As COVID-19 continues to spread, the shelves become empty in stores. We saw it happen in grocery stores, people rushed to the stores to grab toilet paper from the aisles, and now you are lucky if you walk into a store and find toilet paper. But eventually, all retailers supply chains, not just grocery stores, will be affected by the COVID-19. In the midst of a pandemic, consumers begin to panic and tend to act irrationally.
How it works
So how does the supply chain become effected by panic buying during a pandemic? To start, there is a closely integrated path from manufacturing to retailer to the consumer. All it takes is a small unexpected glitch in the system to cause a ripple throughout the entire system. For instance, perhaps a restaurant decided to have their staff wear a special outfit one day. Seemingly out of the blue, there was a shortage on a specific color of shirts at one shop. This caused a depletion of inventory and special orders had to be placed. This leads then leads to more shirts being delivered which causes less room on the delivery truck and so on.
In the case of the COVID19, this was not a small unexpected glitch. This pandemic has sent people into a panic, causing people to drastically change their buying patterns. Most commonly, we are seeing a shortage of toilet paper, but several other industries are taking a hit in their supply chains.
The long-term effect of COVID-19 and supply chains
So, what does this mean for retailers? There will be lasting effects on the supply chain for years to come. Why? Because of the data that is being collected during this time. Several businesses rely on one-to-two years of data to predict demand and influence production. Analytic models will need to be trained to see the irregularity and not account for the outliers.
We’re here to share a few tips you should take into consideration to ensure your supply chain doesn’t run dry during this pandemic and years to come.
1. Develop a supply chain risk management structure
If you don’t already have a supply chain risk management structure in place, now is the time to create one. This management structure should be documented with clear roles and responsibilities, the scope and objectives and anticipated outputs should be clearly stated, the rhythm for executive level review should be steady, and the results must be documented.
2. Collect internal data on disruptions
The information collected during this time is critical for your business. It might seem like it won’t matter once things return to normal but if something happened down the road, similar to this pandemic, you could weather the storm thanks to all of the data you gathered previously. The data you collect now can help predict results for any future disaster. Consider challenging employees by asking them to identify events and teach them how to input and generate the type of data that is needed. You should also keep track of the data for quick reference and better usability within qualitative and quantitative analysis and reporting.
3. Utilize external data and models
The data you collect from your business is critical, but the external data you collect is just as important and can be valuable when it comes time to analyze internal data. During this time, you will want to carefully analyze industry specific data because it can help validate internal data and findings.
4. Identify the most prevalent supply chain risks
You might have already thought about how your supply chain will be affected but connecting with your business leaders to determine the most obvious risk factors is still important. When thinking of risk factors, consider the industry and your competitors to think about other risks that may not come to mind when looking at your business.
It’s important to think big and outside the box when considering risk factors. For instance, don’t just think about a bad storm that causes business to slow down. No one expected a pandemic like COVID-19 to shut down all of New York City and the entire country, but it did, and businesses are suffering because of it. It might seem crazy to think about horrible events that seem impossible but it’s better to think big and be prepared than to be hit with the unknown one day and suffer as a business.
5. Use quantitative modeling that assesses supply chain risks based on conditional probabilities
Once you have determined your supply chain risks, incorporate that risk assessment and cost analysis into the risk modeling. You will want to construct quantitative models that can acquire valid data that you gather and maintain.
6. Develop and restate your resiliency plans including a disaster recovery plan with business rules that define when these plans take action
Always be cognitive of the financial exposure you assume with your supply chain, so you don’t experience the financial strain during a disaster. You will want to have resources in place with this resiliency plan, so that you protect the finances that allow your business to function. There also should be rules in place that determine when this plan goes into action.
7. Demand that your suppliers have a plan in place
Unfortunately, what is so complicated about the supply chain is that you only have so much control over it. Don’t be afraid to ask your supplier what they are doing to ensure you get the products you need to function as a business. Talk to your suppliers about their risk management strategy to ensure they have a steady strategy in place.
Jordan Alliance Group: Guiding You Through Challenges As A Retailer
The truth is, no one predicted this pandemic and if you were unprepared for a disaster like the COVID-19, you are not alone. This pandemic has affected businesses all around the world and many retailers are unsure about the steps they need to take to make it through these challenging times. If you’re struggling through this time and want to ensure your business makes it out stronger than ever, contact our team at the Jordan Alliance Group for a free consultation today!