COVID-19 Supply Chain Action Plan for Retailers


As the number of COVID-19 cases continues to climb around the world, we are feeling a strong sense of sadness for those who have lost loved ones to this horrid disease.


On top of the impacts on human life, we are entering uncharted territory for business. The reality is that many of us need to live simultaneously through the human lens and the business lens. Assuming you will turn to others much more qualified than I to help with the human lens, let me speak to the business lens. The actions we take over the coming weeks and months have the potential to not only increase the chances of survival in an uncertain time, for some it will be a chance to slingshot out of this period significantly stronger than you went in.

Businesses which rely on physical assets coming through a supply chain for their survival - retailers, manufacturers, wholesalers - and the customers of these businesses, are likely feeling the effects of COVID-19 as products become harder to come by to meet unexpected demand. With what we’ve seen working with businesses both large and small, from all over the world, in many sectors, we felt the need to put together an action plan for retailers.


The following passage details steps that a business can take today to increase their chances of surviving and thriving during this volatile period in history.


Business Level Action Plan


With COVID-19 affecting businesses the world over, there are several company-wide actions that managers and executives can take.


Plan for closed borders and implications for freight


At the time of writing we have not experienced borders closed to freight, though there is nothing to say that this won’t happen if the number of COVID-19 cases continues to rise. With many supply chains spanning state and international borders, the risks of freight and deliveries being delayed or cancelled due to stricter border controls must be modelled.


Questions that need to be answered by managers are:

  1. What is the value of on-order inventory that is either on the road/rail, on the water, or in the air right now?

  2. What would be the business impact if this amount was delayed or cancelled?

  3. Can I increase the frequency and lower the amount of which I am ordering to increase the chances of receiving the goods that I need sooner?


Prepare for higher ecommerce traffic


Many countries have advised or mandated that non-essential retail stores must close, so many businesses are now dealing with the fallout of this. Businesses that were already, or have the ability to rapidly pivot to an ecommerce model (e.g. by dialling up that part of their existing business or engaging development resources to do so) will be in a better position than those who rely on physical shop fronts for all business.


Actions that managers may need to take:

  1. Pull inventory back from stores to the warehouse of distribution centre in preparation for increased ecommerce traffic

  2. Sync online marketing with those products that are available in stock, ensuring that no products are being advertised that are on backorder or at risk of reduced availability.

Crisis Management and Governance


The above business level plans will require input from top management e.g. a COVID-19 steering committee or project team. The structure of this response team will naturally vary by company and must be tailored to a business’s specific needs.


Managers and executives should consider:

  1. Building a team of executives and managers from all relevant functional areas e.g. sales, marketing, finance, procurement, supply chain, merchandising, and operations.

  2. Setting a standing - ideally daily - COVID-19 meeting in team members respective calendars. The watchword is extreme agility during this period such, to allow rapid responses such as allowing finances to be approved and directed to where they’re needed most without delay.


Supplier Level Action Plan


Drilling one layer further, there are several actions that can be taken at a supplier level to manage risks and prepare for continued volatility during the coming months.

Source: https://www.newfoodmagazine.com/article/107449/covid-19-should-the-food-industry-be-concerned/

Review supplier resilience


Data on COVID-19 cases and supplier KPIs during the early weeks of the crisis can be used to build an understanding of how a business’s suppliers are likely to perform as this event unfolds. Suppliers will have had trouble with their own sourcing and logistics, and may have a build up of delayed orders. There may also be some who are performing strongly during this time.


Managers should consider the following:

  1. Alternative suppliers for SKUs deemed to be at a high risk of reduced availability, or are that are essential to operations

  2. Analyse suppliers in terms of country exposure. This provides a macro level understanding of a supplier’s risk, based on the countries in which they primarily operate

Communicate with Suppliers Early


Your suppliers will have a strong idea already of products at risk from their perspective, and opening a dialogue with them early can assist both parties through this period, if in no other way than to manage expectations.


Managers should consider:

  1. Sharing data in terms of expected/unexpected demand and challenges that might affect the suppliers

  2. Working with suppliers to manage risks where possible e.g. prioritising orders to lower logistics overhead


Product Level Action Plan


Actions at this level can have the greatest short term impact, and may be the simplest to action quickly. There are 2 areas where we’ve seen quick success from managers during this crisis.


Identify SKUs with COVID-19-induced demand uplift


Retailers can have a strong understanding of the SKUs most affected by extraordinary COVID-19 demand and are managing accordingly via one of the techniques mentioned above.


Managers should also consider:

  • Categorise customers into different priorities e.g. a wholesaler selling face masks to hospitals, pharmacies, and supermarkets might classify a hospital as priority 1, and pharmacies/supermarkets as priority 2. This increases the chances of meeting the essential, where possible.


Pause automatic replenishment


There is a high likelihood that the replenishment points and quantities set in a retailers ERP will not be correct during this volatile period. If left unchecked could lead to disaster such as out of stock or overstock scenarios.


On top of this, if a business has multiple locations, managers should also consider:


  • Rebalancing between stores before replenishing to allow stock to be reallocated to areas of higher demand before another purchase is made if possible.


To reiterate, at Remi we feel a strong sense of sadness for those lost during this period. We hope that the above actions plans can be useful for those operating in retail during this challenging time. More advice will come as this situation evolves and rest we will work as hard as we can to get these insights to you as they arise.


We’re always here to help, and please feel free to reach out to us at any time here.


Stay safe out there,


The Remi Team