Businesses and brands should be ready for a likely scenario in the post-lockdown phase
Online trading will play a crucial role in shoring up the economy
Managing supply chain disruption is a challenge for enterprises and requires a risk-versus-economic efficiency calculation
One of the biggest fallouts in the aftermath of the Covid-19 outbreak may turn out to be a widespread disinclination amongst people to congregate in common social spaces like malls, markets, cinemas and restaurants. Businesses and brands should be ready for a likely scenario in the post-lockdown phase which may well last for the rest of the year 2020. This may result in a moderation in demand for products.
To manage operations and maintain consumer connect in such a scenario, businesses and brands will need to reassess their consumer reach plans. Brands which heavily relied on store footfalls and physical sales will need to reinvent their consumer connect and sales channels, to battle both disinclination for social spaces and lower demand.
Brands like Adidas, Xiaomi, Nike, Samsung and hundreds of other brands where store-visit is a part of the buying experience will also need to deliver more from stores to end customers.
One obvious solution to sail through such times is for brands to reach out to their customers directly through Omni-channels relying heavily on online channels. Though most bigger brands are already present online and generate a good proportion of their sales online, the post-Covid-19 situation may require other brands in the market and in some cases the entire industries to rally around their customers through online reach. Online trading will play a crucial role in shoring up the economy.
This focus on online transactions will bring paradigm shifts in the whole supply chain management – it will move centre stage. Ordering from home is expected to reach a never before zenith for the next 12 months as it would be a safer option when social distancing will be the norm.
So, brands would need to deliver from stores-to-end customers and the delivery would need to be faster than traditionally accepted ecommerce practices of less than 24 hours to a few hours.
Each store would be a store fulfilling online orders. Brands will need to set-up direct integrations with 3PL to ensure that while they don’t depend on platforms, they still provide similar or better customer experience, surpassing platforms. As a backward integration, brands will need to work on and invest in greater online demand generation.
The pandemic and resultant lockdowns have brought into sharp focus the dependencies of economies and their industries. Many firms which have been allowed to operate during lockdown period have been rudely woken up to the fact that they were either too reliant on a few vendors who could unfortunately not maintain supplies in the period or that beyond their first point of contact the business was unaware of the links which made up its whole supply chain.
Companies will now seek to drill deeper to understand their whole supply chains, assess the risk of disruption, reach primary vendors of their own vendors or even further down.
The variables are many. Depending on the kind of business and its demands, firms will look to diversify their vendor base to reduce dependence on a few, or build a tight ecosystem of suppliers they can have more control over, or perhaps appoint vendors located geographically closer. It will be easy to say that post the pandemic we can expect to see a higher degree of localization of supply chains – from the same country, state or even better from the same neighbourhood. This would result in the growth of the hyperlocal intercity services even though companies are aware that major supply chain disruptions can occur as a result of various localized disasters.
Managing supply chain disruption is a challenge for enterprises and requires a risk-versus-economic efficiency calculation on the part of every company. It calls for a judicious mix of critical elements for an effective supply chain. The world will likely never return to the pre-pandemic state in many ways and supply chains will also evolve to embrace the changes and become more organized. Intercity and interstate movements would likely be regulated.
Outsourcing of logistics to 3PL will radically increase as companies would prefer to invest resources in developing core products and transforming their business moats.
The end-user will look for omnichannel options for buying which will increase the warehousing needs of brands leading them to adapt hyperlocal delivery models to enable fast deliveries. This unprecedented time has seen a huge rise in hyperlocal delivery models for critical supplies of essential goods across the country.
Customers and regulatory bodies will now be more aware of safety and the processes followed to drive compliances. The customer consumption pattern is going to get modified with a reduction in demand for luxury items in the initial few months. With the help from logistics providers, customers’ demand for getting the products in a minimum time period will be fulfilled.
While the outbreak will continue to create major challenges for businesses all over the world, it is also an opportunity for manufacturing companies to take a hard re-look at strengthening their core competencies, assess supply chain requirements and form partnerships with other experts for all-round optimum benefits.