Addressing global supply chain disruptions in wholesale distribution
What can wholesale distributors learn from the impact of coronavirus on the global supply chain, and what steps can be taken to mitigate the risk?
Summer is over, winter is coming – and with it, the realization that hope of the pandemic slowly ebbing away was probably too optimistic. One sure indicator that nervousness has returned is the reappearance of empty toilet paper shelves in supermarkets.
So, when it comes to the wholesale supply chain, what have the past three quarters taught us about the impacts of the pandemic? Is it possible to venture a prediction for the months to come?
Wholesale supply chain: Strained, but stable
Social distancing, new hygiene concepts, lockdowns, and safety regulations. As massive as the impact of the pandemic has been on society in general and companies, most wholesalers have made it through this crisis remarkably well up to now.
Business operations have largely adapted to new realities, customer buying behavior has shifted to “no-touch” digital options, and most supply chains have become increasingly stretched. But overall, the business has remained stable – so far.
As the warm days are coming to an end and life is moving back inside, the infection numbers are climbing quickly again – reaching new unfortunate records in many regions.
Supply chain planning amid uncertainty
With new lockdowns, Brexit, the US election, the race for a COVID-19 vaccine or cure, it’s more difficult than ever to make accurate business forecasts. Whole fleets of aircraft are grounded, the entertainment and hospitality sector are operating at a fraction of their capacity, and stimulus programs result in a significantly higher risk of credit defaults.
The longer this situation continues, there’s less chance the overall economy will come out unscathed. If the aftermath of the Lehmann crisis is any indication, it’s very unlikely that this will be just a short hiccup.
This makes business planning and forecasts significantly more interesting. For one, we must accept a good amount of uncertainty in our forecasts. Wholesaler strategies must balance the need to fulfill customer demand without getting too exposed to potentially too large inventory positions.
And if this was not challenging enough, supply chains have been stretched substantially in some segments as manufacturers and third-party logistics (3PLs) are also struggling with the impacts of the pandemic.
How wholesalers can adapt
So, with all these challenges in the mix, we will have to continuously monitor the situation and adapt our supply chain plans. We also need to develop strategies to handle those events that we were not able to predict accurately enough.
How companies react to these situations will depend on their individual customer relationship priorities and business goals.
As you analyze your organization’s ability to stay agile amid disruption, here are a few questions to contemplate:
- Do you deliver as much as possible to everyone or do you focus on key customers first?
- Can you shift inventory quickly across units and countries?
- Do you have alternate sources of supply identified?
- What data can help you better predict customer needs?
Challenges of this magnitude will require flexible and integrated processes, leveraging the insights available, providing full insight into possible solutions, and the agility to constantly adapt to a changing environment.
Fortunately, many wholesale companies have been in the process of adapting their business operations to be ready in an already massively disrupted market. These investments now help to combat the disrupter that is COVID-19.
Building strength for the future
Hoping for the best but expecting the worst, wholesale distribution has been under constant pressure to transform and optimize for at least a decade. This ongoing battle strengthened the wholesale industry to be better equipped for the current crisis than others.
And hopefully, at some point, COVID-19 will become a chapter in history books, and we will go back to “just” brutal competition and evolving business models.
