The COVID-19 crisis has added new layers of unpredictability to supply chains. Industry executives are having to rethink every aspect of operations, and address potentially permanent shifts in consumer behavior.
In the near future, significant investment in technology and automation will be a primary focus. As e-commerce demand remains high, manufacturers and online retailers will be looking to automation to optimize their supply-chain operations and efficiently deliver higher volumes of packages to the consumer.
According to a recent survey conducted by the National Association of Manufacturers, manufacturers across the country are contending with the economy’s impact on their supply-chains. The survey revealed that 78.3% of respondents believe the COVID-19 outbreak is likely to have a financial impact on their business; 53.1% are anticipating a change in their operations in the coming months, and 35.5% say they are already facing supply-chain disruptions.
The global situation has caused every industry to step back and review current strategies, operations, and processes. Many will realize that a key factor is end-to-end inventory visibility. It gives manufacturers, distribution centers and retailers the flexibility to respond quickly to the ebbs and flows of consumer demand, without the need for additional labor and resource allocation.
Supply chains have been presented with significant challenges, testing their ability to flex with demand. Now is the time for executives to focus on making the necessary adjustments to their operations in order to survive this pandemic, as well as thrive in the “new normal” as businesses get set to reopen.
Start with the drive to increase inventory velocity. During the pandemic, bottlenecks appeared at nearly every point along the supply chain, leaving supermarket shelves barren and deliveries delayed. Increasing speed to market for essential items such as toilet paper became urgent, requiring quick reconfigurations by suppliers and retailers.
Had consumers visibility into toilet paper inventory levels, the panic and hoarding could have been avoided. The situation magnified the need for technology that offers end-to-end visibility throughout the global supply chain. Digitization of goods through technologies such as radio frequency identification and barcodes provide full transparency throughout each step of the supply chain.
The impact of the pandemic could have a ripple effect on other business operations as well. Take marketing. Will consumers remain brand loyal, or will they permanently adopt the grab-any-brand-you-can mindset? In the months to come, marketers of name brands will need to clearly communicate their differentiators, while store brands and off-label items may see a surge.
Next, implement agility into lean logistics. What will “lean logistics” mean in the post-coronavirus crisis moment? It remains to be seen whether workforce furloughs become permanent as cost-cutting grows more severe. But it’s clear that reducing manpower will force manufacturers, retailers and distribution centers to look to technology to automate many processes.
In a lean environment, operations are already set up to process inventory in order to maximize labor efficiency. However, that doesn’t allow shifts required to meet changing market demand. Agility in supply-chain operations is the key. They need the ability to adjust operations to meet fluctuating demands.
Once again, toilet paper provides a good example. Historically, this particular supply chain revolved around moving truckloads filled with pallets to the store, which would then break down the pallets for sale to the consumer. Recently, however, as consumers moved online, shippers were challenged with getting the toilet paper directly to the consumer. But they weren’t prepared to break down pallets in the manufacturing and D.C. facilities. With 40% of essential items now being bought online, supply chains need to evolve operations to accommodate much higher volumes of direct-to-consumer shipping.
Can supplier performance be improved? It’s all about the digitization of goods. With the surge in online ordering, logistical adjustments have become a must in order to meet fluctuating fulfillment needs. By giving products a digital unique identifier at the origin of the supply chain, full transparency of inventory at the product level becomes possible. This is vital to meeting the rise in direct-to-consumer expectations.
While some industries such as grocery are seeing a surge in business, and others like apparel are taking a hit, all sectors are re-evaluating current business operations to ensure their ability to meet the ever-changing world of consumer demand. As the coronavirus curve rises and falls over the coming months and possibly longer, the big winners will be those supply-chain executives who adopt technology that will offer flexibility and agility. In the new normal, the only “constant” in the supply chain will be change.
Ryan Yost is vice president and general manager for the Printer Solutions Division (PSD) of Avery Dennison Corporation.