organisations that fared best are those with the ability to source inventory from different suppliers or from other global locations when their main source of supply was impacted by the virus – for example when it hit manufacturers in China.
Also, key was the ability to quickly embrace alternative transportation modes, routes or carriers to keep operations going in spite of the disruption.
And faced with a huge surge in online orders, some retail verticals adjusted fulfilment to increase delivery capacity. By quickly on-boarding new carriers as well as experimenting with new delivery modes, such as local courier and messenger services, they managed to scale online order fulfilment.
Technology plays a crucial role here, as retailers need to seamlessly integrate and communicate with the IT systems of multiple transportation partners, each with different labelling standards and pricing. If not, they can sustain delivery delays, lost packages or unexpected carrier surcharges and fees. And ideally, when using multiple transportation partners, technology can also rate-shop across the transportation network and automatically select the partner and route that provides the best rates for each delivery address according to the retailer’s business rules.
Similarly, omnichannel, ship-from-anywhere logistics capabilities provided a crucial advantage to some retailers.
Through the strict lockdown period, some non-essential retailers in Europe kept physical stores closed to the public while allowing a skeleton workforce on-site to process online orders for parcel deliveries, placing shipments for carrier or courier pick-up at the back door. One global fashion retailer Logistyx contacted has been utilising 21% of its stores as makeshift fulfilment centres and expects this to increase.
For some retailers, however, the logistics of carrier pick-ups has been a challenge. Many store locations have nowhere to park outside – the retailer usually receives deliveries late at night or early morning, which doesn’t work in a store-turned-fulfilment-centre scenario.
Therefore, these retailers have been restricted to using ship-from-store in only those stores with off road parking or docking bays. Stores located in big cities have fared better, using local carriers that rely on bikes, mopeds or small electric cars. The delivery riders or drivers go into the stores to pick up parcels and deliver to addresses within a reasonable radius of the store.
A digitised supply chain
Undoubtedly, those retailers with a digitised supply chain had a head-start in adapting their operations to the pandemic and will be in a strong position if there’s a future disruption.
By providing automated shipment tracking, a digitised supply chain allows retail businesses to anticipate risk while improving customer transparency.
In February, for example, omnichannel retailers who had comprehensive visibility into their inventory were able to respond by closing stores and factories in China, and reallocating inventory to still-active markets to mitigate the pandemic’s initial impact.
Similarly, when the outbreak first hit, one of Logistyx’s clients, a luxury retail brand, was able to close 50 percent of its store network in mainland China and leverage digital parcel shipping technology to relocate its inventory to mitigate the impact of the virus.
And of course, lack of real-time visibility of in-store inventory is a big issue in ship-from-store. If, for example, someone buys a jumper from a store, then there’s one less product available for online delivery, and the retailer’s systems need to be able to track this movement.
Tech firms, educational institutions and manufacturers have been using 3D printing (or additive manufacturing) to help address the shortfalls in Personal Protective Equipment and medical supplies during the pandemic.
These examples have propelled 3D printing into the mainstream and provide evidence suggesting the technology could help manufacturers outside of healthcare safeguard against supply chain problems.
The spare parts industry in particular stands to benefit from 3D printing. Because 3D printers create a product from start to finish, there is no need to transport products long distances from factories in far flung places. This is a smart way to sidestep supply disruptions caused by transportation issues or problems impacting manufacturing. In effect, by having 3D printers in a warehouse or distribution centre, it becomes a manufacturing facility. Manufacturers and distributors can print products or parts on demand, ready to respond to online orders from customers.
Responding to the new reality
To say the pandemic has disrupted supply chains is an understatement. But some businesses have found ways to work around the problems and embrace the new reality – by responding quickly, remaining flexible and being open to experimenting with new ideas, often by leaning on technology. Hopefully, we can all learn from their strategies to help us be more resilient to the next disruption.
Ken Fleming is president of Logistyx Technologies